How Can We Use Wormhole to Enable Cross-Chain Asset Lending?
In the blockchain world, each chain is like an independent bank with its own unique characteristics and ecosystem. The problem? Your assets typically exist on a single chain, making it difficult to use them across different networks.
Let’s look at a simple example:
Suppose you hold SOL on Solana, but you’re interested in a lending protocol on Ethereum. You want to use your SOL as collateral to borrow ETH or USDC—but traditionally, that just wasn’t possible.
Thanks to Wormhole, that’s now within reach. You can move assets seamlessly between chains using Wormhole’s cross-chain messaging and token bridge capabilities. Let’s break it down with a simple diagram and explain how this works in our cross-chain staking and lending protocol.
Understanding the Cross-Chain Flow with Wormhole
The diagram below illustrates the step-by-step process of how cross-chain staking and lending works using the Wormhole SDK:
🚀 Step 1: Initiate a Cross-Chain Staking Request (from Source Chain – e.g. Solana)
To start, you initiate a staking request on the source chain, like Solana, where your asset (e.g. SOL) is held. This request is sent using Wormhole’s cross-chain messaging infrastructure.
🔒 Step 2: Token Bridge Locks Your Assets
Once the request is submitted, the Token Bridge contract on Solana locks your SOL tokens. These tokens are now escrowed and can no longer be used until the process is completed.
Think of it like placing your gold into a secure bank vault. You still own it—it’s just being held temporarily for verification.
🛡 Step 3: Guardians Verify and Generate a VAA (Cross-Chain Message)
Wormhole’s decentralized Guardian Network detects the lock event and creates a VAA (Verified Action Approval)—a cryptographically signed message that proves your assets have been locked on the source chain.
This is like receiving a certified deposit receipt from the bank confirming your gold is secured.
🌉 Step 4: VAA is Relayed to Target Chain – Wrapped Tokens Are Minted
The VAA is then submitted to the Token Bridge on the target chain—in this case, Ethereum. Upon verification, the bridge mints a wrapped version of SOL (wSOL) on Ethereum, representing your locked SOL 1:1.
Just like showing your certified deposit slip at a foreign bank and receiving the equivalent amount in local currency.
💳 Step 5: Use the Cross-Chain Asset for Lending
The minted wSOL tokens are deposited directly into your staking & lending contract on Ethereum. The contract calculates how much ETH or USDC you’re eligible to borrow based on the value of your collateral and disburses the funds to your Ethereum wallet.
Your cross-chain staking and borrowing are complete now—no complicated steps are required. The Wormhole SDK automates and simplifies everything.
💡 The Value of the Wormhole Protocol
Our staking and lending app leverages Wormhole’s powerful cross-chain capabilities, providing users with not just flexibility but also strong security guarantees:
●Guardian Network with Multi-Sig Verification
Each cross-chain message must be signed by a decentralized quorum of trusted nodes.
●Tamper-Proof VAA Messaging
Messages are cryptographically signed and verifiable, ensuring integrity and authenticity.
●Broad Multi-Chain Support
Whether Solana, Ethereum, or other major chains—Wormhole provides reliable, high-speed interoperability.