Connext vs. Hop
Hops mechanism for sending value across rollups is based on a locally verified system. The Hop bridge sends funds between blockchains by leveraging the existing AMBs (arbitrary messaging bridges). This is done via a liquidity provider (i.e. a “bonder”) who fronts the capital on a L1 blockchain to speed up the process. Rebalancing is incentivized by utilizing AMMs (on both sides) that are tasked with swapping between the origin chain’s “canonical” asset and Hop’s representative asset “hTokens” that are used by the bonder.
The need for end-users to run offchain code is bypassed as the “proof” of a successful transfer is passed between blockchains via an AMB.
This interoperability framework comes with several tradeoffs:
- Reduced Security: In comparison to Connext, Hop is less economically secure. Hop’s dependency on an AMB comes with the tradeoff that an AMB needs to be created whenever none exists on the destination chain which introduces the same trust model (and the associated disadvantages) of an externally verified system. Security is further reduced in the case of optimistic rollups as messages are passed through the rollup exit after one day without waiting for the full seven-day exit
- Reduced capital efficiency: The exit liquidity for a Hop user needs to be provided by a Bonder as well as AMMs on both sending and receiving blockchains. The liquidity of a Hop Bonder is fully locked while the transaction passes through the AMB.
In comparison, Connext routers achieve a ~10x higher capital efficiency because there is no liquidity lockup and only exit liquidity needs to be provided. Consequently, bridges such as Hop are either less profitable for LPs or more expensive for end users
- Reduced speed and increased costs: Transactions bridged through Hop need to be bonded on Ethereum’s Layer 1, incurring L1 gas costs for the Bonder. Transactions can be batched, adding latency as Bonders need to wait for more transaction.
In contrast, transactions bridged via Connext go directly from L2 to L2.
- MEV susceptibility: Hop Bonders are confronted with a high susceptibility to gas price griefing as well as MEV. This is because Hop Bonders compete by racing each other to submit transactions to chain. Bonders and/or frontrunning bots may bid up the gas price for transactions, consequently squeezing away Bonder fee margins.
In the Connext network, frontrunning crosschain transactions is not possible for third parties as users negotiate offchain (on route and pricing).