Decentralized finance on the blockchain is driven by the desire to break the chains of centralization created by traditional finance institutions. These are still early days for blockchain infrastructure building and most trade revolves around Centralized Exchanges, which continue to be considered the safest way to move funds from one chain to another. Therein lays the genesis of Decentralized Exchanges such as UniSwap — the need for non custodial, trustless smart contracts which enable a trader to buy and sell without losing control over their funds. As of February 2022, there exist around 360 decentralized exchanges collectively accounting for $70.24 billion in transaction volume that allow traders to swap tokens in a trustless fashion.[1] Such DEXs have captured approximately 12% of the trading volume that CEXs are generating. This market share has grown more than 50% in a year and a whopping 800% in the last two years.[2] As on date, the TVL of leading DEXs on various blockchains is approximately a follows:[3]
By late March 2022, about $37 billion of transaction volume has been captured by the above DEXs operating on the leading blockchains — a remarkable feat by any measure. A major roadblock preventing greater DeFi adoption remains the lack of compatibility between disparate blockchains. Some options do exist — there are ‘bridges’ such as Multichain or Wormhole. The manner in which they operate is often cumbersome. A user who wants to convert their BNB on the Binance Smart Chain to ETH on the Ethereum Smart Chain has to first lock in their BNB on one end of a bridge, ‘mint’ a synthetic token on the bridge (or buy a native token of that bridge), which transfers from one chain to another, and convert that synthetic token back into a native token on the target blockchain (ETH, in this example). This involves multiple instances of minting or swapping before a transaction attains finality. Additionally, users often face the challenge of requiring native currency on the recipient blockchain to account for the gas required to unwrap the synthetic token into its desired form. Cumbersome user experience hinders mainstream adoption, barring capital inflow to the ecosystem.
Notwithstanding these challenges, the TVL locked in the leading cross chain bridges has reached impressive levels:[4]
Substantial capital is flowing on cross chain infrastructure, be they bridges or swaps. This liquidity is growing rapidly and it is our intention to capture a percentage of that cross chain volume by leveraging the trading services on our platform. Such a proposition is not without precedent. Multichain (formerly AnySwap) is the leading cross chain swap as on date. One reason for its success is the sheer range of blockchains that it supports. Since its launch, Multichain has processed transactions worth $70.24b, of which $10.73b was in the month of March 2022, alone.[5]
We propose to construct and deploy a cross chain swap married with our proprietary lending protocol, architecture unlike any other in the small cap DeFi space. What sets us apart from existing swaps like Multichain or a bridge like Wormhole is our promise of delivering a seamless transfer experience for users from one chain to another. Unlike the prevalent cross chain bridges, our proposed Cross Chain Swap shall empower users to seamlessly convert any token from the relaying chain to any token on the recipient chain, with guaranteed instant finality of settlement. Notably, there is only one player in DeFi who also promises a similar cross chain transport protocol, being Stargate. Having said so, it is relevant to note that in raising $25 million in liquidity to undergird its cross chain protocol, Stargate auctioned off 100 million Stargate ($STG) tokens, all of which were sniped by a single entity, Alameda Research.[6]
To steer clear of such centralization, liquidity for our proposed cross chain swap shall be raised through our decentralized lending protocol. Holders of our native token will be permitted to ‘stake’ their tokens and offer its liquidity to a lending pool, which shall be leveraged by our Cross Chain Swap to execute a seamless native asset transaction from one blockchain to another. We intend to ensure a fairer distribution of tokenomics to enable the ordinary investor to become a stakeholder in the future of DeFi. In return for staking their tokens in our Decentralized Lending Protocol, holders of our native tokens will be repaid by way of stablecoin rewards arising out of the swap fees.
Our native Cross Chain Swap is not the end, but rather the beginning of development in the DeFi ecosystem that we intend to offer our users. The long term goal is for the Swap to be the first in a number of iterations of our innovative Decentralized Lending Protocol, one that shall enable like-minded developers to launch utility tokens by permitting holders to ‘stake’ and offer liquidity to fund the goals of individual projects (while deriving benefits in return). Our ambition is to make a tiny contribution towards steering the ship of DeFi back on the path of nurturing utility tokens which enrich this entire space. The innovations which we plan to offer to the participants of our trading suite and the DeFi community at large are unrivalled. They offer a lucrative opportunity to our token holders to secure a source of passive income in stable coin while hedging risk by leveraging our native Decentralized Lending Protocol. In doing so, we will enhance the utilitarian nature of the extant $SNIPE token, holders of which join us in embarking on a bold and adventurous journey at the very frontiers of DeFi.
[1] https://news.bitcoin.com/relatively-unknown-protocols-push-tvl-in-defi-above-the-200-billion-range/
[2] https://coinmarketcap.com/alexandria/article/top-decentralized-exchanges-dex
[3] https://defillama.com/protocol/ as on 26.03.2022
[4] https://defillama.com/protocol/multichain as on 26.03.2022
[5] https://anyswap.net/dashboard as on 26.03.2022
[6] https://en.ethereumworldnews.com/stargate-stg-spikes-116-6-since-alameda-research-snipe-all-the-tokens-on-auction/
