At a time when the decentralized finance (DeFi) protocols have seen a significant outflow of funds from the market, maintaining liquidity has become even more challenging. Liquidity plays a central role in the DeFi ecosystem, and many protocols over time have come up with various new solutions to keep liquidity pools brimming. The latest trend in the liquidity market is focused on cross-chain solutions.
Many experts believe 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 ensure liquidity providers (LPs) don’t incur any impermanent loss.
Nick Avramov, the co-founder of Symbiosis told Cointelegraph that they have secured initial liquidity from the likes of Binance Labs, Blockchain.com, Amber and a few more and hoping to gain some more LPs once they hit a transaction volume of about $100 million.
Talking about the importance of using stablecoins instead of different crypto assets, Avramov 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 eliminates 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 miscreants lately, with some of the biggest heists 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 strategic investment from Binance Labs earlier in February this year and launched beta mainnet a month later in March. The protocol has secured multiple partnerships and has seen integration by various platforms.