Role of Routers in Connext Network

In this article I’m going to explain some key things about Connext and also share some information about what Routers are and how you can become one.

So let’s start with a quick overview of what Connext is.

Connext is a decentralized interoperability protocol. It is unique in three key ways:

1. Trustless. Unlike other interoperablity protocols Connext doesn’t use third parties to communicate across chains.
2. Universal. Connext is designed to work the exact same way on any system and be extensible by developers to enable new types of communication, which means that it can be quickly extended to all chains.
3. Low-cost. Transfers are highly capital efficient, making Connext the cheapest bridging infra for users.

Now when we know what Connext is about let’s dive deeper into it’s structure and focus on its specific aspect, Routers.

What are Routers?

Routers are one of the two types of liquidity providers in the Connext Network. They are called “active” LP providers, whereas Stableswaps AMMs are called “passive”. The router’s role is essential, to provide instant liquidity for the user in the destination chain. They are given a fee based on the transaction size.

What are they for?

Routers play the key role in the Connext Network. After the Amarok Network upgrade, operating process of routers changed significantly. For example, in the previous version, routers would lock up their funds on the destination chain and be rewarded with the user’s fund on the sender chain. This mechanism causes problems such as liquidity rebalancing and strict liveness. So after Amarok upgrade Modular Interoperability can be achieved with the help of Nomad, a cross-chain communication protocol.

How to become a Router operator?

Running a router is quite a complex activity. Being a router is targeted towards professionals that are comfortable running clusters / heavy server configurations and have a devops/DBA background.

To become a successful router you must meet several key requirements:

• Capital: The entry barrier for becoming a router is relatively high as liquidity providers are required to stake Connext tokens. The minimal amount of Connext tokens required to stake could prove to be challenging to break-even on because of the costs of running a router.
• Hardware: The minimum hardware requirement is 4GB RAM and 30GB storage. In addition to the hardware, the following software is required: Docker CE (Community Edition) version 20.10.5 or higher and Docker Compose version 1.27.4 or higher
• Infrastructure: The central piece of infrastructure of a node operator in the Connext network is router node. It serves a variety of different functions, such as providing liquidity, facilitating cross-chain swaps and relaying calldata across chains.
• Skillset: A router in the Connext network needs to be comfortable in running VM environments via SSH or operating their own hardware. Aside from that, routers should have experience with Linux as well as validators and/or should be keen to learn.

The requirements for being a router in the Connext network are really high. Operating a node, you as a router will have to invest capital and will also have to provide the necessary hardware and infrastructure.

So you can see that the role is as risky as it is beneficial and it is your decision whether you are willing to take such risks or not.