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Liquidity protocol uses stablecoins that don’t incur any impermanent loss

  • News
  • July 19, 2022
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When the decentralised finance (DeFi) protocols have experienced a significant outflow of funds from the market, maintaining liquidity has become even more challenging. Liquidity plays an essential role in the DeFi ecosystem, and many protocols over time have come up with various new solutions to keep liquidity pools overflowing. The latest tendency in the liquidity market is focused on cross-chain solutions. The cross-chain liquidity protocol has put special focus on user experience with a simple user edge without them having to deal with complex virtual networks.

Many experts hope cross-chain solutions are the future of DeFi, and Symbiosis Finance, a liquidity protocol, has come up with its own stablecoin-based cross-chain liquidity solution. The liquidity protocol uses stablecoins to approve liquidity providers (LPs) that don’t incur any impermanent loss.

Talking about the importance of using stablecoins instead of different crypto assets, Nick Avramov, the co-founder of Symbiosis explained that stablecoin use not only helps in eliminating impermanent loss but also ensures seamless transactions across different blockchain platforms. This makes for one-click swaps. Avramov explained:

“We enable native assets swaps, not just pegged illiquid yet-another USDTxyz.”

Symbiosis Finance supports cross-chain swaps between any blockchain that enables the generation of EdDSA and ECDSA keys. This effectively means anyone can exchange, for example, an ERC-20 token for Solana, Polygon, or other crypto assets developed on the Binance Smart Chain. Talking about the future of Web3, Avramov said:

“The quest of interoperability is vital for further adoption, so cross-chain and multi-chain solutions are the very building blocks of the Web3 economy.”

The liquidity provider has also paid special attention to the interface to ensure that the user at the front end gets a seamless experience. The protocol removes the need for switching between complex virtual networks while performing swaps. All these processes happen at the back end using smart contracts.

When asked about the security aspect of the network, given cross-chain platforms have been at the receiving end of malefactors recently, with some of the biggest attacks taking place on cross-chain protocols. Avramov said that security is one of their top priorities, and they have already passed multiple audits from established firms.

Symbiosis Finance secured an investment from Binance Labs earlier in February this year and launched a beta mainnet a month later in March. The protocol has secured multiple partnerships and has seen incorporation by various platforms.

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