Renamed to Everclear and sold NEXT tokens, can Connext continue to lead the cross-chain bridging market?

On June 4, 2024, the blockchain interoperability platform Connext announced a strategic transformation, rebranding itself as Everclear, and completed a $5 million financing by selling NEXT tokens to Pantera Capital. This financing marks another significant development for Connext in the cross-chain bridging field.
Additionally, on March 9, 2024, Connext announced on the X platform that its daily bridging transaction volume had reached $10 million, setting a new historical record. This achievement highlights Connext's rapid growth and market recognition in the field of blockchain interoperability.
Currently, Connext's price is $0.3346, up 26.2% from the previous day. Its market capitalization is $34,162,562, with a fully diluted valuation of $336,100,520, a 24-hour trading volume of $4,324,539, a circulating supply of 106,841,704, and a maximum supply of 1,000,000,000.

The Everclear project aims to develop a clearing layer for intent-based cross-chain bridges, addressing challenges related to intent rebalancing and settlement, and will serve as a new foundation for a modular stack. The clearing layer will function as an independent blockchain, providing a backend liquidity platform to offer order matching services for intent-based cross-chain bridges.
This series of initiatives indicates that Everclear is not only rebranding at the brand level but also deeply laying out its technology and market strategy, establishing a solid foundation for further development in the future. So, how will Everclear's future evolve? This article will explore in depth.

What Makes Connext, Claimed to be a Pioneer in Modular Cross-Chain Communication, Unique in Its Design Philosophy?

Connext is a modular protocol for securely transferring funds and data across different blockchains. Developers can use Connext to build cross-chain applications (xApps) that can interact with multiple blockchains or rollups simultaneously, thereby solving interoperability issues between blockchains.

The Necessity of xApps

Current blockchains cannot support the transaction volume required for mainstream adoption. Programmable blockchains like Ethereum alleviate this issue by moving users, funds, and data to multiple parallel domains (such as sidechains and rollups). However, this brings the challenge of a fragmented user experience. Users should not need to understand the specific blockchain they are using or how to move between different chains. xApps address this issue by abstracting the multi-chain experience, providing a unified user interface while retaining the security and trust-minimized characteristics of the underlying chains.

Design Philosophy

Connext is based on three design principles that make it an ideal choice for developers building xApps:
Modularity: Connext adopts a hub-and-spoke structure, obtaining security from Ethereum L1 and connecting to standard message bridges. This mechanism optimistically aggregates messages to a single root on Ethereum L1 through a set of Merkle roots generated in each spoke domain. In the event of fraud, the system reverts to the standard message bridge of each chain ecosystem, providing developers with optimal trust assurances.
Security: Cross-chain bridges and messaging are critical infrastructures in blockchain, with high potential risks. Connext employs watchers, automated off-chain agents that pause messaging when fraud or attacks are detected, minimizing damage from failures in any part of the network. Additionally, Connext adheres to a strict security development philosophy, requiring rigorous external audits for code changes and closely collaborating with the security community to establish best practices.
Simplicity: Transitioning to a new multi-chain development workflow can be challenging. Connext strives to mimic and extend existing development patterns, implementing a simple core function—xcall—that allows developers to asynchronously interact with contracts on another chain, similar to calling a contract on the same chain.

Application Scenarios and Ecosystem Development

The diversity and flexibility of Connext make it suitable for almost any application scenario. For example, cross-chain execution of DAO voting results, token bridging, aggregating cross-chain DEX liquidity, cross-chain treasury operations and strategy management, cross-chain lending, NFT bridging, and chain-agnostic NFT marketplaces, among others. Furthermore, in June of last year, Connext announced a $7.5 million financing at a $250 million valuation, with investors including renowned venture capital firms such as Polychain Capital, Polygon Ventures, Coinbase Ventures, and 1kx. This is not Connext's first financing; according to Rootdata, Connext has publicly raised a total of $21.7 million to date.
Connext's underlying architecture employs a modular design, co-founded by Arjun Bhuptani, Rahul Sethuram, and Layne Haber in 2017, initially focusing on Ethereum L2 user experience and later exploring cross-chain asset transactions through state channel technology. Today, Connext has evolved into a modular cross-chain communication protocol that enables fast, trustless cross-chain transfers of tokens, data, information, contract calls, etc., across different EVM networks and Rollups. This modular development model overcomes the limitations of current cross-chain applications, providing greater universality, scalability, and security.

Connext Renamed Everclear, Launches First Web3 Clearing Layer to Address Liquidity Fragmentation Issues

On June 3, 2024, at 23:00 Beijing time, the well-known on-chain interoperability protocol Connext announced its rebranding to Everclear and launched the first Web3 Clearing Layer, aimed at solving the liquidity fragmentation issues of modular blockchains. To achieve the diversification of its DAO organization, Everclear reached a private deal with Pantera Capital, securing $5 million in financing.

The Fragmentation Problem of Modular Blockchains

With the development of Layer 2 (L2) technology, blockchains are faster, cheaper, and easier to deploy, leading to an exponential increase in the number of new chains. Currently, there are 53 chains in operation, with more chains being launched. While this growth addresses the scalability issues of blockchains, it also brings about fragmentation in liquidity and user experience. To tackle this issue, the Everclear team proposed a vision of "Chain Abstraction," aiming to allow users to operate without concern for the specific chains used, handling inter-chain operations, gas fee payments, and cross-chain interactions through third-party service providers (solvers) via an "intent" approach.

Introduction of the Clearing Layer

To address the liquidity fragmentation issue, the Everclear team introduced a new primitive—the Clearing Layer. The Clearing Layer is a public network that allows market participants to coordinate capital flows and net settlements between chains. By combining net settlement with integration into asset and ecosystem-specific settlement methods (such as USDC's CCTP), Everclear estimates it can reduce the costs and complexities of solvers and other cross-chain liquidity management by up to 90%.

Rebalancing Issues

Rebalancing is one of the core challenges in addressing inter-chain liquidity issues. Current intent systems typically follow three core steps: auction, execution, and settlement. In the auction phase, users express their intent, and solvers bid to complete the task; in the execution phase, the winning solver executes the intent on the target chain, using its own funds to complete the transaction; in the settlement phase, the intent protocol uses the user's original funds on the source chain to repay the solver. However, this approach introduces complexities in rebalancing. For instance, when solvers execute a large number of transactions across different chains, the imbalance of funds between chains requires solvers to frequently rebalance. Rebalancing necessitates integration with bridges, aggregators, centralized exchanges (CEX), and over-the-counter (OTC) platforms to obtain liquidity for each supported chain and asset. This not only increases operational complexity but also incurs high costs, forcing solvers to offset these costs through user fees.

By introducing the Clearing Layer, Everclear modularizes these processes, enabling market participants to efficiently coordinate and net settle capital flows between chains. The design of the Clearing Layer allows developers to deploy optimal net settlement and settlement strategies within Solidity contracts, thereby reducing the complexity and costs of rebalancing and improving the efficiency of cross-chain liquidity management.
In summary, Everclear aims to achieve more efficient and secure inter-chain liquidity management through its innovative Clearing Layer solution, thereby enhancing the overall economic benefits of blockchain interoperability.

After the Sybil Attack Incident, Can Connext Solidify Its Market Position Through Rebranding?

A Sybil attack refers to an entity manipulating the network by creating multiple false identities to gain undue benefits. This type of attack is particularly common in blockchain and decentralized applications, severely impacting the fairness and credibility of projects. Last September, during Connext's airdrop process, a "Sybil fiasco" occurred. Community users reported vulnerabilities in the airdrop contract, leading to some users frequently claiming airdrop tokens. However, upon analysis, these issues were actually caused by the user authorization mechanism, not a flaw in the contract itself. With the help of the community, Connext successfully identified and removed 5,725 Sybil addresses, reclaiming 5,932,065 tokens.
Connext's design philosophy emphasizes modularity, security, and simplicity. Its modular hub-and-spoke structure enables secure communication between different blockchains. When fraud occurs, the system reverts to the standard message bridge, ensuring the security of message transmission. This design is more flexible and decentralized compared to traditional identity verification methods, such as KYC and biometric identification, avoiding the risk of user privacy breaches.
Compared to other anti-Sybil methods, Connext's advantage lies in its use of a watcher mechanism. These off-chain automated agents pause messaging when fraud or attacks are detected, minimizing damage from failures in any part of the network. Additionally, Connext's security development philosophy requires rigorous external audits for code changes and close collaboration with the security community to ensure best practices. This multi-layered security assurance gives Connext an edge in combating Sybil attacks.
In contrast, other anti-Sybil solutions like KYC and biometric identification can effectively distinguish between real and fake accounts but also raise user privacy issues and operational complexities. AI-ML algorithm-based solutions identify Sybils by monitoring on-chain behavior patterns, but their accuracy and reliability still need improvement.
In conclusion, Connext demonstrates excellent performance in combating Sybil attacks through its unique modular design and multi-layered security assurance. As technology continues to evolve, can Connext maintain its leading position and provide more efficient and secure services for the blockchain ecosystem?