KingDeFi becomes the first Multi Chain Yield Aggregator to cross-chain 7 different blockchains (Polygon, Heco, Solana, Ethereum, Binance Smart Chain, Avalanche, Celo) maintaining circulating supply and total supply unchanged, and applying a multi-programming language approach across Solidity, Rust, Haskell and C++ in order to keep expanding to other chains in the near future.
In this article I am going to focus on bridge economics and technology.
Before describing some complex concepts in details, I advise all readers to have a look at our previous articles, where you can already find important informations and understand KingDeFi’s team vision.
What is a bridge?
A bridge is in practice a mechanism which allows the flow of tokens from one chain to another (and back).
Bridges are extremely important because they help projects to move across multiple chains without issuing a new token on a different mainnet (e.g. from BSC to ETH). With this practice you will always have only one token, one project, one supply but on multiple chains.
A lot of projects have preferred to issue a new token instead of using a bridge. This has been done because a large amount of crypto and DeFi investors are not educated about the token economics. As soon as they see a project on another chain, they buy in without asking themselves how this has happened and how this is managed in terms of token supply.
We believe that going multi-chain without a functioning bridge is bad practice which can cause strong arbitrage and inflation effects between the two tokens issued on two different chains.
Moreover, if you have one company, you should always have one asset representing it on multiple exchanges.
Why a bridge is important?
1. Inflation management
The bridge allows us to spread our current circulating supply across 7 (and soon more) blockchains without issuing new tokens on each chain. It means that instead of applying creative practices like burning we can now manage price inflation via re-distribution of rewards across different chains. If the project only work with one chain in order to attract investors, at a certain point price inflation will come as soon as the project run out of buyers.
Most of the projects start then to buyback and burn or logically decrease APR% so that price impact is not affected. In a nutshell they try to apply creative financial practices in order to solve a very simple problem: you finish buyers… and so you buy yourself and burn???
At KingDeFi we strongly believe that this approach is not smart, instead we decide to build a bridge, which means in two sentences:
Don’t buyback yourself, just open doors to other chains and find new buyers
Don’t burn, just let 7 different chains to “digest” the circulating supply that one chain alone cannot manage
2. Avoiding arbitrage
What would happen if a project issued a new token on a different blockchain without a functioning bridge?
- You would be minting new tokens which would increase the overall aggregated circulating supply of your project.
- Investors would arbitrage between the two tokens. One example: Assume KRW on ETH’s chain appreciates in price and KRW on BSC’s chain depreciates. Investors would then be selling the ETH one and buy the BSC one and vice versa. In described process you would be producing an unbalanced supply and demand effect which of course would affect holders on both chains.
- You would still have one project which is represented by one asset for your investors, but in reality you would have just split the project in two by issuing a lot more circulating KRW tokens. The market would find it difficult to “digest” your additional token emission.
Instead KingDeFi’s team decided to develop a bridge which allows to always have one token, one supply and multiple chains.
We didn’t rush like other projects just to advertise that are multi-chain issuing new contracts, we instead took our time and did it properly.
3. Risk management
The bridge it’s also functioning as risk management instrument: imagine in the worst case scenario that something goes wrong on one of the chains your are using (fees increase, network congestions, regulation etc) and you are not able to bridge, then your KROWN tokens will be “stuck” there and the token utility will be then limited into an environment that is not well functioning or that is impacted by some regulatory issues.
With the bridge in practice, you have the possibility to diversify your asset allocation across multiple chains. It means that you are mitigating risk across different blockchains.
4. Business development, new partnerships and portfolio diversification
Bridge provides us the opportunity to transfer KROWN tokens into 7 different blockchains, adding liquidity to each of them and then re-engineer our farms for multi chain launch.
It means our users and investors will be able to have a better diversified portfolio, yields will be than originated by a more diversified amount of pairs and LPs. Additional diversification decrease aggregated impermanent loss risk too.
KingDeFi’s marketing team is already working to strengthen partnerships with best in class projects on Solana, Polygon, Ethereum and Heco. These are all new buyers and potential investors that will get to know KingDeFi for the first time.
5. Multi-programming language approach
This is a very crucial point and we want to explain in details team vision and approach. Most of other BSC projects moved multi chain, but none, or very few moved as well into Solana.
There is a simple motivation behind, Solana uses a different mechanism and is built on Rust instead of Solidity. In order to bridge chains that have different programming language you’ll need first of all to have devs who knows both languages Solidity/Rust for Solana, Solidity/Haskell for Cardano etc.
As you can imagine it’s extremely difficult to find those resources, in order to bypass this issue KingDeFi team built a solid partnership with a provider which is currently very close to the Solana and Cardano foundations and helped us to hire internally directly from there, in parallel they support us with consulting when complexity comes into place.
This strategic choice has been key to speed up bridge development process.
How is KingDeFi’s bridge implemented?
1. Partnership with AllBridge
In order to speed up cross-chain integration we decided to partner with Allbridge, we believe this is one of the most professional partner which we have integrated so far.
We went through a strict process of due diligence in terms of: technology integration, security, efficiency and team background before to decide to start this partnership.
This implementation is key for KingDeFi as we found a very professional partner on one hand but also we speed up the process to the point that instead of bridging 7 blockchains one by one we have now implemented seven of them within one engineering integration.
KingDeFi team keeps working closely with Allbridge in order to be as well able to bridge into TERRA and AVAX in the incoming months.
2. Integration within KingDeFi UI
Logically we want to provide an outstanding user experience to our investors, in order to do so we already started implementation of the bridge UI directly into KingDeFi website. This development allows our users to bridge, farm and analyse everything directly on our website, without disconnecting wallet and move to Allbridge website.
Business development and next steps on roadmap
The bridge is an amazing instrument in order to “open doors” for new partnerships.
The team is now contacting other projects across seven blockchain in order to start farms and have new partnerships with the best and fastest growing projects across Solana, Heco, Polygon and Ethereum.
Our solidity engineers are working closely with auditors in order to re-engineer our farms into the new implemented chains, in parallel security developers and advisors are focusing on system security upgrade in order to guarantee protection and safety across all chains.
Here below you find:
- “sub-roadmap bridge summary”, which helps users and investors to have an overview of new development coming into place due to the achievement of cross-chain bridge integration
- Training material — how to use the bridge