What Is Aurora?

A Step-by-Step Guide to the Ethereum Compatibility Network

What Is Aurora?

More than half the traffic in the decentralized finance (DeFi) ecosystem runs is on Ethereum. This includes lending dApps, exchanges, blockchain games, and NFT marketplaces. So, how does a competitive blockchain challenge such a powerful first-mover advantage?

The answer may be creating a Layer 2 network on top of the base Layer 1 blockchain. 

Aurora is an Ethereum compatibility network on the Near blockchain. For the end user, they get Ethereum dApps on Near’s network

Aurora Origin and Purpose

Aurora launched in May 2021 on top of Near’s network, deployed by a team led by Alexander Skidanov and Illia Polosukhin. Skidanov is a veteran Microsoft developer and Polosukhin is a machine learning researcher with three years of experience with Google’s Deep Learning.

Aurora and Near are inextricably linked. The latter is an enterprise-grade, Proof of Stake blockchain powered by its Nightingale sharding technology. This gives Near an edge in several functions over Ethereum:

  • Near-instant block finality time, which is the time it takes to process transactions. Near executes at 1.3 sec, while Ethereum can go as fast as 15 sec and as long as 4 hours, depending on daily traffic load.
  • Near’s tiny transaction fee at an average $0.01 vs. Ethereum’s at over $1 dollar at the best of times.
  • Near’s theoretical 100,000 tps once its sharding tech is fully implemented. The same could be said of Ethereum once it completes its Surge upgrade after The Merge. Yet, Near is still at least 50x faster than Ethereum as it is. 

Aurora is a Layer 2 network specifically designed to tap into the rich Ethereum ecosystem of dApps.

Source: Aurora

In technical terms, Aurora runs an Ethereum Virtual Machine (EVM) on top of Near, so that developers can port and launch dApps written in Solidity, which is Ethereum’s native programming language. Although Gavin Wood conceived Solidity in 2014, Ethereum’s core team adopted it and honed it since then. 

Aurora is being developed under Aurora Labs, led by its CEO, Alex Shevchenko. His proclivity for physics and math was well matched with blockchain technology, having created Bitfury Exonum in 2015. This project uses blockchain technology to fortify and tokenize legacy systems, from government logistics to business affairs.

Understanding EVM To Understand Aurora

To understand Aurora, one first needs to understand Ethereum Virtual Machine (EVM). Just like video games have engines that run gaming logic, physics, and graphics, so, too, do blockchain networks have frameworks like EVM. Except, instead of games, they run smart contracts.

Specifically, EVM is a runtime environment in charge of executing Ethereum smart contracts, scripted with Solidity programming language. After every new block (transaction) is executed and added on Ethereum, EVM executes its smart contracts and recalls the network’s state because it is a software layer across all Ethereum nodes.

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To extend the previous analogy further, this would also be the case for multiplayer games, powered by their engines.

Aurora runs EVM on the Near network, making it not only compatible to run smart contracts from Ethereum, but from other EVM-compatible networks: Polygon, Avalanche (its C-chain), and Binance Smart Chain. Thanks to this EVM compatibility, developers can easily clone an Ethereum dApp and port it to the Aurora ecosystem.

How Does Aurora Work?

Aurora is so compatible with Ethereum that one can send Ethereum transactions to Aurora without extra bridging steps. That’s because Aurora already has integrated token bridging. 

Source: Aurora.dev

More precisely, Ethereum transactions are executed with Aurora’s Sputnik VM runtime, a tweaked EVM written in Rust programming language. After Ethereum funds are sent to Aurora, they can then be moved to Near itself, via the Rainbow Bridge, created by Aurora’s software engineer Kirill Abramov.

This can be done with the most popular crypto wallet MetaMask, as with any other dApp. The Rainbow Bridge serves as a trustless cross-chain repository to transfer any ERC-20 token between Ethereum and Aurora, and vice-versa.

Aurora’s Native Governance Token

AuroraDAO is in charge of AURORA governance token distribution. This decentralized autonomous organization (DAO) works by voting weight of AURORA token holders. They vote on proposals for the project, including assigning the members of the Council, the DAO’s equivalent to board of directors.

AURORA tokens launched on Nov. 18, 2021, capped to 1B. Out of that, 48% is allocated for AuroraDAO’s future projects, 20% is for the community, and the rest is allocated for integrating Aurora into dApps, partnerships, initial DEX offerings (IDOs), and incentives.

As of October 2022, only 7% of AURORA tokens are in circulation. To mitigate demand, AuroraDAO set an unlocking schedule spanning across two years, with linear unlocking after every three months at a 12.5% rate, nine months after the launch (added to the first six months).

Aurora’s dApp Ecosystem

Thanks to its EVM compatibility, using dApps on Aurora means paying gas fees in ETH. To spur adoption, AuroraDAO set up the Aurora Plus program. Those who register receive 50 free transactions per month. This membership program is also the pathway to Aurora staking, where users receive AURORA tokens and other tokens from partnership projects.

Source: Aurora.dev

Due to the ease with which Ethereum dApps can be ported, Aurora has hundreds of dApps on offer. Most of them should be familiar:

  • 1inch for getting the best token swapping rates across decentralized exchanges.
  • Curve for exchanging the largest stablecoins by market cap — DAI, USDT, and USDC.
  • Solace for insuring DeFi ventures against losses.

Aurora’s native dApps are also popular. Similar to Aave, Bastion provides lending and token swapping. When users lock in their tokens into liquidity pools for either scenario, they receive an interest rate.

Another such yield-earning platform is Trisolaris, as one of the most popular Aurora DEXes. Depending on the demand for certain token pairs, one’s annual percentage yield can reach double-digit figures.

Source: Trisolaris

As its name implies, Trisolaris is equivalent to Curve’s 3pool, consisting of three tokens: TRI, AURORA, and NEAR. Therefore, if users provide liquidity in any token pair liquidity pool, they can earn dual rewards.

To cheaply launch IDOs, Aurora provides the NearPad launchpad. Just like ICO is the crypto equivalent to IPO, so is NearPad a crypto equivalent to KickStarter.

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Aurora’s Future Is Tied to Near

As of October 2022, Ethereum makes 57,73% of the total DeFi market share, while Near makes only 0.5%. But as we have seen from the example of Terra (LUNA), this percentage can rapidly shift in favor of relatively unknown blockchains.

While Terra’s ecosystem collapsed because its UST algorithmic stablecoin depegged, Near is positioning itself as a generalist competition to Ethereum without single-point liabilities. Now that Aurora made it easy to enter Near’s fast and cheap ecosystem, it should benefit from Ethereum’s tide that lifts all boats.

Series Disclaimer:

This series article is intended for general guidance and information purposes only for beginners participating in cryptocurrencies and DeFi. The contents of this article are not to be construed as legal, business, investment, or tax advice. You should consult with your advisors for all legal, business, investment, and tax implications and advice. The Defiant is not responsible for any lost funds. Please use your best judgment and practice due diligence before interacting with smart contracts.

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