A Multi-Chain World Needs Innovative Cross-Chain Solutions ✌🏼
Despite the recent crypto market crash that hasn’t spared anyone, DeFi activity had boomed during 2021 and the first months of 2022, surpassing $240 billion in Total Value Locked (TVL) at its peaks. While some projects will be wiped out by the end of this cycle, most novel protocols that have gained reactions in the past months will flourish again, reaching new all-time highs. Data from the latest CoinGeko report show that some of the biggest gainers in the DeFi segment were multichain bridges. Ben Giove from Bankless wrote:
Bridges are fast becoming one of the most important pieces of infrastructure within the multichain crypto-economy. While each has its own unique risk profile and set of trust assumptions, bridges have exploded in popularity alongside the rise of alternative L1s and L2s by providing a quick, relatively straightforward way for users to transfer their assets between networks.
With the users’ growth and the mushrooming of alternative Layer 1 blockchains (Alt1s), new and existing protocols have consolidated on multiple chains, contributing to diluting the share of DeFi TVL held by Ethereum, and driving the overall demand to move assets across chains. While at least some investors have been using CEXs such as Binance or Coinbase for their cross-chain transfers, decentralized cross-chain bridges and protocols have also proliferated to meet this growing demand. Synapse, Wormhole, Stargate, Multichain, and Hop are among the most popular.
Problems of bridges and current cross-chain solutions
While these solutions represent an essential first step towards a multi-chain world, they come with significant complexity and generally poor user experience (UX) and interface (UI).
User experience encompasses several aspects, such as cost, time, and knowledge required to get through the dApp to accomplish the desired tasks. Users may want to transfer a token from chain A to chain B for any reason, like migrating an LP position from one chain to another or lending money using collaterals on another chain or maybe even getting exposed to the highest APY across the different chains’ yield aggregators. In order to do this, they generally have to go through intermediate steps, like creating a new wallet on the desired chain, either transferring the right token from the CEX to the new wallet or bridging assets from the first chain to the second chain and then swap the coins to the desired one on a decentralized exchange (DEX). In addition, users have to deal with the inefficient process of wrapping and unwrapping tokens, the associated multiple fees and interfaces, and the problem of sourcing for liquidity.
Generally speaking, the first and the most significant problem with cross-chain user experience is the lack of a one-stop, simple solution, a protocol that could offer a bridge and any-to-any tokens swap in one place. Although even advanced users find this a troublesome experience, this is primarily a problem for new users and a big obstacle for DeFi in terms of mass adoption. The lack of an easy-to-use, one-stop solution brings in several additional obstacles that impair users’ ability to navigate freely in the Web3 space.
- Firstly, the costs associated with each step of this complex process. While avoiding gas fees is completely impossible, due to the on-chain nature of the protocols and assets involved, what builders could do is help users find the cheapest ways to move their assets, thus avoiding unnecessary fees.
- Secondly, each step requires users to maneuver through multiple platforms, each with its own interface design and features, considerably raising the time and knowledge barrier.
The second major issue of the existing solutions is related to liquidity. Liquidity is a measure of the health of an asset, as the deeper the liquidity, the easier it is for any participant to exchange from and to that asset in a permissionless manner, while drastically reducing slippage risks. However, for the most part, liquidity is still strongly siloed, meaning that liquidity pools existing on a DEX on one chain only gather liquidity on that chain, separately from liquidity existing on other chains. This fragmentation makes the market highly inefficient. Cross-chain liquidity aggregators have started addressing these issues by aggregating liquidity sources from various DEXs across chains. Nonetheless, these aggregators haven’t solved the problem entirely yet, since it’s not always an easy task for users to find the most convenient and liquid pool among the hundreds available.
Finally, an intricate cross-chain experience can contribute to seriously limiting profit opportunities. For example, users deploy their assets to various DeFi protocols to maximize return on investment, and yield aggregators were created as popular solutions for investors to earn a passive income without having to move assets around:
Since the explosion of decentralized finance in the summer of 2020, a concept called “yield farming” emerged. But yield farming was less attractive to individual users without significant capital or knowledge of the concept, which led to the introduction of “yield aggregators” — sets of smart contracts that pool user funds and optimize yields. These quickly became known as vaults.
However, most yield aggregators such as Convex and Yearn only source for investment opportunities within a single chain, while other, higher APY-bearing investment opportunities could wait on other chains.
A newer generation of cross-chain DEX aggregators has made its way on the market, allowing for more seamless cross-chain swaps and any-to-any swapping solutions, while early bridges allowed for preset, one-to-one transfers between two blockchains. XY.finance, li.fi, Socket, Rubic, Anyswap, 1inch, and Connect are among the most popular of these last-generation protocols offering a seamless cross-chain experience. However, they often just provide a DEX with a bridge, and they cannot always automatically optimize to find the best swapping solution.
Welcome the Via Protocol
Via Protocol sets out to fill the gap in the market, and offer users a comfortable, seamless, and hassle-free cross-chain experience thanks to its two main products, a cross-chain liquidity aggregator and a cross-chain checkout system.
Aggregation protocol
The core functionality that Via Protocol developed is the cross-chain liquidity aggregation protocol. Thanks to its intelligent routing system, it can automatically scan over 41 DEXs across 13 networks and 11 of the most popular cross-chain bridges in order to let users swap tokens on the fastest and cheapest routes, seamlessly. This brings enormous benefits from a user experience point of view and from liquidity and yield maximization. The VIA Protocol aggregator uses liquidity from the protocol’s execution pool in the target chains, allowing users to efficiently route orders across all the available liquidity sources within 60 seconds. In addition, users interested in swapping any major tokens can directly interact with the clean and polished interface provided by the Via App.
Use cases
Swapping tokens across chains in a seamless and optimized way can be the key to success in crypto investments. Liquidity providers (LPs) provide liquidity for a certain token to earn rewards. They may want to move their position from a pool on one protocol on one chain, say Uniswap on Ethereum, to another pool on the same protocol, but on a different chain that ensures lower fees, say Uniswap on Polygon. Following traditional procedures, these LPs would have to close their position after withdrawing liquidity from that pool on that protocol, swap their tokens into the desired tokens following the intermediate steps described above, and open a new liquidity position on the new chain. With Via, LPs can directly migrate their liquidity from the pool on Uniswap Ethereum to the pool on Uniswap Polygon, without any intermediate step.
Another typical use case is lending and borrowing assets using as collateral funds on other chains, without having to move them first. When users start exploring a new chain ecosystem, they might not have assets on it. Therefore, if they wanted to borrow money to get started with investments and other activities, they would have to take funds from other chains, swap them and deposit them onto the desired chain. With Via, having funds on Ethereum means users can automatically have funds on Polygon, Solana, or other chains. They could then take a loan on one chain using collateral from another chain, and use that loan to repay interests on a third chain. All chains, and assets deposited on them, are automatically interconnected.
Finally, users are generally constrained to one single chain when yield farming, even when using a yield aggregator. Via’s smart contract can find the highest APYs across multiple chains and automatically move assets on that chains, letting users farm yields on the highest APY aggregator protocol across multiple chains. As a result, users can effortlessly get the best returns on their investment without even realizing they are moving their assets across chains.
Cross-chain checkout
The core functionality of the cross-chain aggregator is used to create a second product, a cross-chain checkout system that supercharges NFT marketplaces and blockchain games. By directly integrating the cross-chain liquidity aggregator into their project, marketplaces and blockchain games can let their users buy NFTs with any major token and receive the NFTs on the target chain within 20 seconds. Basically, VIA can be thought of as a last-mile NFT payment solution.
For example, a game running on the Solana blockchain could allow its players to buy in-game NFTs (Solana NFTs) using any major cryptocurrency, including ETH, USDC, and BNB. This checkout functionality leverages VIA’s cross-chain aggregator that swaps tokens in the background, making the whole experience completely seamless. Being able to complete a purchase in a fast and seamless fashion, using any token from any chain, is a particularly important added value for fast-paced apps like games or social media, where speed of execution is everything. The checkout system currently supports Ethereum, Polygon, BSC, Avalanche, Fantom, Arbitrum, and Solana coming soon.
Via Protocol is about a smooth and hassle-free experience, both for end-users and developers. Users can simply click on the mint button and are directed to the checkout page, where they can simply choose their preferred token and chain to complete the purchase. Integrating Via Protocol’s checkout system is also an intuitive and fast process. The Via team just needs to create a checkout link and integrate it into the desired project’s smart contracts.
As mentioned earlier in the article, user experience also means accessibility, and to foster adoption, it’s imperative to keep cost barriers as low as possible. While Via’s cross-chain liquidity aggregator is completely free of charge, Via Protocol’s checkout page only charges a 1% fee when a cross-chain swap happens. This means that if a player buys a Polygon NFT using other cryptos like ETH, the 1% charge applies, while the 1% fee doesn’t apply if the player buys the NFT with the same token, even if VIA’s checkout page is used.
Use Cases
Some games have already begun using the Via Protocol checkout service, delivering a fast, intuitive, and smooth experience to their players.
Moonopolis is a simulation game with graphics close to reality, whose entrance is granted by various classes of ID cards, each an NFT minted on the Polygon blockchain.
Battle Shrooms is a Play-To-Earn (P2E) metaverse game where players can acquire heroes, battle, own land, and farm resources.
Both Moonopolis and Battle Shrooms are built on Polygon, and they would require Matic to mint in-game NFTs. However, when clicking on the mint buttons, users are automatically redirected to the Via checkout page, where they can select the preferred chains and currencies like Ethereum, Avalanche, or BSC. This means players can skip many intermediate steps like buying assets on a CEX and transferring to the right wallet or using a DEX to swap tokens into the needed one.
From a high and general perspective, this is how the user experience used to be for these games before they integrated the Via checkout system:
Conclusion
As the blockchain ecosystem grows, so will the number of different blockchains. While this is undoubtedly an indicator of a healthy and prosperous industry, living in a multi-chain world can also bring considerable disadvantages and hurdles, which usually undermine user experience and in turn, jeopardize mass adoption. While at first, each blockchain was completely isolated from others in a void, little by little, the first solutions to create a sort of connective tissue that could interconnect all blockchains started to arise, with individual, one-to-one bridges first, and with DEXs with integrated bridges and cross-chain liquidity aggregators. Via Protocol is advancing the progress one step forward, by providing smooth, fast, and effortless cross-chain experiences thanks to its smart liquidity aggregator that optimizes for the optimal solution on the market, and its checkout system that turbocharge fast-paced applications like marketplaces and games with an easy-to-integrate API.
