In the first quarter of 2020, with the emergence of liquidity mining, the DeFi industry experienced explosive growth. The industry's high returns and new applications attract investors, developers and entrepreneurs. Since then, the total value locked in DeFi has grown tremendously.
Ethereum has been the go-to choice for DeFi, but as more and more people jumped on the bandwagon, scalability issues with the ecosystem began to emerge. High fees and network congestion made ethereum almost unusable for retail users, so some new ecosystems emerged.
Popular ecosystems include Binance Smart Chain (BSC), Fantom, Polygon, and xDai, which are EVM-compatible and enable easier integration of DeFi projects, allowing users to opt-in when browsing their respective decentralized applications (dApps) Which blockchain/ecosystem.
Going multi-chain: is it that easy?
While these new ecosystems offer significantly lower fees, shorter transaction confirmation times, and additional features, Ethereum is still the first choice for most DeFi projects, mainly due to the high liquidity and transaction volume on the network .
The hype surrounding cross-chain infrastructure is justified, as this concept is the ultimate goal of blockchain technology development, enabling interoperability of all chains. Some current forms of cross-chain technology provide asset interoperability. In contrast, some others have proposed communication protocols to enable communication between blockchains, as well as new system designs and operating modes to support access to more blockchains.
Migrating to an alternative network can be hindered by several factors for projects and users. However, the most common problem is the lack of liquidity and transaction volume in these new ecosystems. The project itself tries to provide a solution to its community through a cross-chain bridge. However, this system has multiple flaws.
While the scalability and connectivity provided by cross-chain bridges is indisputable, issues intertwine. For example, Plasma and sharding, two of the most popular scalability solutions for Ethereum, require running parallel chains (“parachains”) or chain splits (“shards”), which may communicate with each other. These solutions, while potentially revolutionary, have long deployment times.
Furthermore, while it is possible to communicate between two different smart contracts running on two separate chains, the illiquid nature of DeFi protocols makes the solution nearly impossible to work.
These shortcomings are common, result in a less-than-satisfactory user experience, and present a barrier to entry for users. However, the following projects have started using cross-chain functionality on different blockchains.
Wormhole (Solana)
Wormhole enables current projects, services, and communities to seamlessly transfer tokenized assets between different blockchain networks, allowing them to take advantage of Solana's high speed and low cost.
Interoperability remains a paramount goal as it enables the most efficient use of resources and unleashes network effects. Wormhole uses the guardian function, which is a decentralized cross-chain oracle operated by a group of node operators, including top Solana validators and other ecosystem participants whose interests are aligned with Solana.
Wormhole allows non-native assets to enter Solana's thriving DeFi ecosystem faster. Wormhole can help projects gain more cross-chain liquidity.
Coin98
Coin98 creates open financial infrastructure because there is demand for it all over the world. Coin98 is a one-stop solution for decentralized banking, cross-chain exchange, staking, yield and liquidity mining.
Users can choose from over 20 different blockchains to access these features, made possible by Space Gate, a cross-chain bridge that allows exchanges and transfers between different networks.
Coin98's liquidity and DeFi solutions leverage numerous blockchains to generate deep liquidity for users while ensuring they receive the best prices when trading tokens. According to the platform’s statistics, more than 284,000 users have generated more than $216 million in transaction volume through 488,000 transactions.
Anyswap
Anyswap is a fully decentralized cross-chain exchange protocol with an automatic pricing and liquidity system, based on Fusion DCRM technology. You can use AnySwap to trade tokens between any blockchain that supports the ECDSA or EdDSA encryption algorithm, which includes more than 95% of the chains, including BTC, ETH, USDT, XRP, LTC, FSN and others.
Anyswap provides users with three major cross-chain advantages:
Users can deposit any currency into the system and create decentralized wrapped tokens.
Users can switch from one coin to another at any time.
Liquidity providers are able to add and remove liquidity from swap pairs. The provided liquidity is the basis of the program's pricing mechanism.
Kylin
Kylin Network is a project that aims to drive the data economy using the Polkadot network. This Polkadot parachain received funding from the Web3 Foundation later in 2020 and will launch its mainnet next year, while continuing to pursue partner network integrations, Kylin Network will include data analysis tools, an advanced decentralized data feed protocol , an open market and native governance token for data exchange and pricing.
Interestingly, the Kylin cross-chain platform has been cited as a possible solution to election-related conflicts in the United States.
Cosmos
The Cosmos blockchain is the most underrated blockchain interoperability initiative.
A number of initiatives are working to bring blockchain projects into focus. Developers have released a software development kit that they claim will solve scalability and interoperability issues for blockchain applications. Cosmos is a decentralized network of independent parallel blockchains that relies on the Inter-Blockchain Communication (IBC) messaging protocol to facilitate conversations between external networks.
The Cosmos blockchain system consists of several autonomous blockchains called Zones, which are linked by a central blockchain called Hub. Tendermint Core powers each Zone and supports a high-performance, consistent, and secure PBFT-like consensus engine. To improve interoperability, the Cosmos Hub connects blockchain projects through an inter-blockchain communication protocol.
Graviton
Cross-chain technology aims to solve problems related to the DApp and DeFi fields. With Graviton, illiquidity and other barriers to entry are greatly reduced.
Graviton is a cross-chain connection technology that allows tokens to interoperate between different blockchains. The core idea behind the technology is to serve as a liquidity incentive tool for wrapped asset CEX tokens. This is to create a seamless cross-chain experience. Essentially, Graviton is made up of multiple blockchains.
Graviton's positioning for itself is simple: a unifier that solves the fragmentation of the DeFi field. It is an accessible, frictionless, user-friendly infrastructure that provides bridge aggregators, cross-chain exchanges, and liquidity providers rewarding liquidity mining products.
Graviton brings together communities of various blockchain projects such as chains, automated market makers (AMMs), farms, and tokens. It provides them with governance tools to enhance the liquidity and yield creation of preferred wrapped digital assets on their target chains.
What does Graviton offer?
On the surface, Graviton appears to be just another project in the DeFi space. But it is a unique project in the problems it solves.
First, Graviton maintains a rich infrastructure for cross-chain liquidity mining by utilizing best-in-class existing cross-chain bridge solutions. Graviton will have its own giant cross-chain bridge, which will be a bridge aggregator, including trustless bridges such as multichain.xyz, RenVM, and the Susy protocol. These bridges are a necessary part of Graviton's multiple subsystems, and they will also help enable seamless and fast use of cross-chain bridges.
Second, the emergence of competing blockchains and the widespread adoption of cross-chain technologies are critical to the growth of the DeFi space. As such, built into Graviton’s infrastructure is the governance token GTON, which helps bridge the divide in the DeFi space.
GTON is not just a governance token; it acts as a multi-chain relay token, connecting AMM DEX liquidity on multiple chains, improving the liquidity of initially illiquid assets such as wrapped, CEX and more recently tokenized enterprise. GTON can be used to create a permissionless farm of Liquidity Providers (LPs) to increase the liquidity of any asset on any supported chain.
Furthermore, the excellence of Graviton is that it helps to increase the efficiency of wrapped tokens and multi-chain relay liquidity. With Graviton, barriers to entry and interoperability are limited. The community can quickly transfer tokens within the ecosystem. The Graviton Catalyst program rewards liquid wrapped tokens, allowing various tokenized blockchain projects to scale to non-native networks.
The goal of Catalyst is to help tokenized blockchain projects such as protocols, AMMs, and farms get more traction by rewarding liquidity, and can even scale to non-native networks if they so choose. Catalyst seeks to engage the community of participating projects in the short and medium term, regularly incentivizing the liquidity bootstrap of newly minted wrapped tokens by providing additional LP rewards.
The Catalyst program is only two to three weeks long, and LP reward distribution points are reweighted weekly. Under the Catalyst program, 12% of GTON supply is used to reward liquidity providers. Community members can stake their GTON for governance, nominate their favorite projects for the Graviton Catalyst program, and increase staking returns on LP tokens.
epilogue
With the expansion of the DeFi market, there seems to be no shortage of new DeFi projects on the blockchain. However, the diversity of blockchains makes it difficult for ordinary users to scale from chain to chain. Protocols like Wanchain, Cosmos, Graviton, and others bring coordination, transparency, and security to crypto markets and liquidity pools.
Source: https://www.cryptodaily.co.uk/2021/09/cross-chain-projects-in-2021
Disclaimer: Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, which has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.
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