CroCoDai: A Stablecoin for Cross-Chain Commerce

TL;DR

CroCoDai introduces a cross-chain, crypto-collateral-backed stablecoin designed for cross-chain commerce by combining local vaults on multiple coin chains with a relay chain for cross-chain transfers and governance. It analyzes two relay-chain designs, proposes cross-chain price oracles, and demonstrates via prototype implementations that CroCoDai reduces local creation costs and offers competitive cross-chain performance while improving resilience to price shocks and platform failures. The paper provides a formal security framework showing full backing under reasonable overcollateralization and debt-ceiling constraints, and a financial analysis using multi-asset collateral portfolios to quantify reduced failure risk compared with siloed baselines. End-to-end experiments indicate CroCoDai can outperform traditional wrapped-token baselines in some costs and can operate within a single block on the source chain, supporting practical cross-chain stablecoin deployment. The work contributes open-source data and code to enable reproducibility and invites future exploration of on-chain relay designs and alternative liquidation mechanisms for enhanced robustness.

Abstract

Decentralized Finance (DeFi), in which digital assets are exchanged without trusted intermediaries, has grown rapidly in value in recent years. The global DeFi ecosystem is fragmented into multiple blockchains, fueling the demand for cross-chain commerce. Existing approaches for cross-chain transactions, e.g., bridges and cross-chain deals, achieve atomicity by locking assets in escrow. However, locking up assets increases the financial risks for the participants, especially due to price fluctuations and the long latency of cross-chain transactions. Stablecoins, which are pegged to a non-volatile asset such as the US dollar, help mitigate the risk associated with price fluctuations. However, existing stablecoin designs are tied to individual blockchain platforms, and trusted parties or complex protocols are needed to exchange stablecoin tokens between blockchains. Our goal is to design a practical stablecoin for cross-chain commerce. Realizing this goal requires addressing two challenges. The first challenge is to support a large and growing number of blockchains efficiently. The second challenge is to be resilient to price fluctuations and blockchain platform failures. We present CroCoDai to address these challenges. We also present three prototype implementations of our stablecoin system, and show that it incurs small execution overhead.

Figures (6)

• Figure 1: Overview of different cross-chain stablecoin systems. V, C, and G respectively indicate the presence of vault, stablecoin, and governance contracts.
• Figure 2: Overview of the existing single-chain DSS.
• Figure 3: Overviews of CroCoDai, a multi-chain stablecoin system based on the DSS. The relays (double circle) are not shared with the single-chain DSS.
• Figure 4: Steps of a cross-chain exchange in the CEX baseline and CroCoDai. The edge labeling corresponds to the step numbers in \ref{['sec:end_to_end']}.
• Figure 5: Correlation between the different token types.

Theorems & Definitions (10)

• theorem 1
• theorem 2
• theorem 3
• lemma 1
• proof
• lemma 2
• proof
• proof : Proof of Theorem \ref{['thm:sudden_price_drop']}
• proof : Proof of Theorem \ref{['thm:corrupted_chain']}
• proof : Proof of Theorem \ref{['thm:corrupted_price_feeds']}