Hop Protocol app review

Hop Protocol

Hop Protocol app review

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Open Dapp

Basic info

  • Token
  • Audited yes
  • DAO no
  • Yield farming yes
  • Team public
  • Hacks no

Audits

Auditors:

Solidified Clean Unicorn

Solidified Clean Unicorn

Yolanta Chomag

Last updated: Aug 29, 2022

What is Hop Protocol

Hop is a scalable bridge for transferring tokens from rollup to rollup. The protocol allows users to quickly transfer tokens directly between layer-2, sidechains, and layer-1 - Ethereum. 

Hop was launched in July 2021 and currently supports the following networks: Ethereum, Polygon, Arbitrum, Optimism, and Gnosis. The protocol relies on market makers, called Bonders, who front the liquidity at the destination chain in exchange for a fee. This AMM model lets Hop users send cross-chain transactions quickly.

How does Hop Protocol work

The mechanism for transferring an asset from one L2 solution to another is as follows: 

When a user transfers USDC from Optimism to Arbitrum, their USDC will be converted into hUSDC in the USDC AMM on Optimism, costing a 0.04% fee. Then this hUSDC will be burned and a Bonder (who provides up-front liquidity on the destination rollup to allow instant transfers, and incentivized by transfer fees) will bond a transfer by locking its collateral and mint some new hUSDC on Arbitrum. 

This hUSDC will then be converted on the Arbitrum USDC AMM for regular USDC costing another 0.04%. Transfers between layers 2 protocols cost 0.08% swap fees (because of two swaps). Transfers from layer 2 to layer 1 cost 0.04% (because there is only one swap).

How to use Hop Protocol

The current version of the Hop Protocol app allows users to transfer tokens between EVM-compatible scaling solutions. The Hop protocol provides a scalable token bridge for the Ethereum Layer 2 ecosystem using a two-sided approach. The first one is creating a special intermediate asset called a hToken (e.g., hETH, hDAI, etc.) that can be quickly and economically moved from one network to another. It allows for trustless swaps. The second is using automatic market makers (AMMs) to exchange between hTokens and the corresponding assets in each Layer 2 network. StableSwap AMMs are present in every scaling solution. They are used to create a market between a bridge token (e.g. USDC) and a corresponding bridge token called an hToken (e.g. hUSDC). 

The Hop Protocol transfer fee has two components: the HopProtocol fee charged by liquidity providers (0.04% of all swaps) and the Bonders’ commission (0.06-0.25%), who take fees for fronting the liquidity. The HopProtocol fees vary per asset and per route based on the transaction volume and other factors due to economies of scale. If there is a high demand for an asset, Bonder fees can be lowered while still breaking even.

To prevent spamming, there is a minimum Hop fee of $1 per transfer. If the cumulative fee paid by the user is < $1 it will still be rounded up to $1.

The token

Hop does not have its own token yet.

Is Hop Protocol safe

The Hop Protocol founder is Chris Winfrey, who is also a co-founder of Authereum.

Another Authereum co-founder Shane Fontaine is the Hop Protocol developer. The third Hop Protocol team member is Lito Coen, he acts as growth manager.

Partners

There have not been any officially announced partnerships yet.

What’s next

The future plans are yet to be announced.

Links

https://docs.hop.exchange/

 

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