Crosschain swaps without bridges: Here’s how it works

1inch has announced the full release of Fusion+, an upgrade designed to simplify crosschain swaps by integrating liquidity from across the Web3 ecosystem.

The decentralized finance (DeFi) ecosystem has long faced significant difficulties with making transactions between different blockchain networks. Simply named “crosschain transactions,” ensuring the safety and efficiency of such orders has become a necessity because each blockchain operates on its own terms, and different blockchain networks simply do not “talk” with each other.

For example, users attempting to move their assets from Ethereum to Polygon encounter cumbersome processes involving multiple steps, high fees and extended waiting periods. This complexity restricts the fluidity of assets within the DeFi space, limiting opportunities for investors and traders alike.

Risks associated with crosschain bridges

Traditional solutions often involve centralized bridges, which carry significant security risks. Known for their vulnerabilities, crosschain bridges are popular targets for hacks and exploits, causing a loss of over $3.3 billion worth of crypto assets in just two years.

Introduced by 1inch, Fusion+ seeks to tackle these issues directly with a secure and user-friendly alternative. By removing the need for traditional bridges, the platform aims to eliminate the slowdowns and risks associated with previous crosschain solutions.

Users can start using Fusion+ immediately on the 1inch decentralized application (DApp) and 1inch Wallet.

Since its beta release in September, Fusion+ has handled millions of dollars in trading volume, indicating its huge potential impact on the DeFi sector. The platform offers several notable features:

• Built-in security measures: Utilizing atomic swap technology and incorporating maximal extractable value (MEV) protection, Fusion+ ensures transactions are either fully executed or safely reversed, thereby eliminating partial fills and failed trades.
• User-friendly experience: The swapping process is straightforward—users select their preferred tokens and networks, confirm the transaction and keep the swap tab open until completion. No additional settings or configurations are required.
• Competitive rates: By employing Dutch auctions and leveraging the competitive nature of 1inch resolvers, who are professional market makers, the platform secures advantageous rates for its users.
• Trustless and decentralized transactions: Fusion+ maintains essential components like hash locks and timelocks, enabling trustless exchanges across multiple blockchains without the need for third-party intermediaries.

How Fusion+ works

Building upon the intent-based approach introduced with the original Fusion solution in late 2022, Fusion+ utilizes atomic swap technology to facilitate crosschain swaps. A seamless process enables users to swap tokens across different blockchains without the need for centralized bridges or third-party intermediaries.

The process starts when users select the tokens they want to swap and set a minimum acceptable return. This order is sent to a network of professional market makers called resolvers. A Dutch auction then unfolds, where the price offered by resolvers decreases over time until one accepts the order at a mutually agreeable rate. This competitive bidding ensures users receive optimal rates without dealing with complex procedures.

Once a resolver accepts the order, they secure the transaction by locking the user’s original tokens in an escrow on the source blockchain and the desired tokens in an escrow on the destination blockchain. Both escrows use cryptographic secrets and time-based locks to ensure a secure and trustless exchange.

After the escrows are set, the cryptographic secret is revealed, allowing the user to access their new tokens while the resolver claims the original tokens. If the swap isn’t completed within the predetermined time frame, the contracts are automatically canceled, and funds are returned to their respective owners, safeguarding assets for both parties.

Implications for the broader blockchain ecosystem

By simplifying crosschain swaps and enhancing security, 1inch is addressing key barriers to DeFi adoption with the launch of Fusion+. Eliminating reliance on third parties and centralized bridges may reduce security risks and improve user trust. Fusion+’s approach to crosschain interoperability may influence other platforms to adopt similar strategies, potentially leading to a more integrated and secure DeFi environment.