IBC between ETH, EVM L1s and L2s: defragmentation of liquidity

Ethereum (ETH), EVM L1s, and L2s can implement the Inter-Blockchain Communication Protocol (IBC), though it presents unique technical challenges compared to its native use in the Cosmos ecosystem.

While IBC was initially designed for Tendermint-based blockchains (like those in Cosmos), its modular design allows it to be adapted for other chains, including those compatible with the Ethereum Virtual Machine (EVM).

🏗️ Implementation Status and Challenges

The goal is to extend IBC to create a universal standard for cross-chain communication, but the EVM environment requires specific adaptations.

1. EVM L1s and EVM-Compatible Chains

Many EVM-compatible chains (L1s or sidechains) are actively integrating IBC or have plans to do so. This is often driven by a desire for trust-minimized interoperability that is more secure than traditional centralized bridges.

• Adaptation: The core challenge is integrating IBC's light client verification into an EVM-compatible smart contract environment.

• Cost: Running a full IBC light client (which verifies the consensus of another chain) on the main Ethereum L1 or even on most L1s can be prohibitively expensive due to high gas costs. For example, verifying the Ed25519 signatures used by Cosmos chains is very gas-intensive on the EVM.

1. Ethereum L2s and Rollups

L2s are a major focus for IBC integration, as it offers a way to unify the fragmented L2 landscape.

• Interoperability: IBC can potentially enable trustless, decentralized communication between different L2s (L2-to-L2) and between L2s and Ethereum L1. This can replace or augment the canonical, often centralized, bridges maintained by the rollup teams themselves.

• Projects: Projects like Union and Polymer are building specialized interoperability layers or hubs to bring IBC to Ethereum L2s like Scroll, often utilizing Zero-Knowledge (ZK) proofs to lower the on-chain verification cost.

  • ZK-proofs are a key technical solution, as they allow a small, low-cost proof to be posted on-chain, proving that a much larger, gas-intensive verification (like a Cosmos light client state) has been performed correctly off-chain.

1. Core Ethereum L1 Direct, full IBC integration on the main Ethereum L1 is the most challenging due to its architecture and gas cost limitations.

• Focus: Efforts here often focus on connecting the Cosmos ecosystem to Ethereum, typically through a specialized hub or intermediary layer that manages the complex verification process and posts a succinct proof to Ethereum's L1.

🔒 Key Advantage of IBC The primary reason for EVM chains to pursue IBC is its security model:

Security wise, Trust is minimized: Relies on verifying the consensus of the connected chain via a light client and permisionless relayers in the receiving chain. You only trust the validator set of the connected chain.