Sifchain Finance
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Sifchain Finance

Sifchain Update: 11 Oct. -24 Dec. 2021

Peggy 2

Peggy 2 is an upcoming upgrade to Peggy (Sifchain’s bridge to Ethereum). Peggy 2’s primary new components include fee reduction through batching cross-chain transactions and stateless exporting with signature aggregation. This should allow Ethereum token holders to execute arbitrages on Sifchain with tighter spreads, increasing trading volume on Sifchain.

Peggy 2’s will also support simultaneous relayers across arbitrary EVM chains (Omni-EVM). Omni-EVM will enable tokens from EVM chains like Polygon, BinanceSmartChain, and Fantom to travel back and forth with Sifchain and the broader Cosmos Network, connecting the $170B+ of assets running on Cosmos SDK chains with the nearly $700B of assets running on EVM chains (including Layer 2 chains like Optimism, Arbitrium, and Metis).

While individual features for Peggy 2 have been complete for some time, getting them all running end-to-end took quite a while, especially as we’ve also been maintaining Peggy 1 code for Betanet. Now, the team has identified the following next steps:

  • Integration testing
  • Sifnode integration
  • Data pipeline integration
  • Deploying in a private testnet
  • Front end integration
  • Load testing
  • Auditing
  • Deployment on Betanet

The team has expressed interest in completing this by late March 2022. That estimate is subject to change, especially since it does not include potential interruptions to support Peggy 1 across changes like upgrading Sifchain to Cosmos SDK 0.43 or 44. Sifchain engineers will try to support the Peggy team to minimize interruptions.

Omni-EVM and Beyond

Once Peggy 2 is deployed, Peggy’s next phase of development will revolve around actually connecting it to a large number of EVM chains. Realistically, the Peggy development team will be the most capable users of the software and thus will be able to lead deployments for bridges using Peggy 2 initially. However, the Sifchain ecosystem would grow more sustainably and quickly if a multitude of development teams were able to autonomously handle Sifchain <> EVM Chain bridges in parallel.

Some EVM chains have offered engineering support for Peggy 2 bridges to their chain. Such deployments are still several weeks away and most EVM chains haven’t yet been contacted about Peggy 2. If you are interested in supporting a particular EVM chain’s Peggy 2 bridge, please reach out and let’s discuss closer to Peggy 2’s launch.

Smart Contracts for Cosmos Tokens on EVM Chains

Cosmos Network tokens like $ATOM, $AKT, and $IRIS can be exported from Sifchain through Peggy onto Ethereum. With Peggy 2, these tokens will be tradeable on every EVM chain. While Peggy is the first bridge to enable this feature on Ethereum and Peggy 2 will be the first to support it on all EVM chains, eventually other Cosmos bridges may deploy with the same ability.

It’s important to minimize user friction for Cosmos token holders on Ethereum which is why Peggy supports granting other bridges the ability to mint from Ethereum token contracts originally generated by Peggy. Sifchain hopes to collaborate with other Cosmos bridges so that all sufficiently secure deployments of Cosmos <> EVM chains can mint from the same smart contract for the same token.

Bridge Routing

Peggy certainly isn’t the only cross-chain software available. Rather than build bridges between chains that are already bridged, we could allow users to route tokens through them in a seamless UX. For example, Wormhole does not connect to ThunderToken but Peggy 2.0 will and Peggy does not connect to Solana but Wormhole will. We could allow users to route tokens through Peggy and Wormhole to connect ThunderToken to Solana. Bridge routing would let users gain traversability through the efforts of all bridges from leaders like Secret, Celo, Wormhole, Gravity Bridge and others.

Of course, bridge routing commingles Peggy’s security model with the security of other bridges. Peggy DAO would need to vote on which bridges to trust and consider insurance products to let them further reduce risks as well. Ideally, engineers from across all of these bridge teams would evaluate each others’ bridges’ security alongside community members and audit firms to the benefit of all parties.

This would enable deep bridge integration, like allowing different bridge projects that bridge to the same chains to mint tokens that are fungible with each other. With so many projects bridging to EVM chains and each other, we could enter scenarios where EVM chains have many tokens that are equivalent in value but not fungible because they took different bridge routes to get there. Cosmos Network already has this problem; if tokens go from Chain A -> Chain B -> Chain C and others go from Chain A -> Chain C via IBC, they will not be fungible on Chain C even if they were on Chain A. Sifchain has already proposed token fungibility groups to handle this at the application level, but shared bridge minting would solve the problem at the blockchain level which would likely be appreciated by EVM chain users as EVM chains run many smart contract applications on the same chain. Implementing token fungibility groups on a per-application basis may be frustrating for them.

Other News

The long awaited deep margin feature has been progressing dramatically over the past several weeks. Recall Sifchain Margin Trading Features:

  • Liquidity Concentration — Price slippage resulting from shallow liquidity around the market price is a common problem of early AMM/DEX models. Sifchain uses an oracle model to amplify liquidity and stabilize the price close to market levels. Traders benefit from the ability to execute larger trades with minimized price slippage.
  • Omni-EVM will enable any ERC20 token, any Cosmos Token, and any token that exists on ANY EVM compatible blockchain to be imported and traded in Sifchain. Any ERC20 token or Cosmos Network token can be used as collateral in any margin trading position. Likewise, any such token can be longed or shorted. This unlocks nearly unlimited margin trading pairs and enables users to utilize this feature on tokens that have previously never been possible.
  • Decentralized/Non-custodial — Margin trading on CEXs carries centralized custodial risks. Sifchain eliminates such risks as the first DEX to offer omni-chain margin trading whereby the protocol holds traders assets and margin.
  • Uncapped gains — By contrast to other projects, there is no cap on trading gains for successful trades, allowing traders to benefit fully from their convictions and earn more vs comparable exchanges.
  • Transparency — CEX rules and operations are opaque, with traders not able to verify the order of events which lead to liquidations or other trading events. Sifchain DEX will be the first to offer omni-chain margin trading in a fully verifiable manner as the protocol implementation and activity data are recorded on the Sifchain public blockchain. Traders can verify themselves that trading is fair and rules-based.
  • Dynamic-interest rate pools — Liquidity provider revenue is enhanced with ‘lending revenue’ generated by margin trading activity. Interest rates for each pool are set dynamically based on its ratio of available assets to borrowed assets, the lower the ratio the higher the interest rate. This benefits LPs earning potential and encourages more liquidity which in turn brings pool depth, further benefiting traders by enabling large margin trades.
  • On-chain reputation system — Users start with being able to access base levels of margin and must earn their way to larger levels of leverage by successfully closing trades profitably, meaning higher reputed traders can borrow more.

Mathematical documentation on its functionality, including liquidity concentration, interest rate calculator, the liquidation engine, and the on-chain reputation system, is under revision and should be published in early-mid January. A cadCAD simulation of the system in Python and the actual on-chain implementation of the system in Go are both under active development.

Sifchain’s chainops team has done a great job preparing validator infrastructure to allow Sifchain’s validators to maintain stability for Betanet amidst a frequently changing environment. Its sprawling demands have meant that IBC relayer integrations need to be handled by community engineers. Sifchain’s validators have expressed interest in running relayers between Sifchain and other IBC chains which will let Sifchain engage new Cosmos Network chains for connections and token listings.

Sifchain’s liquidity mining rewards code is being rewritten in two ways. An overhaul will allow for features such as distributing non-Rowan tokens as rewards and issuing daily payouts. At the same time, the rewards team is also actively reviewing tickets on reward calculation edge cases and issuing relevant patches.

Several teams have expressed interest in hosting a front end for the Sifchain DEX. The front end dev team is soon to release an image of the DEX that can be run on cloud hosting infrastructure such as Akash. For now, SifDAO can consider remuneration of Sifchain DEX front-end hosts on a case-by-case basis. Later, Sifchain can install on-chain referrals that directly compensate front end hosts.

SifDAO has been expanding in other ways. The Validator Delegation and Token Listing Councils have been inspiring strong community support. Soon, a Marketing Council will be underway as well. SifDAO will further expand to handle additional proposals.

Thanks for a great year, 2022 will be 🚀

Decentralized Exchange (DEX)

We welcome traders and developers to give feedback and participate in our network! The best ways to join our community are Telegram, Github, and Discord.

For now, in order to take full advantage of the Sifchain DEX, you must have a Keplr wallet for managing assets on Sifchain and a MetaMask wallet for managing assets on Ethereum. Check out our usage guide article, video tutorials, and “getting started” documentation!

Liquidity and Swapping Rewards

Sifchain allows users to swap any asset on any bridged chain (like Ethereum) for any other assets. Liquidity providers can add liquidity into Sifchain’s liquidity pools where they earn income. Check out our article about swapping and our article about liquidity pooling!

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