The communication between blockchains has been problematic – they don’t understand each other’s protocols and can’t communicate effectively. As a result, users have difficulty moving their assets across different blockchains, resulting in a communication bottleneck. In order to solve this problem Wormhole is developed. In a nutshell Wormhole allows users to seamlessly transfer tokens between Terra, Ethereum, Solana, Polygon and Binance Chain. It works like magic, especially for those who have been struggling to move their tokens from one blockchain to another.
How does Wormhole work?
In reality, Wormhole is not yet another blockchain; instead, it is a protocol that relies on existing blockchains to allow tokens to be easily transferred from one blockchain to another. Tokens such as ERC20 tokens, NFT tokens and even Oracle price feeds can be transferred between various blockchains.
To facilitate transfers, Wormhole employs a leader-less, all-guardian architecture. The Wormhole guardians observe token transfers from one network to another and sign them. When 2/3 plus majority of all guardians sign the transaction, the transfer is successful.
When a user initiates the transfer of tokens from one blockchain to another, the transaction is first routed through the Wormhole smart contract. Messages are acknowledged and signed by the guardians of Wormhole’s peer-to-peer network monitoring this smart contract. The message is forwarded to the destination blockchain or off-chain program when the majority of the guardians sign the message.
Wormhole Usage By Terra Blockchain Users
Wormhole was launched early October 2021 and it as gained some traction by mid october due to the efforts by Terra & Solana blockchain developers and promoters. The following chart shows the number of transfers made by Terra blockchain users to send their Terra ecosystem tokens to other blockchains like Ethereum, Solana, etc.
Having said that, what is the most popular blockchain destination among Terra users? I’ve included a graph that shows the distribution of transfers by blockchain. As you can see, most of the Wormhole’s transfers are being sent to the Solana blockchain. According to the day in which the charts are viewed, the second most popular destination is split between Polygon and Binance Chain.
Wormhole vs Terra Shuttle Bridge
Terra’s Shuttle bridge enabled cross-blockchain transfers for Terra users for the first time. It was only possible to send to Ethereum, Binanace and Harmony One using the Shuttle bridge. I want to compare and see how many transfers are taking place via Shuttle Bridge versus Wormhole in the chart below.
On the following chart, you can see the number of transfers across both systems between November 1st 2021 and November 23rd 2021. There are still around 90% of transfers initiated from Terra blockchain that go through Shuttle bridge, and around 10% of transfers are going through Wormhole. Are the users unaware of Wormhole yet, or is there any other reason as to why Wormhole is not being widely adopted?
Here is another chart that show transfers through Wormhole vs Shuttle Bridge for the past 360 days. Shuttle bridge is still the first choice of Terra users to transfer tokens.