Wormhole (W): Pioneering Interchain Communication in Web3

Cross-chain decentralized applications (DApps) have seen a notable increase in use over the past few years. The “old” mode of using blockchains in which all crypto operations are confined to a single chain — typically Ethereum (ETH) — has been growing increasingly obsolete. Given the colorfully increasing range of blockchains, Layer 2 protocols and multichain DApps on the market, solutions that facilitate cross-chain communications are increasingly relevant.

One of the most notable and recognized players in the niche of cross-chain communications is Wormhole (W). Having originated as a crypto bridge platform in late 2020, Wormhole has evolved into a comprehensive cross-chain protocol, offering a diverse array of products essential for crypto activities spanning multiple networks. It has recently achieved two critical operational milestones — over 1 billion cross-chain messages and more than $40 billion worth of crypto funds processed since it launched operations.

Key Takeaways:

• Wormhole (W) is a decentralized messaging protocol that facilitates cross-chain communications across more than 30 blockchains and Layer 2 platforms, including every major smart contract–capable network.

• Its services offer a diverse line of products, such as its main messaging protocol, a crypto bridge and an on-demand, on-chain data querying tool.

• Having operated for more than three years without a native cryptocurrency, Wormhole is set to launch its W token in late March 2024. The W token is already available exclusively via Bybit’s Pre-Market Trading platform.

What Is Wormhole?

Wormhole (W) is a cross-chain protocol with a diverse range of products that facilitate communication and messaging across more than 30 blockchain and Layer 2 networks. These include all of the major smart contract chains, such as Ethereum, BNB Chain (BNB), Solana (SOL), Polygon (POL) and Avalanche (AVAX), to name just a few.

Wormhole was launched in 2020 as a crypto bridging solution to facilitate fund transfers between blockchains, primarily Solana and Ethereum. In early 2022, the project underwent significant transformation, rebranding from Wormhole Token Bridge to the more succinct Wormhole, and transitioning into a lightweight messaging protocol for cross-chain communications.

The crypto bridge maintained by the project, rebranded as the Portal token bridge, remains one of the critical products within the broader Wormhole ecosystem. By now, Wormhole boasts support for over 20 blockchains and Layer 2 protocols. Its suite of products includes a cross-chain messaging protocol, an on-chain querying tool, the Portal token bridge, a solution facilitating interconnectivity with the Cosmos ecosystem and a protocol designed for native-level token transfers.

In short, the Wormhole platform has virtually everything developers might need for cross-chain operations and functionality.

How Does Wormhole Work?

To enable cross-chain messaging via its main protocol, Wormhole maintains core smart contracts on every blockchain within its wider network. When a DApp on one platform needs to send data or a message to another blockchain, lightweight cross-chain data packets are forwarded by the DApp's smart contract to the Wormhole contract on the source chain.

Once received, these cross-chain data packets within the Wormhole ecosystem are processed by the Wormhole smart contract, initiating the production of cross-chain data packets known as Verified Action Approvals (VAAs). At this point, the VAA messaging data is forwarded to the off-chain segment of the platform, which consists of two key elements — the decentralized Guardian network and VAA message Relayers.

Guardians play a crucial role in off-chain processing and data verification within Wormhole by monitoring and verifying message accuracy and legitimacy, as well as independently observing and signing the messages emitted by the Wormhole core contract on each supported chain to produce VAAs. The Guardian nodes are typically institutional blockchain service providers.

Once enough Guardians have signed a message, the collection of signatures is combined with the message and metadata to finalize the VAA. Then, the verified message is released to Relayers for transmission to the destination chain. The Wormhole smart contract receives the message, processes it and forwards the finalized, formatted data to the DApp's smart contract on the chain.

Wormhole Key Features

Wormhole Messaging

Wormhole’s key feature, its cross-chain messaging protocol, allows DApps to send and receive messages across more than 30 blockchains in an efficient and lightweight fashion. For DApp users, this is an excellent alternative to having to maintain individual smart contracts on every chain they’d like to operate on. Wormhole Messaging is integrated with both the Cosmos-native Inter-Blockchain Communication protocol (IBC) and Polkadot's native Cross-Consensus Message Format (XCM) in order to facilitate seamless communication and interoperability between disparate blockchain networks.

Developers can easily integrate the protocol into their solutions to achieve cross-chain connectivity using the Wormhole SDK (software development kit).

Wormhole Connect

Wormhole Connect is a solution that allows blockchain developers to easily integrate cross-chain asset bridging into their DApps. All you need as a developer is three lines of code, and your DApp will be able to process asset transfers across the extensive network of blockchains supported by Wormhole.

This solution leverages Wormhole’s bridging platform, the Portal token bridge, to enable the transfers. Portal is Wormhole’s native crypto bridge, based on the underlying protocol. While the messaging protocol is geared toward sending lightweight cross-chain data packets, Portal is the core solution that facilitates crypto asset transfers.

Wormhole Gateway

Wormhole Gateway is the platform's dedicated solution for interconnectivity with the blockchains of the Cosmos (ATOM) ecosystem. Cosmos is home to dozens of decentralized platforms and maintains one of the largest network blockchains in the industry. The original Wormhole protocol lacked support for the Cosmos network, prompting the project team to engineer the specialized Gateway solution. Gateway uses a connection to Cosmos's IBC bridge to establish connectivity between the two large blockchain ecosystems.

Wormhole Products

Wormhole Native Token Transfers

Native Token Transfers (NTT) is Wormhole’s development framework, designed for native-level token transfers between blockchains. The tokens moved from one chain to another maintain their core characteristics while complying with the native standards and formats of the destination chain.

NTT supports native transfers based on the two main token bridging modes: burn and lock. In burn mode, tokens being transferred are sent to a burner address and are permanently taken out of use on the source chain. The equivalent tokens are then minted on the destination chain. In lock mode, the tokens on the source chain are temporarily “locked” and the equivalent tokens on the destination chain are issued. The source chain tokens will remain locked as long as their equivalents on the destination chain are in use.

Wormhole Queries

Wormhole Queries is a data querying solution that supports the immediate retrieval of on-chain data from any blockchain network accessible via the Wormhole protocol. This capability opens up various cross-chain use cases from real-time, cross-chain price feeds to cross-chain gaming experiences. The retrieved data undergoes processing and attestation for accuracy through Wormhole's Guardian network.

Queries offers lightweight and highly efficient on-demand data retrieval, significantly reducing gas fees associated with cross-chain data operations. The Wormhole team estimates that utilizing Queries can help achieve up to an 84% reduction in gas fees, with the typical response time for a query request being less than a second. To further enhance the efficiency of cross-chain data retrieval, Queries allows developers to batch their data requests.

Wormholescan

Wormholescan is a GUI-based block explorer that helps users visualize and monitor all cross-chain activity facilitated by the Wormhole protocol. Through the explorer, users gain access to comprehensive insights, such as data and message transfers split by source and destination chains, overall transaction volumes and counts, address-specific stats and more.

Wormholescan lets users drill down to the level of individual transactions, addresses and even VAA messages, providing an exceptionally granular analysis. The platform also offers aggregate-level data on message inflows and outflows for each chain. Additionally, users can access statistics related to individual cryptocurrencies transferred via the protocol, including token-specific transaction volumes and counts, as well as the corresponding destination and source chains.

The image below is a snapshot from Wormholescan made on Mar 5, 2024, showing the outflow of protocol messages from the Ethereum chain to the top destination chains for the previous 30-day period.

What Is Wormhole Crypto Token (W)?

For more than three years since its launch, the Wormhole platform, initially as a crypto bridge and then as a comprehensive cross-chain messaging protocol, has operated without a native crypto token of its own. In early February 2024, the project team announced plans for the launch of the platform’s native W token.

W is envisioned primarily as a governance token. Token holders will be able to vote on a range of issues related to the development and direction of the protocol via the Wormhole DAO — a decentralized governance entity made up of W holders. Initially, the DAO will be responsible for guiding Wormhole’s community and treasury activities. 

Over time, the DAO is envisioned to take more responsibility for governance processes on the platform, including operational and technical decisions such as adding or removing blockchains connected to the protocol, upgrading smart contracts, adjusting fee schedules, introducing new token utilities and selecting new members of the Guardian network.

W will be issued on two blockchains — Ethereum, as an ERC-20 token, and Solana, as an SPL token. The maximum supply for the token is specified at 10 billion, with 1.8 billion (18%) representing its initial circulating supply. The remaining 82% will be released in stages over a period of four years.

The chart below shows W’s planned supply allocation shares.

The 17% for Community & Launch will be distributed in the form of airdrops. Eleven percent (1.1 billion W) is scheduled for a token generation event (TGE) airdrop, and the remaining 6% (600 million W) will be airdropped four months later.

Is Wormhole Crypto a Good Investment?

You might consider investing in the upcoming W token for the following reasons:

• Wormhole stands to benefit from the industry-wide growth in cross-chain applications and use cases that’s gathering pace. Indeed, the niche of cross-chain technologies in the blockchain industry is fiercely competitive, but Wormhole isn't a small-scale or new player in the field, having maintained its place among the leaders of the niche for the past three years. As such, Wormhole and its new token will be among the primary beneficiaries of the current cross-chain mini-revolution we’re witnessing.

• The W token is a deflationary asset with a maximum supply limit. Over the next four years, the stage-wise release of the token’s full supply might lead to some attenuation of its price growth. However, in the long term, supply limitation will benefit W’s price.

• Since Wormhole is a major infrastructural backbone of cross-chain communications, the W token might even emerge as an ultimate HODL asset. Few big-name projects have remained without a native token till now. For this reason, Wormhole’s W could be a rare opportunity to grab a high-profile HODL token at this relatively mature stage of the cryptocurrency market.

Where to Buy the Wormhole Crypto Token (W)

The W token can already be bought exclusively via the Bybit Pre-Market Trading platform, which provides unique opportunities to access cryptocurrencies before their official TGEs (token generation events). 

W is actually the first crypto listed on the recently launched Pre-Market platform, with more valuable pre-TGE offers to follow.

Closing Thoughts

The Wormhole project is a significant enabler of cross-chain adoption that connects over 30 blockchain platforms, including all of the leading smart contract chains. Its platform is a key contributor to realizing a unified web3 world — a concept still in the making.

The imminent launch of the W token has revitalized the Wormhole platform, as well as the crypto investor community’s interest in it, while the token itself has the potential to claim the coveted label of a HODL asset — a rare occurrence in the 2024 crypto market.

For DApp developers, Wormhole provides a comprehensive suite of cross-chain development tools, and for crypto investors, unique opportunities might lie right under the Big W — Wormhole’s new native cryptocurrency.

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