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Multicollateral Warp Route Rebalancing

Overview​

A Multicollateral Warp Route is a way to bridge multiple existing tokens across different chains while maintaining liquidity. Instead of introducing a new synthetic asset for every transfer, it allows chains to leverage existing token liquidity in a structured manner.

This is useful when expanding to new chains, ensuring users have access to assets that already exist in the ecosystem. The diagram below shows a setup where canonical USDC exists on Base and Arbitrum, with a synthetic warp route created on a new chain.

Collateral Imbalances​

If more funds flow in one direction, one of the chains in the route can run out of collateral. This imbalanced flow prevents withdrawals until the collateral is covered.

To fix this and mantain a good user experience we must perform collateral rebalancing, collateral must be moved between chains to restore balance. An aligned actor may assue a traditional Liquidity Provider (LP) role and provide collateral to address these imbalances using their own inventory.

Liquidity Provider​

Currently, Warp Routes don’t have an explicit liquidity provider interface that enables local deposits/withdrawals. However, LPs can manually manage liquidity using the Hyperlane CLI to interact with the Warp Routes in the Hyperlane registry.

warning

The stopgap procedure defined below requires at least one synthetic chain to exist within the warp route topology.

  • To inspect a Warp Route’s topology, use the warp read command:
hyperlane warp read --symbol ETH

ethereum:
    type: native
    ...
base:
    type: native
    ...
bsc:
    type: synthetic
    ...
  • To send a transfer (transferRemote) on a Warp Route, use the warp send command:
hyperlane warp send \
	--symbol ETH \
	--origin base \
    --destination bsc \
	--amount <AMOUNT> \
	--recipient <ADDRESS>

Depositing Liquidity​

LPs can deposit collateral via a transferRemote where:

  • destination domain is a chain where the warp route has a synthetic type
  • recipient address is controlled by the LP
  • amount is liquidity denominated in the origin chains collateral token

This can be done for providing liquidity on many collateral chains and representing a claim on each collateral with a single synthetic asset balance.

Withdrawing Liquidity​

LPs can withdraw via a transferRemote where

  • destination domain is a chain where the warp route is a collateral type
  • recipient address is controlled by the LP
  • amount is denominated in the destination chains collateral token

Future: Admin-Controlled Liquidity Rebalancing​

Depending on the collateral asset and the pair of chains, several different rebalancing paths may be available. For example, CCTP (Circle’s Cross-Chain Transfer Protocol) can efficiently move USDC between Base and Arbitrum. Other assets and pairs may require more complex rebalancing paths (eg L2 withdrawals+deposits). This approach requires a permissioned rebalancer to move the collateral over trusted paths.