Dear Neutron community,
For over two years, we at Timewave have been inventing, designing, and implementing cross–chain applications. Our Covenant product is our clearest example of a cross-chain application because Covenants enforce agreements between multiple different chains in a trust-minimized way. Covenants are arguably the most sophisticated cross-chain application ever built because they not only traverse different chains, but also take action programmatically on various chains.
As we brought Covenants to market, we quickly learned that writing cross-chain applications was complex:
- Asynchronous execution needed very careful error handling
- Writing integrations per domain was time consuming
- There was a high cost to making all execution trustless—often we want the ability for humans to exercise judgment but in a highly constrained manner
In the process of overcoming these challenges, we built cross-chain infrastructure that projects beyond our own are already finding useful. Valence is now more than just a protocol for lending protocol-owned liquidity. We are becoming a platform for cross-chain programs.
We are especially excited to share this development with our Neutron community as Valence Programs utilize Neutron as a coprocessor. Doing so generates demand for $NTRN in the form of gas, generates order flow that could be monetized, and strengthens the narrative behind Neutron by making it an essential component of the first generation of integrated and cross-chain applications. It will also help onboard new developers that can integrate neutron DeFi primitives and users of new applications.
Valence Programs
We believe that we have created a faster, cheaper, and safer way to develop and test cross-chain logic. Cross-chain applications built using our tools are called Valence Programs. Various solutions have emerged to make blockchains interoperable, including interblockchain communication (IBC), Axelar, and Hyperlane to name a few. However, developing applications where sequential execution occurs over multiple chains remains a challenging problem. This is where our infrastructure comes in. Valence Programs abstract over pre-existing interoperability protocols to enable programmatic control over assets across chains.
What can you do with Valence Programs?
We have a simple goal: any combination of things that a user can do across chains, we should be able to achieve through trust-minimized smart contracts. This allows entire sequences of actions to be automated on-chain.
Without Valence, crypto application developers struggle to expand beyond their initial ecosystem; users, capital, and developers are fragmented across different ecosystems; and protocols introduce humans in the loop via multisigs to handle increasingly critical operations. Valence solves all of these problems.
Here are some examples:
Putting DAO treasuries to work
Today, the only way for a DAO to make use of DeFi opportunities on other chains is to send funds to a trusted multisig and have that multisig take cross-chain actions on the DAO’s behalf. With Valence Programs, a DAO could simply deploy a set of cross-chain contracts that carry out the sequence of steps in a trustless manner.
For example, if the Cosmos Hub wants to deploy ATOM to an ATOM:dATOM pool on Astroport, the Hub could use a Valence Program to bridge ATOM to Neutron, liquid stake half of the ATOM with Drop to turn it into dATOM, and use the resulting assets to provide liquidity to the ATOM:dATOM pool on Astroport.
Entering into deals with other protocols
Valence Programs have additional features, including enabling multiple protocols to enter into deals together, enforcing ongoing deal terms automatically, setting specific exit conditions upon which the position is unwound, and returning tokens to various parties according to pre-defined rules.
For example, if a protocol wants to borrow NTRN from Neutron, Neutron could offer the protocol the ability to borrow up to 100K NTRN as long as the borrower puts up collateral that is worth at least 110% of the value of the NTRN lent and pays 1% annual interest. If the collateral ever falls below the threshold or the borrower ever fails to pay the interest, the Valence Program could automatically unwind the position and return the assets to Neutron’s treasury.
Harmonizing multi-chain application deployments
Successful DeFi projects that start off on one chain often expand to other chains. In speaking with these project teams, there are two common problems they encounter:
- UX is fragmented on different chains. For example, borrowers using a lending protocol that has a footprint on multiple chains may need to pay interest at different rates on the different chains even when borrowing the same assets because the utilization rates might be different.
- Revenue management is operationally complex. For example, some protocols generate fees in various denominations on one chain and need to aggregate the fees into a single asset on a different chain.
Currently, these problems are managed by multisigs. Using multisigs is an error prone, time-consuming process that introduces liability and cannot happen in real time. Rather than use multisigs, these DeFi protocols can use Valence Programs to automatically rebalance funds across multiple chains according to predefined rules.
Offering strategies to users that combine markets across multiple chains
Creating vaults with complex cross-chain strategies is expensive because integrating each cross-chain venue—where execution is asynchronous—is a time-consuming engineering process. Valence Programs make this problem approachable by offering off the shelf integrations and a ready-to-use app architecture that’s safe and fast to develop with.
Current Status
We are putting the final touches on the first version of Valence Programs ahead of our audit with Zellic. The audit is scheduled to begin December 2nd.
This first version of Valence Programs will enable anyone to deploy simple cross-chain applications by setting up a config file — no code necessary. These cross-chain programs support sequential execution across multiple domains and are extensible. If we don’t support an integration on a supported chain out of the box, we can add one for you or you can write one yourself, likely within a day!
This first version has full support on IBC-enabled chains that include the CosmWasm. Support for non IBC-enabled chains is coming in Q1 2025 with Hyperlane.
Wrapping Up
Valence began building internal tools to make it easier to deploy Covenants. These internal tools have evolved into Valence Programs, which is infrastructure that makes it faster, cheaper, and safer to deploy cross-chain applications. Valence Programs are going to audit soon and will be available not just to Valence developers, but to all developers. To get early access to the Valence Programs, get in touch with us: @ValenceZone