At a time when decentralized finance (DeFi) protocols have seen significant inflows of funds from the market, maintaining liquidity has become more difficult. Liquidity plays a central role in the DeFi ecosystem, and over time several protocols have come up with many new solutions to keep pools of liquidity filled. The recent trend in the liquidity market is focusing on cross-chain solutions.
Many experts believe that cross-chain solutions are the future of DeFi, and the liquidity protocol Symbiosis Finance has come up with its own cross-stable-chain liquidity solution. The protocol uses stablecoins to ensure that liquidity providers (LPs) do not incur any non-permanent loss.
Symbiosis co-founder Nick Avramov told Cointelegraph that the protocol has provided initial liquidity from Binance Labs, Blockchain.com, Amber and a few others, and he hopes to earn more LPs once the transaction volume reaches around $100 million.
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Regarding the importance of using stablecoins instead of various crypto assets, Avramov explained that stablecoins not only help eliminate non-permanent losses but also ensure smooth transactions across different blockchain platforms, allowing one-click exchanges. Avramov explained:
“We are enabling local asset swaps, not just the illiquid peg but another USDTxyz.”
Symbiosis Finance supports cross-chain swaps between any blockchain enabling the generation of EdDSA and ECDSA keys. This effectively means that anyone can exchange, say, an ERC-20 token for tokens on Solana, Polygon, or BNB Smart Chain. Regarding the future of Web3, Avramov said:
“The search for interoperability is vital to further adoption, so cross- and multi-threaded solutions are the building blocks of the Web3 economy.”
The liquidity provider also paid special attention to the interface to ensure that the user on the front end has a smooth experience. The protocol eliminates the need to switch between complex virtual networks during exchanges. All processes happen on the back end using smart contracts.
Several cross-chain platforms have been on the receiving end of bad actors lately, with some of the biggest thefts happening on cross-chain protocols. When asked about network security, Avramov said that security is one of her top priorities and that it has already passed multiple audits from established companies.
Symbiosis Finance secured a strategic investment from Binance Labs in February and launched a major beta network a month later in March. The protocol has secured multiple partnerships and seen integration with different platforms.