The goal of cross-chain bridging and swapping has long been a topic of interest in the DeFI space. Due to the realization that we are entering into a multichain landscape, the enablement of interchanging of assets across different chains has transitioned from a 'good-to-have' feature to now an important and fundamental necessity. At this moment in time, there are 2 typical approaches that are being utilized and experimented with:
Lock & Mint Synthetic (i.e. Ren, Binance Bridge, Anyswap)
Cross-chain Liquidity Pair Pool Model (i.e. Thorchain, Swingby)
By far, the easiest to implement is the centralized version of the 'Lock & Mint" where native tokens are given to a central custodian who in turn mints a synthetic version of the token on a target blockchain. The decentralized version requires the usage of decentralized custodians that are properly incentivized to behave appropriately. The majority of bridges, including those proposed by Cosmos and PolkaDot are of the ‘Lock & Mint’ variety, the difference mostly being on how to achieve true decentralization and their approach for key security.
The cross-chain liquidity pool model is currently led by Thorchain whereby liquidity providers stake pairs consisting of a native token with Thorchain’s RUNE token into pools and Thorchain routes swaps leveraging the common RUNE token to facilitate cross-chain swaps. In this approach, swappers are able to receive native tokens on the target chain instead of synthetics.
While these conventional approaches are moderately acceptable in the current nascent stage market, there are still some critical issues that we are facing.
The proliferation of synthetics of the same underlying asset
The core objective of the OpenSwap Interchain protocol is to introduce a solution that offers more efficient inter-blockchain swapping of chain-native digital assets through the usage of single-asset vaults and decentralized mechanisms.
The Interchain protocol incorporates earlier innovations from the OpenSwap team such as 'Liquidity Queues' and 'Hybrid Smart Router' to form a transparent and more capital efficient end-to-end Interchain swapping solution.
The following diagram illustrates the full picture of where the Open Interchain Protocol fits in with the Liquidity Queues and Hybrid Smart Router.
Above are just some teaser information, further details about OpenSwap Interchain Protocol such as Architecture Overview, Core Concepts, Smart Contract Components, and other important details will be uploaded here closer to the feature release date.
To interact with the OpenSwap platform, please explore the following link: https://www.openswap.xyz/
We encourage community members to partake in community discussions to help better shape OpenSwap's platform. Users may get in touch with core team members through joining the OpenSwap telegram group: https://t.me/openswapdex