The Solution of SofaSwap Cross-chain Bridge, A Vertical Extension of Multi-chain Ecology
Ⅰ. Isles and Cross-chain
Blockchain world, which is composed of one public chain system after another, is characterized by decentralization, point-to-point, openness, transparency and irreversibility. In a single blockchain system, it can also reflect the characteristics of borderless, and users’ behaviors such as transactions are not restricted by geographical factors. But there will always be clear boundaries between different blockchain systems.
Blockchain systems are essentially islands in between. First of all, from the perspective of data, it is difficult for the blockchain system to actively obtain the required data from the outside. For example, an insurance protocol deployed on Ethereum requires external data transmission, such as constant feeding by the predictor, in order to ensure accurate judgment of the smart contract. Similarly, the island effect is reflected in the circulation of assets.
In essence, assets between heterogeneous blockchains, due to structural differences between systems, do not really flow across chains. For example, an ERC-20 standard asset will not be “Cross-chain” to HECO in a direct way. Therefore, in order to break the barrier between the chain and the chain of assets difficult to “Circulate” each other, often in the form of indirect cross-chain.
As the main battlefield in the early crypto asset world, Ethereum has extremely rich asset types and liquidity. Many emerging ecosystems also need the support of Ethereum assets due to poor asset richness in the early stage. With the rise of DeFi, it further accelerates the liquidity between crypto assets, such as stablecoins, cross-chain support between major cryptocurrency, etc. As a safe, efficient and low-cost cross-chain solution that supports heterogeneous blockchain, cross-chain bridge has been widely used gradually.
Ⅱ. Cross-chain Bridge
The understanding of cross-chain Bridges is not complicated. Modeled, a cross-chain bridge is more like a hub linking two heterogeneous blockchains and building a mapping of the same asset or data between the two systems. Specifically, a cross-chain bridge builds a connection that transfers tokens or data between blockchains. Two chains can have different protocols, rules, and governance models that are called heterogeneous blockchains, and cross-chain Bridges provide a compatible way to safely interoperate between the two.
When an asset crosses a chain through a cross-chain bridge, it usually goes through three steps: deposit, update the account balance and withdraw. So let’s say we deposit asset A between chain 1 and chain 2, so first we deposit asset A in the bridge, and then asset A will be issued on the target chain. Upon receipt of the User Asset A deposit, the bridge will update the account balance, and the bridge will be notified of the new account balance information and used to facilitate the withdrawal.
At the time of withdrawal, users can withdraw assets from the bridge based on their balance on another system, where the tokens issued will be burned or deposited in the bridge as petty cash.
Compared with Cosmos and Polkadot, which provide a more dedicated blockchain cross-chain solution, such systems with relays and other cross-chain solutions require the blockchain itself to be natively plugged in. As a result, networks such as Cosmos ecology, Polkadot ecology, Ethereum and Bitcoin cannot communicate directly because they are heterogeneous systems. The advantage of cross-chain bridges is that they are more flexible and theoretically capable of “Bridging” all blockchain systems, as well as improving the scalability of individual protocols, projects, and tools to optimize the flow and use of assets on their chains. For example, as a developer on Ethereum, when the GAS cost of Ethereum is high, assets can be transferred to other chains such as HECO, BSC and other low-cost chains through cross-chain bridge for testing.
Ⅲ. Cross-chain Bridge Solution
Many cross-chain Bridges are applied to some specific assets, such as WBTC. Bitcoin was “cross-chain” to Ethereum in the early stage through cross-chain Bridges, so that BTC can be perfectly integrated into many DeFi protocols.
In addition to mapping Bitcoin to Ethereum chain, there are other practices that started early on like RSK, which is committed to mapping Bitcoin to other chain. It is characterized by the fact that RSK is a multi-organizational bridge, with a set of fixed independent parties keeping the locked funds and carrying out cross-chain mapping of Bitcoin through an alliance.
Besides the old cross-chain bridge systems mentioned above, XPollinate (only supports cross-chains on Polygon, BSC and xDAI chains) and Popsicle (only USDT cross-chain Bridges) are also well-known cross-chain Bridges for specific assets in the industry.
Renbridge also focuses on the old public chain cross-chain bridge, which is the cross-chain between traditional public chain such as BTC and smart contract platforms such as Ethereum and BSC. Renbridge includes developer oriented RenVM and user oriented Renbridge. Renbridge is based on the fact that users can directly cross-chain native assets such as BTC to smart contract platforms via Renbridge, thus freeing up liquidity of assets between blockchains. At present, Renbridge can only realize the cross-chain of the four public chain assets, BTC, BCH, DOGE and ZEC, to Ethereum and BSC. However, the use of Renbridge requires the node to pledge REN tokens, and the overall use cost is high.
In DeFi era, many DEX built cross-chain Bridges by themselves such as MDEX, which only FEI, TRIBE and SHIB can be cross-chained from Ethereum to BSC and HECO. Although MDEX has a large transaction volume, the overall support of cross-chain Bridges is still relatively low.
At present, Poly Network’s cross-chain bridge solution enjoys the highest degree of certainty in the industry. Poly Network is not limited to the cross-chain of assets. It can not only realize the cross-chain of homogeneous and non-homogeneous tokens (NFT), but also realize the cross-chain of any information between heterogeneous chains, thus maximizing the value transfer capability and application scope of blockchain. Poly Network solves the technical difficulties such as large differences in algorithms and underlying architectures among various block chains, unguaranteed cross-chain information security, and low execution speed of cross-chain transactions. It also helps ecological member chain to access different underlying platforms quickly, conveniently and at low cost, and supports application scenarios with transaction consistency requirements.
Although multichain.xyz is a more comprehensive cross-chain solution of the same type, compared to Poly Network cross-chain Bridges, the multichain.xyz bridge can realize assets directly cross-chain on BSC and HECO, whereas Multichain.xyz bridge usually requires the routing of Ethereum. Therefore, Poly Network is better in terms of overall cost and efficiency.
Ⅳ. SofaSwap’s Poly Network Cross-chain Bridge Solution
At the beginning of June, SofaSwap, which takes derivative play method as its positioning, reached a deep cooperation with Poly Network, and carry out deep cooperation in the field of cross-chain assets. Through Poly Network to provide the underlying cross-chain technical support, SOFA will achieve cross-chain communication in ETH, BSC, HECO Network, cross-chain transactions can be achieved.
First of all, from the perspective of the cross-chain development of Poly Network, Poly Network cross-chain bridge has supported ten heterogeneous chains, which are Bitcoin, Ethereum, NEO, Ontology, BSC, HECO, OKExChain, Elrond, Zilliqa, Cosmos-SDK. This also means that SofaSwap in the early online stage can through Poly Network cross-chain bridge to achieve their own ecological asset richness, and ensure SofaSwap trading depth and liquidity.
From its own characteristics, SofaSwap is positioned in the derivatives sector. SofaSwap has pioneered the trading model of DAMM model. In terms of functions, DAMM protocol supports Multi Asset Deposit, Free Leverage, Liquidity Pool and Smart Keeper.
With the support of Poly Network, and the increasing variety assets that SofaSwap supports, SofaSwap will also support more assets in the form of decentralized derivatives trading, constantly helping SofaSwap to enrich the variety of derivatives assets and the horizontal extension of future product lines.
As a derivative oriented DEX, it provides users with leverage and contract and other mainstream derivatives playing methods. SofaSwap supports all kinds of assets, including low-liquidity assets and unfashionable assets, as collateral for derivative play. With the overall volatility of the market, SofaSwap will be able to “Revitalize” many of the less popular assets, providing liquidity and actively driving the market. Poly Network will allow users to cross-chain their unpopular assets of different standards to SofaSwap in the form of cross-chain bridge to improve the utilization of assets and further improve SofaSwap’s ability to end market illiquidity in Bearish.
SofaSwap Ecology uses SOFA token as an ecological token to play the role of governance and equity tokens. It is worth mentioning that SOFA token issuance total of 3 billion (ETH, HECO, BSC on each issue of 1 billion), and through Poly Network cross-chain agreement to achieve circulation total constant 1 billion, never increase, which ETH locked 600 million, circulates 400 million; HECO locked 700 million, circulates 300 million; BSC locked 700 million, circulates 300 million. Therefore, for SofaSwap, Poly Network can not only provide SofaSwap with rich asset types and liquidity, but also help SofaSwap layout multi-chain ecology and serve as the adjustment hub, so as to realize the ecological intercommunication of SofaSwap on ETH, BSC and HECO, and lay the foundation for the future expansion of SofaSwap’s ecology.
In general, Poly Network, as the current whole-plate cross-chain bridge solution, is suitable for DeFi. Through the integration of SofaSwap and Poly Network, SofaSwap will continue to realize the multi-chain ecology and the multi-dimensional extension of derivatives ecology, making up for the deficiency of the overall layout of DeFi derivatives plate at the same time, but also for the whole field of cold assets liquidity enable to provide a foundation.
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