Crossing Horizons: The Significance of ShimmerEVM’s Bridge

With the upcoming release of the AAA bridge for ShimmerEVM, it’s important to emphasize its significance for the entire Shimmer ecosystem. The bridge stands as a paramount foundation, playing a pivotal role in expanding our ecosystem and reducing entry barriers for both new users and incoming assets. In this article, we explore the primary advantages offered by the bridge.

Stablecoins

Stablecoins are essential for managing risk in the volatile crypto market, offering a hedge against sudden price fluctuations. They play a crucial role in maintaining liquidity, addressing challenges posed by limited trading pairs and fragmented markets, and enhancing overall market efficiency. Additionally, stablecoins serve as a superior alternative to traditional fiat off-ramps, streamlining the process of converting cryptocurrencies and reducing fees. Their decentralized nature empowers users with an efficient means of transferring USD value within the crypto space, facilitating cross-border transactions and payments in DeFi ecosystems.

Presently, ShimmerEVM lacks a stablecoin. However, the introduction of the bridge will enable seamless integration for stablecoins like USDT and USDC into our ecosystem.

DEX liquidity influx

Liquidity is paramount for the optimal functioning of decentralized exchanges, influencing transaction efficiency and overall stability in a DeFi ecosystem. A robust pool of assets in liquidity pools ensures seamless trading without significant price fluctuations.

With the anticipated ShimmerEVM bridge, there’s transformative potential for an increased influx of liquidity into our ecosystem’s decentralized exchanges, such as Shimmer Sea. This development not only benefits individual investors and traders by reducing slippage (changes in the price ratio between two assets) but also enhances the broader DeFi landscape, providing access to other assets such as BTC or ETH and others.

Moreover, in a low-liquidity environment, the potential for impermanent loss (reduction in the value of deposited assets compared to simply holding those assets outside the pool) increases because the prices of assets in the pool can experience greater volatility.

The ShimmerEVM bridge’s role in boosting liquidity becomes a catalyst for attracting more users and projects to decentralized exchanges, creating a positive cycle of growth. Given their role as a fundamental pillar crucial for nurturing the robust growth of a Web3 ecosystem, increased liquidity is of major importance within decentralized exchanges.

SMR liquidity and volume influx

Compared to other DeFi ecosystems, the current daily trading volume of SMR stands at a relatively low level, approximately $250,000 over the last 24 hours. One of the primary contributors to this situation is the limited availability of funds or assets that can be readily traded or exchanged against the SMR token.

As discussed earlier, low liquidity poses a challenge to fostering a healthy Web3 ecosystem. Similarly, a low trading volume, reflecting the total number of actual trades, introduces risks. Elevating the trading volume of SMR can yield several enhancements, including mitigated slippage for traders, heightened market efficiency, and the creation of a more dynamic and accessible market for SMR.

It’s crucial to address both liquidity and trading volume concerns to fortify the overall vibrancy and resilience of the Shimmer ecosystem within the context of a healthy DeFi ecosystem. The implementation of the ShimmerEVM bridge is set to facilitate a more seamless exchange of funds and assets into SMR, thereby increasing the daily trading volume.

Expanded collateral options

The implementation of a bridge on ShimmerEVM marks a significant stride forward by introducing a diverse array of collateral options, including but not limited to BTC, ETH, USDT, and USDC. This expansion broadens the spectrum of available assets that can seamlessly integrate into the Shimmer ecosystem. Notably, these newly introduced tokens become accessible for utilization in various DeFi applications, with Deepr Finance being a prime example.

These expanded collateral options unlock extensive opportunities for lenders within the platform. They can leverage these additional collateral options to either generate passive income through lending or strategically borrow funds as needed. The enriched collateral pool not only enhances the versatility of the DeFi landscape but also contributes to the overall liquidity and functionality of platforms like Deepr Finance, reinforcing the interconnected nature of decentralized finance systems.

Lowering entrance barriers

The bridge will address a key challenge by simplifying entry into ShimmerEVM for users from other Web3 ecosystems. Currently, the process for newcomers involves multiple cumbersome steps:

1. Choose one of the limited centralized exchanges offering SMR tokens and make a purchase.
2. Download and install Firefly Shimmer, the official Shimmer wallet.
3. Transfer SMR tokens from the centralized exchange to the Firefly Shimmer wallet.
4. Bridge SMR tokens from the Firefly Shimmer wallet to MetaMask on Shimmer L2.

This complex onboarding procedure poses a significant barrier for new users, making it challenging to initiate their journey within the ecosystem. However, with the implementation of the bridge, many of these steps will become obsolete, ensuring a streamlined and user-friendly entry into the Shimmer ecosystem with funds and assets from various Web3 ecosystems.

Outlook

At Nakama, we are actively engaged in testing the upcoming ShimmerEVM bridge and are pleased to report substantial progress. From our standpoint, the AAA bridge represents the crucial missing element in the current ShimmerEVM ecosystem, and we eagerly anticipate its official release. Once it becomes available, we will follow up with another article providing comprehensive coverage of the bridge launch. Stay tuned for more updates.