Interoperability remains a persistent issue in the world of gazillion blockchains and interesting protocols and projects. The need for interoperability leads to many practical problems, one of which comes down to token liquidity and crypto swapping between blockchains.
Bridges are vulnerable
Moving tokens from one blockchain to another has become a crucial part of the DeFi sector. It allows users to use these tokens on different chains than their native ecosystem. However, most blockchains are closed systems and thus aren’t directly compatible with each other. The problem can be compared to using a European power plug in the United States — it’s just not going to fit. At least, not without an adapter.
Within DeFi, these adapters — better known as bridges — can be found everywhere. With bridges, users lock tokens on one blockchain to unlock wrapped versions of them on another chain. These wrapped tokens can then be used in whatever DApp on that blockchain.
One caveat of this approach is that bridges form a significant attack vector. Hackers could exploit a vulnerability and steal all locked tokens on one side or simply create large amounts of wrapped tokens. One such attack targeted the Wormhole bridge, in which hackers managed to steal 120,000 wrapped Ether worth $321 million. This vulnerability applies to other centralized platforms as well.
No need for intermediaries
In an ideal world, intermediaries are no longer needed. It’s one of the key reasons Satoshi Nakamoto invented and developed Bitcoin (BTC). They wanted to make it possible to exchange value without needing a bank or payment provider to serve as the middleman. With the help of a blockchain, Nakamoto made it possible to make a digital transfer of value as straightforward as handing over a $1 bill directly into someone else’s hand.
The goal of removing intermediaries is also a key part of DeFi. All kinds of applications can be found in this sector, where intermediaries usually play a role. For borrowing tokens on the blockchain, for example, in traditional finance, it would take at least one intermediary to bring the borrower and lender together.
Bridges can be considered as a sort of intermediary. Without them, users couldn’t use BTC in Ethereum-based DApps. However, as hacks in the past have shown, they form a vulnerability. Luckily, some projects are working hard to solve this issue and minimize the risks of exchanging tokens between chains.
Native swapping and a fair launch
One of these projects is Maya, a decentralized liquidity protocol. Its goal is to enable noncustodial and efficient native swaps across blockchains. In simpler terms, this translates to a protocol that enables its users to swap native assets without the need to lock liquidity on a third-party platform like a bridge or wrapped tokens like WETH. For instance, a BTC holder can easily swap these tokens into ETH through Maya without having to wrap them and transfer them through bridges.
Some innovations the project is built on include liquidity nodes and an increased number of integrated chains for higher interoperability, including names like Dash, Kujira, Osmosis and potentially Cardano. Liquidity nodes allow operators to not only support the network but also benefit from double capital efficiency, as their assets are also participating in liquidity pooling.
March 7 marks the start of the project’s fair launch, commencing the liquidity auction simultaneously. Investors and supporters of the protocol can then participate in the liquidity auction with native BTC, ETH (including USDC and USDT) and RUNE. According to the developers, the pros of a fair launch approach bring better transparency, a permissionless approach to participation and reduced volatility. What is more, with fair launches, all investors get access to the network and its native token at the same time, meaning there are no early investors or teams that have an advantage over retail users.
In the busy DeFi sector, new implementations and solutions are essential for successful end products. The crypto sector is bubbling with innovative and highly technical approaches to enable decentralized and more humane financing. Maya Protocol is one project that aims to solve existing constraints within the blockchain and crypto sectors.
More information about this project is available on Maya’s official website.
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