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Interchain Jam Highlights — IBC Expansion: Toki
Interchain Jam Highlights — IBC Expansion: Toki recaps the live X session hosted by the ICF’s Robb Stack. In this edition, we find out how Toki is expanding the IBC Protocol beyond the interchain, permissionlessly connecting to external ecosystems including Ethereum and Binance Smart Chain via IBC, and enabling enterprise adoption to fuel the internet of blockchains.
Getting to Know the Interchain: Toki
Toki enables one-click cross-chain token transfers secured by IBC, making it easy to transfer assets natively across blockchains with best-in-class security without trusted third parties. Developing a permissionless IBC-enabled bridge between the interchain, Ethereum, and Binance Smart Chain, and recently announced a partnership with Progmat to build a cross-border stablecoin transfer platform for enterprises with IBC, Toki is pioneering IBC expansion and enterprise adoption.
The stablecoin platform will leverage SWIFT’s existing API for banks, unlocking broader usage of IBC by financial institutions. Toki partner for BizDev and Growth Ed Gemmal comments, “We are one of those projects that aim to connect the whole world — legacy finance, new finance, decentralized groups, decentralized initiatives, everything. We believe in this universalist aspect of the technology and how it can bring people together by facilitating new systems and processes.” Toki founder Daiki Ishikawa adds, “We are really happy to contribute to expanding IBC beyond the Cosmos ecosystem.”
IBC: The Standard for the Internet of Blockchains
Toki strongly values openness, decentralization, and community-based development. Daiki says, “Instead of competing and bumping heads with each other, it’s the opposite. All of these projects can benefit from whatever the other project builds. For example, we contributed with IBC-Solidity and other projects are using that, even other bridges. So that’s the beauty of it. It’s the modularity and the community-based aspects of the whole thing.”
The Toki team has made significant contributions to enhance IBC and leverage its modularity to connect diverse ecosystems in a permissionless way. Why did Toki choose to pioneer blockchain interoperability with IBC? Ed explains:
“We are huge believers in the IBC standard. It’s the truly open and decentralized community-based system for interoperability available today. Other standards are present but they don’t quite fit the bill to the same level.”
Daiki talks about the “protocol wars” back in the 80s and 90s before the TCP/IP standard was adopted for the internet. Eventually, it emerged as the only truly open protocol that could last long term. He compares IBC to TCP/IP, believing it will become the interoperability standard for blockchain. “Once IBC can expand everywhere, IBC can last for the long run,” he asserts. Ed adds: “The modularity and true decentralization is on its own a competitive advantage.”
Daiki emphasizes that another “super big difference between IBC and the others” is the question of incentives, as other bridging protocols are centralized and rely on a business model, token price, or even IP. “They have a pretty strong incentive to maximize their revenue. So maybe the other protocols want to dominate much of the transactions… In this context, we are heading to super-centralized topology, which is not good. In order to avoid that…
“We need a truly permissionless and secure standard that doesn’t have any token price or business model, that is IBC.”
A Multi-Prover Security Model
Toki refers to itself as “the next generation of IBC-based bridges,” adopting a unique approach called the Multi-Prover Security Model. Ed explains, “There’s never a one-size-fits-all solution. That’s regarding blockchains themselves, certain aspects of security, and so on. We believe that no one security model is fully bulletproof. So the idea is to combine security models, and these security models can complement each other.”
Toki’s approach combines TEE and ZKP to create a truly secure system. “We are obsessed with security,” Ed says, “I like to say we’re security first, security second, security third, and of course, the other aspects, such as efficiency and speed, are not left behind.”
Daiki explains that one of the important features of IBC is the light client-based verifications to establish secure and permissionless connections. However, the light client verification on Ethereum or other EVM-based blockchains is “impractical due to gas cost.” To reduce this gas cost “without sacrificing the beauty or nature of IBC and its permissionless and secure connections,” Toki adopts the multi-prover approach. Daiki says, “We set up the TEE and ZKP to run light client verification within those TEE nodes and the ZKP nodes. So this is one of our innovations to expand IBC efficiently without sacrificing its properties.”
Connecting Ethereum and Binance Smart Chain to the Interchain
Why did Toki focus on connecting Ethereum and Binance Smart Chain? How much progress has been made, and when will it go live? Ed replies, “We made a strategic choice starting with this network connection… We think this can be a first-mover type of initiative because we will be the first IBC-based bridge between Ethereum and Binance Smart Chain. So basically, we think that the uniqueness of this connection on its own is worth doing by itself.”
He also points out that these are two ecosystems with strong communities, protocols, and use cases. “We look forward to many exciting developments,” he says. In terms of progress, Daiki explains that most of the work is already complete and currently under security audit.
“Most of the contract is cooperated already. We developed IBC-Solidity and their live clients, but the remaining big task is the security audit, and these things take time.” Realistically, he says, we can expect the connection to go live by the end of Q1, 2025, with the stablecoin initiative implemented around the same time.
The connection will open pathways for Ethereum-compatible L2 networks as well, including ZK and Optimistic rollups like Polygon, ZKsync, and Avalanche:
“We will expand IBC connections step by step… IBC will be everywhere in 2025.”
Enterprise Adoption of IBC
With an impressive background in traditional finance in his native Japan, Daiki has established relationships with most major finance institutions there, working with securities companies, banks, credit card companies, and more. Beyond public chains, Toki has a long track record of applying interoperability solutions and enterprise adoption. Through the Progmat partnership, which will leverage SWIFT’s API for banks, financial institutions will be able to send payments in JPY and receive them in USD (or vice versa) over multiple blockchains with one click — a substantial innovation.
“This is huge,” Ed states. Beyond the architecture of this massive endeavor, there’s a lot more groundwork behind the scenes. “We are helping to build the whole ecosystem because this is a brand new thing we’re talking about. The regulatory mark already exists, but the system itself needs to be fully connected, meaning all the parties, all the stakeholders, and the necessary parties for the system to be compliant. We are working on adding financial institutions, payment services, centralized/decentralized exchange systems, and so on. Beyond our technical expertise, we are making humongous efforts in terms of business development and strategic alliances to actually put together all the parties and interconnect this whole not-so-simple system to come together.”
Ed says there is “huge interest” in Toki’s new approach for cross-chain bridges from both private and public chains. “The main use case is cross-border transactions, right? We need a stablecoin that enterprises can use with confidence so that’s why one of the fully regulated stablecoins, which is Progmat, is going to be the key part to doing it, and that’s why the partnership with Progmat is really important for us, and adoption of IBC.”
Daiki enthuses, “2025 is going to be a very important year for us to see the real use case, especially for real-world assets besides just DeFi or crypto. We’re [Japan] going to take the lead to make other countries adopt IBC solutions using stablecoins backed by tier-1 megabanks.”
Try Out the Toki Testnet
The Toki testnet of Ethereum to BNB Chain is open now and you can try it out today and experience firsthand how simple the one-click swap interface is. You can also join the Toki Discord to become a part of its vibrant community and follow Toki on X to stay updated with its latest news.
Watch out for the next episode of the Interchain Jam taking place on September 19 at 4 pm CEST featuring CosmWasm and how interchain projects Abstract, Archway, Nolus, and Streamswap are levering this stack component to achieve their goals. Set a reminder now!
Interchain Jam Highlights — IBC Expansion: Toki was originally published in Interchain Ecosystem Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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