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Multi-chain liquidity protocol Symbiosis Finance launches in the next week, enabling users to perform crypto token swaps across multiple blockchains with a single click.
Unlike existing decentralized exchanges (), Symbiosis Finance supports cross-chain swaps between any blockchain that enables the generation of EdDSA and ECDSA keys. In practice, that means you can take, say, an token and swap it for , or , or crypto assets built on .
"It's a -like AMM DEX, but working simultaneously on different chains—EVM compatible and non-EVM compatible," Symbiosis co-founder and CMO Nick Avramov told Decrypt.
Making swaps simple
Solving for the twin problems of interoperability and user experience is essential to attract the next wave of mainstream crypto adoption, Avramov explained. "The user experience in crypto is really complex, even for tech-savvy people," he said. "It's a really big barrier for new entrants, the general audience from the street."
By supporting cross-chain swaps, Symbiosis provides a simpler user experience than existing DEXs, he added. "You don't need to switch between different virtual networks while performing a swap," he said.
That, in turn, means that users won't miss out on trading opportunities. Using conventional centralized exchanges, token bridges and DEXs to perform token swaps between different chains is an involved, multi-step process, Avramov said. "Let's say you see that there is a high yield on , but what you have in your hands is just ERC-20 tokens, or even more complex, Solana tokens." Because of the differing token standards, he explained, "you cannot directly swap it within say, five minutes, to enjoy this yield."
Symbiosis gets around the problem by routing swaps through liquidity pools containing , swapping the initial asset for a stablecoin, then swapping that stablecoin for another on the destination blockchain, before the final swap to the destination asset.
This approach, said Avramov, allows for rapid cross-chain swaps while minimizing volatility. "We route transactions through an existing AMM DEX to pick up the best price; so we route through Uniswap, PancakeSwap, et cetera," he explained. "Second, we change assets on the chain to stablecoins, and we swap just stablecoins."
Stablecoin pools, he explained, are "more capital efficient" than pools consisting of native assets. "Because we're using stable pools, because we don't pair all tokens to our native token, the price is not that big, and the slippage is not that big," he added.
To ensure a seamless user experience, gas fees across multiple chains are abstracted into a single transaction fee. Symbiosis adds a markup to the tokens picked up from the user and instantly converts them to the destination chain's gas tokens. "From the user's perspective, he or she will just have to pay one gas fee on the source chain," said Avramov.
The platform will initially launch with swaps between , , , , Huobi Chain and OKEx Chain, with temporary restrictions on the amount people can swap; "We'll have a test period where people can swap no less than $50 and no more than $2,000 per swap," said Avramov. "It'll be going for a week, maybe two weeks, and then we lower the barrier."
Transactions in the network are processed by a relayer network, a "decentralized network of nodes that have to reach consensus on each transaction," said Avramov. Network security is maintained by staking the SIS token. "The staked amount of SIS tokens for each relayer network node is proportional to the volume this particular node can process in USDT," Avramov explained.
The SIS token will also be used for governance in the Symbiosis DAO, which determines the direction of the network and the allocation of the DAO treasury. Initially, however, the network will launch in a more centralized form. "For a protocol such as ours, in such a crowded place, it's vital to move very quickly," said Avramov, who added that with a fully-fledged , the decision-making process would be too slow.
5% pleasure, 15% pain, and 100% reason to deliver what has been promised.https://t.co/MQdHq8ZxR0
— Symbiosis Finance 👾 (@symbiosis_fi) January 26, 2022
"We have a plan for this year to move to a fully decentralized mode," he said. For the time being, the network will launch with proof of authority, with 50 nodes, half of which are distributed among investors and "robust network node runners" including Blockchain.com and Coinfund.
Looking to the future
Other future plans include expanding to offer swaps between more blockchains including Terra, and . "Our ultimate goal is to add as many layer 2s as we can," said Avramov.
And on the roadmap for Q3 2022 is Symbiosis version 2.0, which will add a manager network for swaps—which, Avramov said, will make multi-chain swaps almost as cheap as single chain swaps. At least four people in the 32-person Symbiosis team, he added, are currently working full-time on version 2.0.
Ultimately, the goal is to make multi-chain swaps on Symbiosis Finance as seamless and efficient as single chain swaps are now, Avramov told Decrypt. "People care about security, speed, convenience and reliability," he said. "We want to make the experience of working with our protocol like using Uber."