Emerging DeFi project, CrossFi, has this week published details of the protocol’s cross-chain liquidity sharing solution. Developed as a way to grant liquidity to heterogeneous blockchain locked digital assets, the CrossFi protocol utilizes industry-leading interoperability technology to connect different assets across public chains and drive further development in the DeFi space. As a part of this project, one-stop filecoin ($FIL) lending platform scheduled to be online mid-April coinciding with the launch of native ecosystem token, CRFI, CrossFi is pushing to be the filecoin lending platform of choice for users.
Throughout 2020, DeFi experienced rapid growth in user adoption as technical innova-tions in critical infrastructure, smart contracts, and clever token economics incentivized pooled lending and borrowing, giving rise to the very lucrative practice of yield farming and ‘wrapping’ to create synthetic assets. Two of the largest developments in the space came in the form of the Ethereum 2.0 pre-launch ‘lock-up’ and the main net launch of the highly-anticipated IPFS project, Filecoin. In the case of ETH 2.0, more than 3.6 million ETH (approx. $7 USD billion) has already been staked with currently no option to un-stake. For Filecoin, miners must stake FIL tokens to receive mining rewards which are locked for a minimum of 180 days and are incentivized to continue locking for up to 540 days. This locking and staking slows down the expansion of DeFi by reducing the amount of liquid capital in the space, which is an issue the CrossFi protocol can resolve.
About the launch, CEO David Hong said, “We are very excited to be working with some key movers in the DeFi space to bring the CrossFi protocol solution to the world of blockchain and especially to Filecoin ecosystem participants. We are committed to making digital assets more liquid and expanding the capabilities of DeFi.”
Underpinning the protocol’s superior interoperability is its use of the Multi-Asset Adaptor Protocol (MAP) which functions as both a bridge between compatible public chains and an adaptor network between non-compatible chains. Maintained by an independent network of nodes, the MAP is essentially a separate aggregating public chain built upon Substrate, the open-source blockchain development framework built by Parity, which supports rapid docking and deployment of blockchain networks to the Polkadot network. This chain effectively works as a universal bridge, allowing digital assets to be seamlessly transferred from one public blockchain to another.
The key value CrossFi brings to the DeFi space is to give liquidity to locked digital assets similar to a bond. For example, filecoin users can stake their FIL on the filecoin network using the CrossFi protocol and mint an equivalent value amount of ERC20 token compliant liquid cFIL. This is a two-way reversal process, meaning users wanting to later unlock their staked filecoin must send the equivalent amount cFIL to the redemption contract, executing a burn of the synthetic cFIL for a small settlement fee. As the protocol-supported liquidity pool is chain-agnostic, there is virtually zero slippage as a result of asset swapping.
With the crypto bull market still in full swing, the blockchain-powered DeFi movement is being positioned as a genuine alternative to traditional finance. Also, as innovation in the space continues to grow in speed and complexity, more and more people are joining the movement, leading speculators to concede the revolution is less about making people rich, and more about returning financial freedom to the people.
