Octopus 2.0: Interpreting the Octopus Network and Its Two Pioneering Contributions

Author: MiX, Octopus Network

On December 17, 2023, the first Cosmos SDK application chain Ottochain of the Octopus multi-chain network ecosystem was officially launched.

This means that the shared security service based on $NEAR Restaking and the cross-chain service based on NEAR-IBC are running stably, and the Octopus 2.0 mainnet is officially online.
Please enter the Octopus 2.0 mainnet from the official website.

https://oct.network/

We welcome more excellent Cosmos application chain teams to join the Octopus multi-chain network ecosystem.

The $NEAR Restaking mechanism of Octopus 2.0 allows $NEAR holders to stake for the NEAR Protocol while also staking for Ottochain and even more application chains. Therefore, in addition to receiving a staking reward for $NEAR, they can also receive an additional $OCT distributed by Ottochain as a reward for Restaking.

This multi-layered compound yield from $NEAR Restaking is currently the most capital-efficient staking method. Therefore, every $NEAR holder should participate in Octopus 2.0. The $NEAR Restaking operation documentation is as follows:
https://docs.oct.network/maintain/v2/delegator-delegate.html

Ottochain is a blockchain built on the Cosmos SDK and compatible with EVM, developed by the Octopus Nation community, aimed at promoting cooperation and innovation among Web3 communities.
https://www.ottochain.io/

Value Expansion of Octopus Network

Improvement and Upgrade of Multi-Chain Network Infrastructure

Octopus Network is a leading multi-chain network infrastructure project in the NEAR ecosystem, aiming to provide flexible and rentable shared security services, cross-chain interoperability, one-stop infrastructure, and comprehensive community support.

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In the Octopus Network 1.0 phase, as shown in the Octopus V1 Relay section: Validators of Substrate application chains stake $OCT from the Octopus Network to ensure the security of the application chains; the Octopus Network's Bridge enables trustless two-way asset transfers between Polkadot and NEAR Protocol, and through NEAR's Rainbow Bridge, trustless cross-chain interactions with Ethereum are achieved, while Substrate IBC enables direct interoperability between Substrate blockchains and Cosmos SDK blockchains.

In the Octopus Network 2.0 phase, as shown in the Octopus V2 Relay section: Further support for Cosmos SDK application chains has been added. The $NEAR Restaking mechanism has been introduced, raising the level of available security to the billion-dollar level, allowing a portion of $NEAR assets staked for the NEAR Protocol to also stake for application chains or middleware in the NEAR ecosystem, thus obtaining multiple staking rewards. In terms of cross-chain capabilities, the launch of NEAR-IBC allows direct cross-chain interoperability between NEAR and the Cosmos ecosystem, elevating the scope and experience of blockchain internet connectivity to a new level.

The groundbreaking innovation of Restaking lies in maximizing the interests of "decentralized applications/blockchains," "blockchains providing shared security," and "stakers." >>> Click to view "Understanding Restaking in One Article"

In Octopus 2.0, the Octopus Network has changed the value capture method of the $OCT token from "staking income" to "buyback and burn." 30% of the block rewards from all Octopus 2.0 application chains will be used to buy back $OCT tokens from the open market and burn them. The initial buyback and burn will be conducted manually, with the expectation of achieving protocol-driven automatic buyback and burn in the second half of 2024. Therefore, $OCT token holders do not need to stake in the 2.0 network.

The upgrade of the value capture method in Octopus 2.0 stems from the core team's industry research and observations. One important reason is the low participation rate in application chain staking and delegation. Although the delegation threshold in Octopus 1.0 is extremely low and can be completed in one step, a significant number of $OCT token holders have still not participated. We understand that the main motivation for the community to hold $OCT tokens is appreciation. The buyback and burn will directly convert protocol revenue into market buying power for $OCT tokens, which is more beneficial for the value growth of $OCT. Future protocols launched by the Octopus Network will adopt the buyback and burn value capture method, collectively contributing to the value of $OCT tokens.

It is important to note that Octopus 2.0 is a complement and expansion of Octopus 1.0, and both operate in parallel without a replacement relationship.

Core Contributions of Octopus Network

Shared Security & Heterogeneous Chain Interoperability

With its two major industry contributions, Octopus Network is increasingly becoming a key force in shaping the blockchain internet.

1. Establishing the Basic Paradigm of "Shared Security Services"

As a pioneer of shared security services, Octopus Network has created the LPoS (Leased Proof of Stake) mechanism, establishing a bilateral market for "decentralized trust" in transactions.

The so-called LPoS mechanism allows new blockchain projects to use their native tokens as rent to pay nodes that use $OCT and $NEAR for validation, thereby obtaining "decentralized trust" and achieving decentralized launch and operation.

The "decentralized trust" bilateral market consists of demand-side blockchains that want to achieve secure launch and operation with low thresholds and costs, and supply-side validators that can stake tokens.

Octopus Network launched its mainnet in October 2020, and this "bilateral market model for security" and the underlying logic of "leasing security" have become the basic paradigm for shared security services, followed by shared security services from Cosmos Hub, EigenLayer, and even Babylon. >>> Click to view "Understanding Shared Security in One Article"

Based on the contributions of Octopus Network, decentralized trust has truly become a third-party service that can be flexibly rented, just like cloud computing and cloud storage.

2. Proposing Adaptive IBC, Becoming a Disruptor of Heterogeneous Chain Interoperability

Octopus Network believes that an open and universal cross-chain interoperability protocol is the core and soul of the blockchain internet, and the IBC protocol proposed by Cosmos can achieve cross-chain interactions without trust, which can be called the golden protocol for cross-chain. Its uniqueness lies in the design of lightweight clients. However, non-Cosmos SDK blockchains did not leave space for this lightweight client-based cross-chain mechanism during their initial construction, so Octopus Network faced many challenges while building cross-chain infrastructure services for the entire blockchain internet and achieved significant breakthroughs.

In 2020, Octopus Network proposed, developed, and maintained ICS10 in the official Cosmos IBC specification, namely Substrate-IBC, becoming the first team in the world to implement IBC on a non-Cosmos blockchain.

In 2023, Octopus Network proposed and completed NEAR-IBC, with Blocksec completing the audit in October. The NEAR Client is currently under review, and once approved, it will officially become ICS12 of the Cosmos IBC specification.

After nearly three years of development practice in heterogeneous chain IBC, Octopus Network has found a flexible, adaptable, and overall leading technical route for heterogeneous chain IBC—Adaptive IBC.

Taking cross-chain interactions between NEAR and Cosmos chains as an example: A verification proxy is added off-chain, replacing the lightweight client with a proxy client. The off-chain verification proxy is a Cosmos lightweight client that maintains the consensus of the Cosmos chain, verifies cross-chain messages, and signs them. On the NEAR side, the proxy client only needs to verify one signature. The principle is the same in the other direction.

The difference between Adaptive IBC and centralized cross-chain bridges lies in the deployment of verification proxies on the proxy chain. We chose the public chain ICP, which is decentralized and publicly verifiable, significantly enhancing security compared to multi-signature or other external verification cross-chain bridges.

Based on this, Adaptive IBC breaks through the scalability bottleneck of heterogeneous chain IBC, allowing it to adapt not only to various blockchains with different consensus mechanisms like NEAR, Polkadot, and Ethereum but also to the rapid development of verification technologies. If in the future Cosmos adopts aggregate signatures or NEAR supports precompiled ED25519 signatures, the cost of direct verification on NEAR will be significantly reduced. The proxy client can then be upgraded to a true lightweight client, discarding the corresponding verification proxy. Once ZK cross-chain technology matures, the proxy client can be replaced with ZK validators, and the verification proxy can be replaced with ZK provers. These upgrades will be completed through governance, remaining completely transparent to upper-layer applications.

Thus, Adaptive IBC not only adapts to reality but also to the future, always embracing the best available technology.

Disclaimer: This article is for reference only and should not be used as legal, tax, investment, financial, or any other advice.