At a time when decentralized finance (DeFi) protocols have seen a significant outflow of funds from the market, maintaining liquidity has become even more of a challenge. Liquidity plays a critical role in the DeFi ecosystem, and many protocols have come up with various new solutions over time to keep liquidity pools topped up.. The latest trend in the liquidity market focuses on cross-chain solutions.
Many experts believe that cross-chain solutions are the future of DeFi, and Symbiosis Finance, a liquidity protocol, has come up with its own stablecoin-based cross-chain liquidity solution. The liquidity protocol uses stablecoins to ensure that liquidity providers (LPs) do not incur any impermanent losses.
Nick Avramov, the co-founder of Symbiosis, told Cointelegraph that they have secured initial liquidity from the likes of Binance Labs, Blockchain.com, Amber, and a few more, and are hoping to get more LPs once they reach a transaction volume of around $100M.
Speaking about the importance of using stablecoins instead of different crypto assets, Avramov explained that using stablecoins not only helps eliminate impermanent losses, but also ensures seamless transactions across different blockchain platforms. This allows one-click trading. Avramov explained:
“We enable native asset swaps, not just pegging an illiquid USDTxyz.”
Symbiosis Finance supports cross-blockchain swaps that allow the generation of EdDSA and ECDSA keys. This effectively means that anyone can trade, say, an ERC-20 token for Solana, Polygon, or other crypto assets developed on Binance’s smart chain. Speaking of the future of Web3, Avramov said:
“The pursuit of interoperability is vital to increased adoption, which is why cross-chain and multi-chain solutions are the very building blocks of the Web3 economy.”
The liquidity provider has also paid special attention to the interface to ensure that the user on the front end gets a smooth experience. The protocol eliminates the need to switch between complex virtual networks while exchanges are taking place. All these processes are done on the back-end using smart contracts.
When asked about the network security aspect, bearing in mind that cross-chain platforms have been the target of criminals lately, as some of the biggest thefts have taken place on cross-chain protocols. Avramov said that security is one of their top priorities, and that they have already passed multiple audits from established companies.
Symbiosis Finance secured a strategic investment from Binance Labs in early February this year and launched the mainnet beta a month later in March. The protocol has achieved multiple associations and has been integrated by various platforms.
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