In this repository you will find smart contracts on the Elrond side for Elrond-Ethereum bridge. For setup details, take a look here. Documentation for relayers can be found here.
Although cryptocurrency is the future, there are still many challenges to overcome. One of them is providing an easy way to manage multiple different types of coins. Although we already have some exchange services, they can be a bit difficult to use and require many steps to perform the actual transfer, and they require you to trust a centralized third party and/or a centralized ERC20 token smart contract. With this suite of smart contracts, we aim to provide a decentralized way of transfering tokens between Elrond and Ethereum.
For this to be truly decentralized, we're using a multisig smart contract. More info on that here. Basically, we're going to have a set of relayers that validate the transaction. You could think of it as a mini-blockchain, whose sole purpose is to handle cross chain transactions.
To be able to transfer the tokens, we make use of a concept known as "Wrapped Tokens". Basically, you don't transfer native EGLD or ETH tokens, but instead you lock the native tokens in a contract and generate "Wrapped" versions of them. On Elrond, we are going to use ESDT for this purpose. On Ethereum, we're most likely going to use something like ERC20.
Now you might ask, how is this any different? There already is an ERC20 style contract on Ethereum for EGLD! The main difference is you won't have to go through exchange services at all, and at some point, we'll likely have this integrated fully into out Maiar application. And there's one more important difference: This is decentralized. There isn't a single contract owner doing all the work. We have a set of trusted accounts that will handle the transactions.
But why should you trust them? We use the "Proof of Stake" concept: each of them will have to stake a certain amount of EGLD to be able to become a relayer, just like validators on the Elrond blockchain. If any of them misbehvaves, their stake will be "slashed" and they'll lose quite a bit of money as a result.
As said above, we're going to use ESDT to implement wrapped tokens, but how is the wrapping actually done? For that, we have the EgldEsdtSwap, a very simple SC, whose only purpose is to exchange 1:1 native eGLD to WrappedEgld ESDT tokens. You can also do the reverse operation at any time, which is known as unwrapping.
One important thing to note is you can never unwrap your WrappedETH while on the Elrond blockchain, as that is not a native Elrond token. You will only be able to unwrap them by transfering to one of your Ethereum accounts, and then unwrapping them there.
To be able to send eGLD to an Ethereum account, we first have to wrap the tokens through the EgldEsdtSwap contract. Then, we have to create a transaction through the EsdtSafe contract. This is a 2-step process.
First, you will have to deposit an appropriate sum of eGLD (NOT your wrapped eGLD) to pay for the transaction fees. Unfortunately, transactions on Ethereum are very expensive. We can't expect the relayers to cover the cost from their pockets, so you'll have to pay for the transaction fees yourself. This is done through the EthereumFeePrepay smart contract.
After paying the fees, you can create a transaction by making a smart contract call to the EsdtSafe SC with the tokens you want to transfer and the receiver's address. The tokens will be locked in the contract until the transaction is processed. If the transaction is successful, the tokens on the Elrond side will be burned. If the transaction fails for whatever reason, you will get your tokens back.
To be able to transfer your tokens back, you will likely have to use an ERC20 contract on the Ethereum blockchain. Once your transaction has been processed on that side, our relayers will simply transfer the tokens back to your Elrond account, through the MultiTransferEsdt SC. No additional fees have to be paid for this kind of transactions.
And that sums up the Elrond-Ethereum bridge. It's open source, so if you're interested in the details, you can always check out the implementation. In the future, it will likely be implemented in Maiar, so it will be very straight forward to move your tokens around :)