Bridges have earned a bad (w)rap.

TL;DR:

• Bridges between blockchains are often centralized and prone to attacks.
• Hemi’s Bitcoin and Ethereum Tunnels improve security while decentralizing asset portability.
• They do this by leveraging the Hemi Virtual Machine, which gives the network direct awareness of both Bitcoin’s and Ethereum’s state.

Say you hold BTC and want to buy an Ethereum NFT. Or you have ETH, but congestion on Ethereum is compelling you to use a layer-2 with lower transaction costs.

This is where bridges have conventionally come in. These protocols connect blockchains so people can transfer tokens and data. Typically, to port assets in this way, you lock up assets from the chain you’re leaving into a bridge contract. In return, you receive a synthetic version of that asset, which works on the chain you’re going to. 

Because bridges must track the state of both blockchains, centralized third parties typically control them. And just as enemies at war target physical bridges because they represent obvious chokepoints, attackers have repeatedly exposed vulnerabilities on crypto bridges, draining them of user funds.

Which is why Hemi introduces a better, trust-minimized way of moving assets between chains: Tunnels.

Ethereum Tunnel

Most L2s are centered around a single chain, with a bridge only between the main chain and the L2. You port your ETH to a layer-2 to take advantage of lower transaction fees, then move it back. Rinse, repeat.

Hemi, however, connects Ethereum and Bitcoin via the Hemi Virtual Machine (hVM), a Bitcoin node wrapped in an Ethereum Virtual Machine.

That means not only can you tunnel BTC through Hemi into the broader Ethereum ecosystem, but also that you get an added security boost by incorporating Bitcoin finality. 

Bitcoin Tunnel

The hVM gives the network direct awareness of Bitcoin’s state without the need for third-party relayers. That gives Hemi all the data it needs to implement secure Tunnel systems from Bitcoin to Hemi. As a bonus, the robust Bitcoin awareness that Hemi exposes directly to smart contracts makes it possible for anyone to design their own custom Bitcoin Tunnel tailored to whatever security, cost, and speed requirements they need using the Hemi Bitcoin Kit.

Bitcoin Tunnel Dual-Vault System

To provide optimal security and capital efficiency for assets ranging from an Ordinal NFT to $BTC itself, Hemi employs a dual-vault system.

Large quantities of fungible assets like $BTC or large quantities of popular BRC-20 tokens will be deposited into high-value vaults, which are secured by a decentralized group of custodians with a 1-of-N trust model using a variant of BitVM.

That’s not possible for every type of asset, so we also use low-value vaults. Non-fungible assets and small quantities of fungible assets (like $100 worth of a BRC-20) are deposited into these low-value vaults, which are secured by over-collateralized custodians. Using hVM, Hemi monitors the custodianship addresses for unauthorized transfers and, in the event of misbehavior, uses this collateral to make users whole.

Until the BitVM-based high-value vault system is launched, all assets will be managed by low-value vaults, and appropriate assets will be migrated to high-value vaults when available.

To learn more about Tunnels, read the whitepaper and the relevant documentation or stop by the team’s Discord.