The FUTURE of Token Farming At Your Fingertips
DAPP Network and It’s Cross-Chain Capabilities Can Unlock More Efficient Ways to Stake and Farm New Tokens
Every season, a new token distribution trend takes off in the blockchain space. Airdrops, ICOs, pre-mines, private sales all had their moment in the sun.
Today, fair launch models are gaining momentum with the aim of giving equal opportunity to anyone that wishes to get their hands on new tokens. Central to all these models is the notion of ‘farming,’ a novel concept that involves locking up tokens of some kind in return for receiving an allocation of a new token. The idea behind farming is to even out the distribution of new tokens so that ordinary holders aren’t dominated by massive whales. While, in theory, this is a noble goal, in practice the cost of gas can price out all but the most capitalized of users from taking part in farming.
The DAPP Network’s cross-chain bridge addresses this critical pain point by allowing tokens used for farming to shuttle across chains. What this means is that Ethereum tokens can be moved to a different, faster chain or layer-two, and staked over there in order to farm new tokens. This could slash the cost of farming while keeping the main liquidity on Ethereum, getting closer to the fair launch models’ objective of equal opportunity in DeFi.
The Gas Is Too Damn High
Since the DeFi movement took off, not only are people making more transactions on Ethereum, but the average cost of gas per transaction is also escalating. This is because the more complex an Ethereum transaction is, the more gas it consumes. Farming new tokens consists of many function calls and more resource utilization that makes it expensive. The more complex farming becomes, the more gas it consumes — creating a unique problem for many projects.
Data: Etherscan
Criss-Cross: Slashing the Costs of Token Farming With DAPP Network’s Cross-Chain Bridge
One of the most exciting aspects of DeFi is the way in which anyone with a cryptocurrency wallet can become an integral part of an exchange, lending platform or any other financial service by providing them with liquidity. When users add their assets to a Ethereum-based liquidity pool, they receive ERC-20 Liquidity Provider (LP) tokens in that pool proportional to their contribution. LP tokens earn them a right to receive fees paid by liquidity seekers, and they can be redeemed for their share in underlying assets of the pool. These LP tokens can then be staked to farm a wide range of tokens, from the serious to the silly.
However, farming with LP tokens is especially costly. Even if ordinary token transfers don’t necessarily cost too much money to execute, the full cycle of LP token staking can accumulate serious gas cost due to complexity.
That is because users have to pay gas to:
- Approve the liquidity pool the first time they use it
- Lock up tokens in the pool and receive their LP tokens
- Stake their LP tokens to farm a new token
In the last couple of months, it has not been uncommon to be charged $100 in fees for staking LP tokens (or even more). Thanks to the cross-chain bridge pioneered by DAPP Network, projects and users can devise all sorts of creative solutions to circumvent this thorny issue. For example, users can utilize DAPP Network’s cross-chain bridge to send their LP tokens from Ethereum to a different, high-throughput chain and farm new tokens over there. Liquidity from multiple networks can be bridged and bootstrapped to Ethereum and to each other. Since the bridge is bidirectional, those new tokens can easily make their way to Ethereum when the need arises.
Ethereum is clear-cut leader when it comes to DeFi, and DeFi is also flourishing on countless other smart contract platforms, like Polkadot, EOSIO, and Binance Chain. Instead of looking at Ethereum and the rest of the smart contract platforms as rivals locked in zero-sum competition for users and liquidity, they should be viewed as complementary systems that can be blended together to yield the next generation of DeFi products. The DAPP Network’s cross-chain bridge is a massive step in the direction of synergistic, interoperable DeFi that expands win-win opportunities for all chains.
Chat with the developers, DAPP Service Providers and community members to find out how to get started setting up your cross-chain bridge. Or dive straight into the architecture if you’re feeling adventurous.
