Router Protocol: Unleashing Liquidity
The total combined market cap of all crypto currencies amounts to approximately $1.8 trillion. Unfortunately, this value is currently fractured across over 18,000 different crypto currencies. These liquidity islands were an inevitable part of crypto’s evolution but are a hindrance to its adoption. Currently, even among the Ethereum specific Layer 2s there are about $6 billion split amongst 14 different Layer 2 protocols. The blockchain space is suffering from an interoperability problem. There is no shortage of liquidity providers for Automated Market Makers (AMMs) and DeFi has become a staple of most Layer 1 blockchains. The internet of money should be ultra-liquid and hyper-transferable between persons, blockchains, and dapps. To realize this future, we need cross-chain infrastructure that can move value quickly, trustlessly, and for minuscule fees. The Router Protocol aims to be the backbone of cross-chain liquidity.
The Router Protocol is not only a bridge but a mechanism for cross-chain communication. Router allows for both token and message transfers across blockchains. This theoretically allows for the interoperability of smart contracts across multiple blockchains which would unlock DeFi’s full potential and allow dapps to be blockchain agnostic. Router could be the catalyst that meshes the various crypto islands into one crypto continent. Router plans to realize this reality by tapping into AMMs across blockchains while also keeping a reserve of assets to ensure every transfer of funds is done in the most efficient way possible. This is the Smart Order Routing method for crypto. Tapping into AMMs across multiple chains is a genius way to maximize Router’s bridgeable liquidity while negating the need to hold funds in smart contracts. The increased activity for liquidity providers of AMMs and Router’s ability to outsource liquidity is a win-win scenario. This relationship can move both ways. While Router is great for the end user who wishes to swap tokens or move them across blockchains; The Router Protocol is also extremely useful for dapps, AMMs, DEXs, and DeFi protocols. This means DEXs like TraderJoe which is on the Avalanche blockchain could implement Router into their yield farming protocols and capture value from multiple other blockchains. No longer would liquidity providers need to decide which blockchain to deploy their capital. They could pick one DEX and experience the entirety of the crypto market.
The Router Protocol mainnet launched in January of 2022 and now supports three blockchains: Avalanche, Polygon, and Binance Smart Chain. You can swap any token between these blockchains and pay minimal gas fees. Router protocol accepts $AVAX, $USDC, and $ROUTE as fee payment. When paying with $ROUTE users will receive a 50% discount. $ROUTE holders can receive a portion of transaction fees accrued by the protocol by running a validator node or providing liquidity.
Who is behind the Router Protocol?
The Router protocol was founded by Priyeshu Garg, Chandan Choudhury, Shubham Singhn, and Ramani Ramachandran in August 2020. Ramani Ramachandran and Shubham Singhn are CEO and CTO respectively. Garg and Singhn are both veteran software engineers who have been in the crypto space since 2017. Ramachandran is a smart contract expert and a long-time developer in the crypto space. Choudhury has an extensive background in traditional finance as a derivatives analyst and became the head of strategy at the India centric crypto exchange Bitpolo in 2019. Together they run Router Protocol and lead its employees. Router Protocol is backed by Coinbase Ventures, Alameda Research, Qcp Capital, Polygon and others not listed here.
Why Router Protocol?
It seems obvious that there is a need for a cross-chain bridge for the crypto ecosystem. There will be a premier cross-chain bridge that is both trusted and utilized by blockchain users and developers. The Router Protocol team has the network, financial backing, and technical ability to place their project into a keystone position allowing them to become the backbone of all cross-chain transfers. Router Protocol is already tapped into three major blockchains each with individual market caps of over $10 billion. This is just the start for Router as they plan to increase compatibility safely and steadily among blockchains.
Written by David Coryat, Crypto native and Analyst at Istari Capital LP.
This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this report constitutes a solicitation, recommendation, endorsement, or offer by Istari or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Please be advised that Istari Capital LP is invested in the project discussed in this article and/or in projects related to this article.
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