Unpacking the XCVM use cases: An overview — Pt. 1

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Composable Finance

4 min readAug 31, 2022

The XCVM’s primary objective is to eliminate the obstacles that developers face when building and deploying cross-chain solutions. The XCVM will enable user-centric applications that abstract the development process and simplify the user experience. With this in mind, our Founder and CEO, 0xbrainjar published an article revealing the potential use-cases of XCVM-enabled applications and protocols.

These protocols can be broadly divided into 4 categories; aggregation, arbitrage, UX & developer tooling, and onboarding. To expand, here is the first post of a three-part series where we will highlight each category, and go into further depth.

How does the XCVM work?

The XCVM enables the creation of cross-chain protocols through the advent of satellite smart contracts. Satellite contracts are a novel concept, which is covered in detail here. In short, satellite contracts refer to the necessary gateway, router and interpreter instances that come together to form the XCVM’s implementation on each blockchain. These satellite contracts allow for the deployment of natively cross-chain protocols as they are able to translate the XCVM’s generalized instruction set into specific commands for specific blockchains.

XCVM use cases

The result is a framework which will allow developers to take advantage of cross-ecosystem opportunities across DeFi for the first time. The core applications which are made possible by the XCVM are as follows:

Aggregation

An aggregator in DeFi is a protocol that combines multiple applications into one. Traditionally, this is only possible for applications on the same blockchain. Through the XCVM, developers can build aggregators that span multiple blockchains. This will allow end users to receive the best rates for common DeFi functions such as; yield farming, lending, and borrowing, across DeFi at large.

Arbitrage

Cross-chain arbitrage is another lucrative opportunity that XCVM developers will be the first to explore. Arbitrage is the simultaneous buying and selling of assets to take advantage of a discrepancy in price. Similar to aggregation, if a developer tries to automate this process today, it would only be possible to leverage arbitrage opportunities on a single chain. Through the use of the XCVM, however, developers will be able to take advantage of price discrepancies across all connected ecosystems.

UX and developer tooling

In addition to providing the core infrastructure required to facilitate cross-chain applications, Composable is also actively developing tooling to make the process as seamless as possible. Some of these tools include:

Composable’s Name Service (CNS), an abstraction of our identities system, will allow developers to use a single name across interpreter instances
Cross-chain data analysis via Apollo and Pablo’s integration with Subsquid
The proxy wallet, allows users to connect their Polkadot, EVM and Cosmos-based wallets to interact with all ecosystems through a single dApp
Our cross-chain stepper, which developers can use to visualize the status of cross-chain user transactions
A cross-chain block explorer

Creating a seamless cross-chain user experience starts by providing developers with the tools they need to make this a reality. This is why we have prioritized this tooling at Composable Finance.

Onboarding

Another vital use case of the XCVM is onboarding. The XCVM will allow for the unification of applications across many existing ecosystems. At Composable Finance we believe that people don’t resist technology, they resist complexity. Through this design principle, we have built the XCVM and the other foundational DeFi primitives pallets in active development to address this UX issue head-on. They fully leverage DeFi’s complexity for its value, but abstract it as needed for a seamless user experience. The applications we are building at Composable, as well as those which will be created by developers who leverage the XCVM will enable a seamless cross-chain experience for users. As such, this will allow for the creation of applications that provide the best value across ecosystems and allow more users to be onboarded into the DeFi space, rightly tapping into our vision of composing DeFi for mass adoption.

In our next post, we shall be covering aggregation, arbitrage and institutional scale onboarding in more depth.

For more information about Composable and how it is architecting the unified DeFi landscape of the future and composing DeFi for mass adoption, check out our socials: