Motivation
While optimistic token bridges between a Layer 1 (L1) and a Layer 2 (L2) chain provides a secure way of transferring assets between chains, it comes with various downsides- Long Withdrawal Times: Transferring tokens from L1 to L2 is usually instantaneous, but the reverse direction involves long wait times, often days, before receiving assets on L1.
- Single Sequencer Risks: Creating a DEX pair between the original token on L1 and the bridged tokens can mitigate long withdrawal times. However, most L2s currently operate with a single sequencer, raising security, reliability, and centralization concerns for liquidity providers.
- Lack of Liquidity: The sequencer risk issues can result in insufficient liquidity in the token pool, leading to unfavorable swap prices, high volatility, and significant slippage for users bridging tokens back to L1.