Router Knowledge Hub
What is a Router?
Learn everything you need to know about routers and their role in the Connext network
Introducing Routers
Liquidity Providers of the Connext Network
Routers are the active liquidity providers & nodes of the Connext network.
Requirements specification
What does it take to become a router?
What is a Router?
Node Operators in the Connext Network
The main objective of routers is to relay funds and data across chains. To accomplish this, routers provide liquidity in the Connext network. In exchange, they receive fees for their services.
How do routers work?
Before becoming active in the network, routers provide liquidity on each chain and for each asset they want to support. This liquidity is denominated in nextAssets – a Connext-specific unit-of-account that acts as an IOU of locked funds on Ethereum L1.
Routers observe all chains in the network. For xcalls involving their supported chains & assets, routers simulate the transaction on destination, create a bid (a signed transaction that executes the destination chain interaction), and submit that bid to the Connext sequencer .
The sequencer waits a fixed period of time to collect bids from routers and then randomly selects from among them. For every batch of transactions, the sequencer will send a corresponding batch of winning bids to a relayer network (e.g. Gelato) to submit the transaction to the destination chain.
For router transactions that are submitted by the sequencer immediately (see fast path), the router effectively fronts the transaction funds and calldata on the destination, being repaid by the protocol after the slow path completes if they submitted the transaction with the parameters provided in the origin chain
xcall.
Business Model
Financial Incentivization for Routers
The router’s primary business model is to earn transaction fees for providing liquidity and relaying data across chains.
Routers earn a fee of 5 basis points (0.05%) on all liquidity that is provided for a user transaction. Router liquidity is then subsequently locked up until it can be claimed against the slow path. In effect, this is as if the router is giving a protocol-level loan to the user for a period of up to 2 hours. In this model, router ROI scales with user demand – routers earn the highest returns if a high percentage of their capital is frequently locked up.
Routers currently do not take a fee for relaying data itself. There are future plans to implement an EIP-1559-style tip, that can supplement router income for data-only transactions.
