Decentralized exchanges are thought to be the future of cryptocurrency -- but there's a problem. Liquidity.Liquidity refers to how easy it is to buy or sell an asset, and it lets us purchase these assets with as little slippage as possible, while also giving those with a time preference an efficient way of getting these orders filled without waiting for multiple hours, or even days. Currently, centralized exchanges (e.g. Coinbase, Gemini, Kraken) are acting as custodians (securing/storing assets), and providing liquidity in the form of professional market makers. Without these counter-parties acting in service of the exchange's customers, our DEX's will lack the very fundamentals that let an exchange function. All of these components of centralized exchanges are integral to the customer experience, and most of it comes down to liquidity.I've long wondered how the crypto ecosystem would be able to break away from these centralized services and have truly functional markets in a decentralized ecosystem. I've seen many other projects which sought to provide liquidity through smart contracts and node distribution, these things are similar, but not quite to this magnitude. Some examples: REN, (Decentralized Dark Pools), Uniswap (Ethereum automated liquidity pools) etc. but none were blockchain-agnostic, with the ability to connect most blockchains together.I happened to be scrolling the Binance V label projects and found something called THORCHAIN (https://ift.tt/2XNvKiN). Thorchain connects to other blockchains through bridges which are secured by economically incentivised validatators. They stake and provide Rune, the native asset of Thorchain, to secure bridge assets. The pools attract liquidity by allowing asset holders to earn fees on otherwise unproductive assets, so, if you're a BTC hodler you can actually grow your Bitcoin holdings while you lend it to the smart contract liquidity pool, but this doesn't go for just that one chain, it could be for any coin on any chain, to create a mass distributed network of liquidity providers. I really think they're bringing something new and innovative to the table and it's exciting to see Cosmos and Zengo working with them. I'm interested to see where this goes.THORChain integrates an on-chain liquidity strategy -- termed 'Continuous Liquidity Pools' -- locking assets into smart contract pools in such a way that they are bound together and priced according to the ratio at which they are held, thus providing liquidit through crypto-economic incentive and math, with no possibility for human error. The liquidity pool is cross chain, using a new protocol called Cross Chain Bridging which enables different chains to swap for another token instantly with little to no fees. The potential here is insane. RUNE will launch on the binance dex. Their CEO is a Binance Fellowship member as well, seems like Binance is planning on using them to provide liquidity to their Binance Chain.TL;DR: Thorchain and Binance integrating Thor's liquidity protocol potentially. Project is trying to solve liquidity through staking pools and cross chain bridges. Team is affiliated with Binance Fellowship Program and launching on Binance DEX.Share some other projects in the comments you think I should check out!
Submitted July 17, 2019 at 08:19PM
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