At a time when 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 have, over time, 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 liquidity protocol Symbiosis Finance has come up with its own stablecoin-based cross-chain liquidity solution. The protocol uses stablecoins to ensure liquidity providers (LPs) don’t incur any impermanent loss.
Nick Avramov, co-founder of Symbiosis, told Cointelegraph that the protocol has secured initial liquidity from Binance Labs, Blockchain.com, Amber and a few others, and is hoping to gain more LPs once it hits a transaction volume of around $100 million.
Regarding the importance of using stablecoins instead of different crypto assets, Avramov explained that stablecoins not only help eliminate impermanent loss but also ensure seamless transactions across different blockchain platforms, allowing 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 tokens on Solana, Polygon or BNB Smart Chain. Regarding the future of Web3, Avramov said:
“The quest of interoperability is vital for further adoption, so cross-chain and multichain solutions are the very building blocks of the Web3 economy.”
The liquidity provider has also paid particular 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 the processes happen on the back end using smart contracts.
Several cross-chain platforms have been at the receiving end of bad actors lately, with some of the biggest heists taking place on cross-chain protocols. When asked about the security of the network, Avramov said that security is one of its top priorities and that it has already passed multiple audits from established firms.
Symbiosis Finance secured a strategic investment from Binance Labs in February and launched a beta mainnet a month later in March. The protocol has secured multiple partnerships and has seen integration with various platforms.