Crossing chains: How pTokens bring greater accessibility to the crypto space
Despite what many view as a cooling off period following the boom, the DeFi world is still exploding. New protocols, dApps, liquidity pools and other DeFi focused innovations are hitting the market every day. Perhaps a little out of the limelight, the more “traditional” blockchain world is also flourishing and experiencing a similar growth spurt with a variety of new coins, blockchains, use cases and product launches bringing ever greater diversity to the cryptosphere.
Now is truly an exciting time to be a blockchain user.
However, increased diversity of protocols, chains, and coins brings with it a number of difficulties. Though a hot topic of discussion in the blockchain space for the last few years, the “interoperability dilemma” still looms large. Most blockchains are not able to communicate properly with each other resulting in siloed blockchain ecosystems. This results in limitations on access to different protocols for users stands as a serious impediment to broad adoption of blockchain and crypto assets.
In practice, this means that a user holding BTC cannot go and interact with the various dApps built on EOS, Ethereum, or other chains and vice versa. Since Bitcoin is by far the largest crypto asset by market cap and Ethereum homes the vast majority of dApps recently built to facilitate DeFi protocols, this issue has become particularly pertinent of late. Though the DeFi boom was far from a small incident, the interoperability dilemma has surely dampened what could have been a revolution catapulting DeFi tools to mass adoption.
To zoom in, let’s look at an example of a Bitcoin holder, Bob, wanting to interact with non-Bitcoin DeFi protocols. Bob wants to provide liquidity in the form of ETH to a liquidity pool on a protocol. To do so under normal circumstances, Bob would have to acquire some ETH either via his preferred fiat onramp or by exchanging some of his BTC holdings. There are various reasons that Bob might not want to do this: from the hassle of setting up an exchange account to the high fees associated with exchanging crypto assets, and the delays in receiving his desired tokens to security concerns and so on.
If Bob does choose to go this route, he will then hold a big bundle of ETH that he can then go and use freely within the Ethereum DeFi ecosystem. Ideal right? But then Bob notices that he can get a high yield in one pool for providing EOS or LTC or MKR or some other token; what then? Well, Bob must do the process all over again, exchanging his Bitcoin for these tokens or purchasing the tokens via fiat and investing more into crypto assets than he may wish to, all while incurring even more fees.
Then what happens if Bob decides that he is done interacting with these protocols and wishes to go back to holding only Bitcoin? He has to go to an exchange again, convert all of the different assets that he has been holding back and, if he wishes to, convert any excess investment back into fiat.
All in, Bob has likely lost a large percentage of his potential wealth in fees, wasted a lot of time on exchanges and gotten a big headache for his troubles.
That’s where pTokens come in!
pTokens provide an easy way to substitute one token for another, granting interoperability without having to sell your underlying asset.
What if instead Bob simply went to dapp.ptokens.io? There, Bob can deposit his Bitcoin holdings as collateral and receive an equivalent amount of pBTC in whatever denomination he likes. pBTC on Ethereum, for example, is a 1:1 pegged BTC representation on Ethereum, which functions as an ERC-20 token. The same synthesis applies to pBTC on EOS, pBTC on TELOS or any of the other pegs that pTokens is developing.
This pBTC will be freshly minted and Bob’s BTC is safely locked away until he wishes to return and reclaim it. Bob is then free to take his pBTC and use it to participate in whichever ecosystem he has chosen. When Bob is ready to revert his holdings back to BTC, he simply returns to dapp.ptokens.io where he can return his pBTC — which will be burned — and redeem his BTC.
The processes of locking away collateral, minting new pTokens, and receiving them as well as returning pTokens, burning them, and returning locked away collateral to the token holder are simple and extremely quick with near instantaneous peg-in and peg-out speeds. There are currently no fees associated with pegging in and pegging out of any token. And, unlike some synthetic token protocols, there is no overcollateralization required. This means that no assets will be unnecessarily frozen and users are free to play the market with all of their available capital.
Finally, the governance of the pTokens protocol will, over time, become progressively more decentralized in line with its progressive decentralization roadmap. The project recently launched pNetwork Dawn, its network of node operators, and the pNetwork is continuously audited by Cryptonics Consulting (with previous reports available here). The project aims to become entirely decentralized with all important decisions being made by the pNetwork Decentralized Autonomous Organisation (DAO), which anyone holding PNT is able to join and participate in.
This means that every dimension of the pTokens protocol will continuously adapt to meet the wants and needs of the pNetwork community.
The aim of the pNetwork project is to bring greater accessibility to the crypto space.
It does this by drastically reducing the time that one has to wait to be able to dive into different ecosystems and broadly simplifying interactions with protocols from across the blockchain landscape. Our hope is that pTokens can significantly increase the number of users interacting with protocols on different blockchains, increase volume across all of these protocols, increase value for these protocols, increase liquidity across liquidity pools, provide greater access to the full protocol ecosystem for those who would not otherwise have it by removing various barriers to interaction, and contribute to the wider adoption of cryptocurrencies and blockchain protocols overall.
🔗 For any blockchain project looking to integrate pTokens into their infrastructure, we have also built a pTokens JS library.
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