Key Differences | Sifchain & Thorchain
Sifchain is the world’s first omni-chain decentralized exchange (DEX).
It uses Thorchain as a reference for implementation but has notable differences which we highlight below.
Built with the Cosmos software development kit (SDK) and the Inter-Blockchain Communication Protocol (IBC), Sifchain processes substantially more transactions per second than Ethereum, making it 100 times more efficient than a current leading Ethereum-based DEX like Uniswap in terms of trading fee and transaction speed.
Cross-Chain Software Development
Thorchain uses native tokens, which means it makes transactions on the native chain for any external asset. Sifchain uses a pegged token model, which means users trade pegged tokens that can be redeemed on the blockchain at any time for their native underlying token.
Sifchain uses a two-way peg protocol which results in the swap of pegged tokens. For example, a trade of YFI for COMP would be executed as transactions of pegged tokens (cYFI and cCOMP) on a Cosmos SDK blockchain. Each source chain would have a specified peg chain (known as a peg zone) in the Cosmos network with its own validators separate from Sifchain. Sifchain would verify peg zone validators’ transactions through the IBC.
Peg zone validators must run a full node only for their peg zone blockchain and the blockchain to which they are pegged. For example, an Ethereum peg zone validator only needs to run a full node for the Ethereum peg zone and the Ethereum blockchain.
The primary benefit of using a native token is participation in the consensus mechanism of the native token’s set of validators, miners, or other nodes. However, that benefit is not as helpful as the deployment of a pegged token based on a combination of technical and crypto-economic incentives.
Generalized Model of Liquidity Allocation
Sifchain’s fundamental beliefs about liquidity pool architecture are specified in its token economics paper. We don’t enforce any formula on users. At launch, Sifchain may use Thorchain’s slip-based fee formula but that will be soon updated so that holders of our native token, Rowan, can govern the liquidity pool formula through voting on a per liquidity pool basis.
Sifchain also optimizes the balance between rewards to validators and rewards to liquidity providers. Our rebalancing policy is a vectorized extension of Thorchain’s Incentive Pendulum that is extensible to an arbitrary number of subsystems beyond validators and liquidity providers (e.g. peg zone validator subsystems and external DEX subsystems).
Governance
SifCore (the core team of Sifchain) is focused on the development of SifDAO and the transition of protocol governance power to our community. We are actively cultivating best practices via a joint research project with MetaGov.
For true self-sovereignty, Sifchain’s development should be self-funding and self-sustaining. We look to models like Linux and Wikipedia for inspiration. We are collaborating with a research lab at UC Davis to formalize properly funded open source development as a hallmark of Sifchain’s governance.
Governance will engage market-based performance evaluation within SifDAO through tools like alpha bonds. Wherever possible, the market should govern Sifchain through on-chain crypto-economic incentives for SifDAO members.
Conclusion
In conclusion, Sifchain and Thorchain are both great products. The team behind Sifchain is in strong support of Rune, which is the network asset of Thorchain. We hope this article gives you a clear understanding of Sifchain’s technical differences and the unique value proposition of Sifchain’s Rowan token.
