Cross-Chain Tech & How It’s Transforming Defi
Ever wondered why we are always chirpin’ on about interoperability? Allow us to explain.
Each blockchain is like an isolated island. If you’re a Magpie, you could simply flap your wings to fly between them. But there are still a lot of chicklings yet to learn how to fly, who might need some extra support.
In this post, we fill you in on the most “egg-citing” cross-chain innovations transforming DeFi today. Let’s begin.
What Is Cross-Chain Technology?
Cross-chain tech refers to a crypto protocol that exchanges data across multiple chains, usually using bridges or an automated messaging service known as a relayer. There are many ways cross-chain protocols use relayers, but they generally work as a type of blockchain network capable of communicating between multiple other blockchains.
Each blockchain has different rules, and validators only accept transactions that follow those rules. Cross-chain technology is all about finding workarounds to this blockchain rules issue. Some protocols act as infrastructure layers for developers to create interoperable blockchains, while others focus on moving tokens between blockchains with different rule sets.
A Look at Emerging Cross-Chain Protocols
Next, let’s look at some of the most brilliant cross-chain protocols on the market today.
Wallets
Currently, wallets are one of the leading causes of poor user experience in DeFi. To compete with TradFi, DeFi must provide at least a comparable user experience, if not better.
The purpose of cross-chain tech is to build a seamless crypto experience. Many crypto users would prefer to avoid managing multiple wallets, using various bridges, and swapping in and out of wrapped tokens.
But with multi-chain wallets like XDEFI, Ledger, and Trust Wallet, you can manage your crypto from multiple blockchains. Some wallets even facilitate cross-chain swaps from the dashboard, although you generally don’t get the best price. P.S. You know what bird to call if you want unbeatable prices!
Infrastructure Layers
While cross-chain wallets make moving and managing funds easier, infrastructure layers allow dApps on different chains to communicate. Protocols like Wormhole provide SDKs for dApps to leverage liquidity independent of their blockchain.
When projects deploy dApps with Wormhole, the Wormhole network connects the chains using relayers so they can transfer liquidity and data between the connected chains.
Bridges
Bridges are the ultimate multi-chain tool that allows you to transfer funds between chains. While bridges are not perfect, they serve an important purpose. That said, when you use Magpie, bridges work flawlessly!
How It Applies to Defi
Let’s look at how you can use cross-chain tech with Magpie to make your DeFi experiences more seamless.
Manage Everything From One Multi-chain Wallet
Manage your DeFi activity across multiple blockchains from one wallet, so you only need to learn one wallet interface, saving you time and effort. But for an even more epic DeFi experience, combine multi-chain wallets with Magpie for lightning-fast, hassle-free cross-chain swaps with the best prices.
Whether yield farming on Arbitrum or making swaps on BNB Chain, a multichain wallet combined with Magpie Protocol is all you need to succeed in DeFi.
*Cough, cough, humble brag.* As you may know from our Wallet Service blog post, you can track and manage your crypto balances with Magpie across all our integrated DeFi protocols.
Cross-Chain Solutions Seamlessly Integrate dApps from Different Blockchains.
Cross-chain solutions like Wormhole use modular SDKs allowing developers to build dApps on their preferred chain but can communicate with other Wormhole dApps.
In other words, Wormhole increases capital efficiency in DeFi and provides much more flexibility to users.
But why are we so big on cross-chain aggregation if infrastructure layers are already improving DeFi interoperability? Good question. Allow us to eggsplain (sorry — explain)!
Bridges
Liquidity is essential for DeFi. Most cross-chain liquidity is locked up in bridge smart contracts, but this can be a pretty inefficient way to utilise it. On the other hand, Magpie aggregates this cross-chain liquidity to consistently deliver the best prices while leveraging bridges as a cross-chain messaging layer to make swaps easier and faster.
Want to know more about how this works? Check out our blog post on aggregating bridge liquidity.
Why We Need Cross-Chain Aggregation
Wormhole is just one liquidity source; sometimes, the best price for a cross-chain crypto swap might be elsewhere. In search of the best price, we scour every bridge and DEX, so you can sit back, relax, and save to build a bigger bird’s nest.
And because Magpie is chain-agnostic, we work perfectly with multi-chain wallets to build the most seamless experience in DeFi, allowing you to switch between blockchains smoothly.
For instance, let’s say you use a multi-chain wallet, like Trust Wallet. You can manage multiple chains from one wallet, so you don’t need a second wallet to make a cross-chain swap with Magpie.
In other words, you can save time and headaches. With this in mind, Magpie is a DeFi tool unlike any other. There are countless benefits to using our app, all of which fix the ‘clunkiness’ of first-generation DeFi.
If you want to get your DeFi game off the ground, join our waitlist today before it’s too late: https://www.magpiefi.xyz/waitlist
