The new 'Sovereign Bridged Token” proposal will help limit losses from bridge hacks, says Connext founder.
According to the proposal’s discussion page, it allows token issuers to designate a list of canonical bridges. Only bridges added to this list could mint an official version of the issuer’s token. Issuers can also limit the number of tokens a bridge is allowed to mint. These parameters can be changed at virtually any time by the issuer.
In Bhuptani’s view, this proposal will ensure that “ownership of tokens is shifted away from bridges into the hands of token issuers themselves” and will limit losses if a bridge’s security comes into question: “In the event of a hack or vulnerability for a given bridge , issuer risk is capped to the rate limit of that bridge and issuers can seamlessly delist a bridge without needing to go through a painful and time-intensive migration process with users.”Bhuptani said the proposal would also help prevent user experience problems in decentralized finance, as all bridges will issue the same official token. Over time, this will eliminate the need for multiple versions of the same token, he claimed.
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