Clover Finance: The Lightest and Easiest DeFi Infrastructure Empowered by Polkadot

Clover Finance
Mar 26 · 5 min read

DeFi has been hitting all the headlines in 2020.

We have seen many DeFi-centric projects which have created brand new business models and large amounts of locked-in value assets in the cryptosphere. Stablecoins, lending, trading, financial derivatives, etc. have experienced rapid development and huge growth this year.

The total market value of current DeFi projects has grown exponentially from nearly US$700 million in early 2020 to more than US$11 billion at present (that is, by 15 times). However, most of these projects are either too slow, very expensive, or centralized.

Clover has been designed as a mainnet on Polkadot as an open DeFi platform by leveraging all the excellent features of Polkadot and providing both secure and fast communication with other existing parachain projects.

Highlights

To achieve a new-level of interoperability, Clover created the model of built-in SPV threshold simulation technology that allows seamless cross-chain communication and trustless two-ways pegs between decentralized networks.

Clover is born with unmatchable EVM compatibility. By minimizing the changes required to run existing Solidity smart contracts on the new network, Ethereum projects can simply replicate their dApp and deploy it to Clover using MetaMask, Truffle, Remix, and other familiar tools.

Unique incentive structure creates passive income streams for contract developers. We re-parameterized the gas distribution model to direct gas fees to both network maintainers and dApp builders.

We believe incentivizing third party developers and commons, boosts external dApp development which ultimately enlarges the Clover and Polkadot DeFi ecosystems altogether.

Gasless transactions lowers the barrier by taking the transaction fee directly from the transacted asset. To provide an overall frictionless user experience, Clover has redesigned feeeconomics to allow relayers to act on behalf of the sender where they can cover gas price in the base currency, and receive compensation in the denominated asset.

The set of products that Clover is starting to release reflects this interoperable and cross chain vision as the future of Web3, from the Clover Extension Wallet, to CloverScan, to the underlying 2-way peg technology between Ethereum and Polkadot, and eventually support for non-Turing complete blockchains like Bitcoin.

How Does Clover Bridge Work?

Clover, a Polkadot-Based All-Round DeFi Service Platform, committed to providing easy‑to‑use blockchain infrastructure and creating a one‑stop EVM compatible framework for Substrate‑Based cross-chain applications. Ethereum developers and projects can simply migrate their smart contracts onto Polkadot to enjoy truly cross-chain DeFi interactions.

To achieve a new-level of interoperability, Clover created a model called built-in threshold SPV simulation technology to enable trustless two-ways pegs between turing-complete and non-turing-complete blockchains. Clover EVM is able to verify Bitcoin and Ethereum transactions directly, by enforcing some standards and dissecting transactions and block headers. This is so that Clover can natively inspect a Bitcoin or Ether transaction without storing/checking the entire external blockchain history.

Users willing to peg-out their Bitcoin or Ether send funds to a predetermined covenant/contract address that escrows funds for further peg-ins, along with respective proof of inclusion data Clover needs for verification.

Clover verifies an outside transaction inside a smart contract. This part is a quick run-through of transaction components, to ensure the caller isn’t trying to sneak through fake content. Clover verifies that the transaction is included in a block by checking a merkle proof of inclusion, and checking each block references the previous one, and calculates the total Proof of Work spent to make that chain.

Clover validators, while securing the network with a nominated proof of stake consensus layer, notarise Clover block headers with a groundbreaking n of m threshold protocol. Clover uses BIP-Schnorr compatible threshold signatures to provide a high level of decentralization as opposed to today’s federated cross-chain bridges that are limited by either 15 signatories in Bitcoin scripting or massive gas consumption in Ethereum scripting. Users willing to peg-in their Bitcoin or Ether burn tokenised assets with Clover-deployed peg-out contract, whose proof of inclusion along with notary proof of whichever block its part of can redeem assets back on their own chain.

Why Substrate?

As pointed out by many industry insiders, even with a complete upgrade and PoW to PoS mechanism migration, Ethereum 2.0 may not be the ultimate answer to the high Gas fees and congestion problems. Hence, Clover looked for the perfect solution and found the answer in Polkadot. To tackle the current challenges in the Ethereum DeFi ecosystem, Clover is developed based on Substrate, the foundation of the Polkadot network.

As a sharded multichain network, Polkadot is able to process many transactions on several chains in parallel, eliminating the bottlenecks that occurred on legacy networks that processed transactions one-by-one. This parallel processing power significantly improves scalability and creates the right conditions for increased adoption and future growth. With Polkadot and Substrate, Clover is able to realize low gas fees and high-speed trading experience for its users.

Meanwhile, the Substrate framework and Polkadot parachain technology facilitates anonymity and makes the seamless verification process a reality. Clover also implements oracles, which are used to fetch trusted off-chain data to be included in the on-chain state and enable lending, borrowing and more.

Clover Blueprint: The Easiest and Lightest DeFi Service Provider

As a decentralized financial service provider on Polkadot, Clover provides modular DeFi protocols and application tools, which greatly reduces the repeated efforts needed in the protocol development. Modular DeFi protocols include Staking Liquidity Protocol, Decentralized Lending Protocol, Token Dividend Protocol, Governance Protocol, and Synthetic Asset Protocols. Clover allows its upper-layer application projects to focus on improving user experiences and accelerate innovations of diversified financial applications through its composability.

Clover can potentially convert a large number of DeFi users into users of its upper-layer applications. This way, upper-layer applications will be able to bootstrap its community and inject more market values.

Clover will also establish a developer-centric community. Through giving rewards to those who provide constructive contributions, Clover will encourage its developers to continuously innovate DeFi protocols. Therefore, Clover will become a one-stop financial services platform that gathers users, developers, and upper-layer applications.

About Clover

Clover is a powerful smart contract platform that enables Ethereum developers and projects to migrate their contracts onto Polkadot. By minimizing the changes required to run existing Solidity smart contracts on the new network, Ethereum projects can simply replicate their dApp and deploy it to Clover using MetaMask, Truffle, Remix, and other familiar tools.

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Clover

An Open Operating System Powered by Polkadot