Improving dApp Onboarding with Instant Cross-chain Transfers
DApps cannot exist within siloed ecosystems of different chains. Web3 needs to be chainless.
Blockchain maximalism and minimalism aside, crypto has always been multichain. The space is entropy positive, and network proliferation will continue its stride in the future.
As one chain’s dominance diminishes over time for a number of reasons, new innovations rise in its wake; each chain supports its own novel applications, users, distributions, security models, and design trade-offs.
As it stands today, there is a flipping of progression happening in web 3 — dApps are being innovated on and built rapidly… a bit too rapidly for the blockchain infrastructure to catch up. This leads to race conditions, including congestion, high gas fees, latency, and connectivity issues for the end-user.
Many leaders have expressed concern over the L2 ecosystem showing signs of amphoteric fragmentation — a double edge sword of scalability. A more zoomed-out view paints a clearer picture — L2, app-chains, substrates, rollups — have conceived a degree of scalability, but they also created silos.
As such, the phenomenon of “multichain — ing” nearing escape volatility presents several caveats for the developers as well as the end-user —
Going multi-chain can increase friction for the end-users as they would now need to bridge assets, reconfigure wallet connections, manage native gas tokens, and master new user interfaces. On the protocol side, liquidity dilution, slippages, and token depreciation due to the lack of utilities add to the nuance of going multichain.
Interoperability stacks, more importantly, cross-chain bridges can decode this mortal affliction for a more seamlessly connected Web 3.0
Exodus: Out of Silos, Into Interoperability
Cross-chain bridges form the very basis of this interoperable multiverse. They enable users to access new platforms and utilities and developers to collaborate to build hybrid functionalities. More specifically, bridges can dramatically improve the productivity and utility of assets previously confined to one monolith.
For lack of a better explanation — for the end-user, like me and so many of our other Biconauts — money is money, and unconnected/siloed money is even less valuable than store credits. Key takeaway — interoperability enhances the value of an asset.
Lastly, more than a planned formulation Web 3 is more of a spontaneous emergence — for its applications to thrive — the infrastructure should be pluggable and composable. A cross-chain bridging solution is a significant piece of infrastructure lego that will power Web 3 as efficient cross-chain communication can truly extend a chain’s utility beyond capacity.
And that is why we engineered — Hyphen: Web 3.0s strongest, fastest interoperation catalyst!
We see a future where bridges and middleware are simply just invisible tech working their magic in the background while you engage with the dApps you love! We envision a user experience where every bridge remains censorship-resistant, yet the underlying complexity remains hidden from the end-user. That’s why we are already taking the first step at Hyphen, with a clean, frictionless, and straightforward UI.
Hyphen — Quarterbacking Accelerated Interoperability
There are a lot of players in the cross-chain bridge markets. However, there are equally as many engrossing arguments for why Hyphen has the most robust and future-proof design space. Let’s look at five of the key parameters:
Capital Efficiency
Rest of the cross-chain bridging market:
Liquidity platforms require cross-chain volume to aid in the platform’s development; however, a high volume of transactions in one direction can dry up the liquidity on the opposite side. This disturbance in equilibrium increases the risk of failed transactions, which our CTO explains in great detail👉 Here!
A single pool only leads to an increased surface for attack vectors and capital inefficiency. Validators are often left to carry out the rebalancing of these pools, which gives rise to multiple layers of fees to compensate nodes and liquidity providers.
Hyphen:
Hyphen maintains liquidity on both sides of chains. Liquidity pools are mutually exclusive and operate independently of other pools on other chains, and they don’t need to know the state of pools on other chains. Suppliers provide liquidity to these pools and enjoy LP fees from user transfers. Automated underlying rebalancing leads to a unified pool and just in time liquidity.
This prevents a potential state of imbalance in liquidity pools and ensures that the bridge can scale with adoption. Additionally, it lends Hyphen the capacity to handle large, frequent, and lightning-fast asset transfers and maintain a smooth trading experience (low slippage and high capital efficiency).
Our dynamic fees model is a core capital-efficient proponent that incentivizes users to rebalance the liquidity pools during states of disparity. The model helps mirror liquidity pools between the source and destination chains while ensuring the maximum degree of decentralization.
Consider the following two scenarios to understand how liquidity pools in different states are mirrored efficiently:
Scenario #1 — When assets are transferred between a source chain with higher liquidity to a destination chain with lower liquidity. In this case, the dynamic fee is relatively higher, as the state moves farther away from equilibrium.
Scenario #2 — When assets are transferred between a source chain with lower liquidity to a destination chain with higher liquidity. In this case, the dynamic fees are relatively lower, encouraging rebalancing as the state becomes closer to equilibrium.
When a user supplies principal to the pool with lower liquidity, they receive a percentage of the incentive pool as a reward. Hyphen’s catalytic effect from the rebalancing and dynamic fees model creates a flywheel effect of extra incentive and deeper liquidity with every execution. This, in turn, reduces slippage, incentives user-onboarding, and drives utility.
Bonus — Hyphen’s rebalancing bot generates arbitrage trade opportunities beyond those produced by general market participants. Arbitrage opportunities that are naturally produced by the market are unpredictable. The Rebalancer bot’s main purpose is to provide a predictable, routine force that generates arbitrage opportunities for Hyphen arbitrageurs to produce volume. Thus, any period of low arbitrage opportunity is guaranteed a minimum rebalance, ensuring a predictable price spread.
Continual liquidity growth > consistent and fast cross-chain transfers > anti-dilutive LP rewards = hyphen trifecta!
Speed and Instant Finality
Rest of the cross-chain bridging market:
Instant finality entails that before the transaction would resolve on the source chain, the cross-chain transaction will first clear on the destination chain. Due to the possibility of concurrent calls from multiple chains, there is no guarantee at submission that transactions can go through at a specific price. This adds to the friction around reverting/failed transactions.
From the user’s point of view, the optimization endgame of the cross-chain bridging depends on a smooth cross-chain experience: whether the cross-chain speed is fast enough, whether there is an upper transfer, whether it can achieve a one-button cross-chain, whether it helps users reserve/settle gas fees, whether the assets obtained are common assets of the destination chain, etc.
Hyphen:
Hyphen offers truly instant cross-chain transfers thanks to its unique binary liquidity pool model. It achieves fast finality as transactions on the destination chain are instantly cleared before resolving on the source chains. This means that when a user makes a transfer, Hyphen instantly transfers tokens on the destination chain after accepting the deposit on the source chain.
Instant cross-chain transfers also unlock new possibilities for blockchain-based games with greater interaction density and increased microtransactions. In fact, Hyphen is already helping shape new in-game economies for Sandbox, FearNFT, ZED_run, and more!
Here’s how Hyphen made a difference for ZedRUN, a virtual horse racing platform:
Read the full article👉 Here!
Native Assets
Rest of the cross-chain bridging market:
Typically existing cross-chain solutions mint wrapped assets on the destination chain and not native assets. In theory, the wrapped assets are backed 1:1 by locked assets on the destination chain. However, the wrapping of assets generates an undesirable trade-off between capital efficiency and decentralization.
Why are wrapped assets suboptimal for bridging? Because it is non-intuitive and cumbersome as it requires users to bridge and then exchange the wrapped asset for the native asset
Moreover, wrapped assets issued on the credit of the second protocol are constantly open to hacks and depegging, which further limits the confidence and use case of these assets.
Hyphen:
Hyphen does not rely on intermediate or wrapped tokens to execute bridging. Instead, it allows users to transfer native tokens across supported chains. Hence, it is engineered to support high liquidity multi-chain assets efficiently and securely.
Furthermore, the attack surface dramatically dampens systemic risks by moving away from asset wrapping, reinforcing asset security.
Value Accrual
Rest of the cross-chain bridging market:
Most cross-chain bridges suffer because of poor crypto-economics — as they often are only used as governance tokens. Very few tokens can be staked for additional yields, among other utilities. For such bridges, we can observe a similar pattern, TVL appreciation does not beget token price appreciation.
Hyphen:
Besides maintaining absolute parity among Hyphen liquidity pools, it also increases $BICO (native) token utility, granting more options and power to token holders in a compliant and beneficial way.
LPs can earn $BICO rewards for providing liquidity to the Hyphen pool. Currently, Hyphen/Binance pools are active, and users can provide liquidity for:
BNB/wETH, BNB/USDC, BNB/USDT, and BNB/BICO.
You can provide liquidity and start earning rewards in 20 seconds! Don’t miss out, check it out👉 Here!
We’re also working on creating a more holistic approach to token utility and moving toward developing the token as an operational token, where it is used for all three facets — including Hyphen.
Security Risks
Rest of the cross-chain bridging market:
There has been a higher degree of concern regarding the crypto-economic security limits of cross-chain bridges. As argued by Ethereum’s founder — Vitalik Buterin — the systemic risks posed by cross-chain bridge security increase in parallel with adoption.
Hyphen:
TVL is a sticky metric in Web 3.0 — in one camp, it has become ubiquitous to the Cambrian explosion of DeFi and Web 3.0 dApps. As the number grows bigger, it can also draw more eyeballs (the scary eyeballs, the red, devilish ones), from malicious attacks, including 51% attacks.
Hyphen reduces risk through increased capital efficiency -it can execute the same volume of cross-chain transfer as a bridge holding colossal TVL, but at a lower risk. Native token bridging instead of token wrapping and dynamic fees for robust active rebalancing are some additional parameters that work cohesively as prohibitive mechanisms for potential security cracks.
The Ultimate dApp Growth Tool — Hyphen Widget
Going back to the original narrative — the hyphen widget reinforces a plug-and-play cross-chain experience. The widget is smart and fully configurable within 3 mins.
- Instant cross-chain Transfer: inherits the ability to transfer assets across chains in seconds
- In-dApp UI offers a clean, seductive, ready-made UI that your users will love!
- Gasless for free transactions: integrate gasless to provide your users with free transactions by covering negligible gas fees
- 24/7 dev support: Dev roadblock is frustrating, but we’re available round the clock to make it a breeze!
Check the Hyphen widget👉 Here!
The Real Winners of Scalability Wars!
In the long run, we believe that Hyphen will usher in a new dynamic infrastructure lego that promotes positive-sum economies, higher capital efficiency, mobility, and enables novel business models.
On a different note, it is apparent that the multi-chain ecosystem will most likely follow a power-law distribution. At Biconomy, we adopt the frame of collaboration over competition, believing it to be the more powerful stance.
And while all bridging solutions are key to abstracting friction from the Web 3.0 multiverse, the real winners of scalability/interoperability wars will be the end-users who can enjoy the benefits of each player within the tapestry without any high cost and low throughput downsides!
