On July 7, 2023, an Ethereum Improvement Proposal (EIP) was made to standardise how network tokens are exchanged. It is believed that the “Sovereign Bridged Token” standard, or EIP-7281, will enable token issuers to create canonical bridges across multiple networks, stated Cointelegraph.
Sources revealed that the EIP was co-authored by Arjun Bhuptani, founder, Connext, a bridging protocol. In a July 7, 2023, social media post, Bhuptani mentioned that the protocol might help to avoid issues such as the July 6, 2023, Multichain incident, which many experts identified as a hack, Cointelegraph added.
“In the event of a hack or vulnerability for a given bridge (e.g. today’s Multichain hack), issuer risk is capped to the rate limit of that bridge and issuers can seamlessly delist a bridge without needing to go through a painful and time-intensive migration process with users,” Arjun Bhuptani explained.
It is expected that the proposal might help to prevent issues in decentralised finance and enable them to issue the same official token. Furthermore, it will eliminate the need for multiple versions of the same token, Bhuptani told Cointelegraph.
(With insights from Cointelegraph)