While many decentralized exchanges boast crosschain capabilities, most use bridging technology for swaps. One exchange has created a cross-chain liquidity aggregation mechanism that doesn’t rely on bridging to bring crypto trading fully decentralized.
Dejun Qian, Chainge founder, has more to say about cross-chain liquidity.
Q: What’s the greatest problem for DEXes right now? And why is it so difficult?
DEXs have several problems, among which the most notable are: lack of liquidity, inefficient/hazardous interoperability solutions, and user experience.
These two issues are partly related: Some traders still prefer CEXs due to lack of liquidity. And it’s pretty difficult for DEXs to catch up since they have to rely on liquidity providers and can only access liquidity on one single chain. Naturally, users will seek out better prices.
Traditional bridges, which are interoperable solutions that can be used to connect two devices, fall short in security and can be a pain to use. DEXs are a good choice for UX. Trading involves learning about chains, slippage, impermanent loss and other issues, while CEXs allow traders to trade fairly easily.
Chainge is focused on all 3.
Q: Why is interoperability so difficult to achieve in the global blockchain space.
The short answer is lack of resources. Everyday new crypto assets and blockchains are created. With the lack of a bigger development community to work on bridges, the code isn’t audited as it should be for potential bugs. Developers build bridges upon more bridges to try to cover the entire blockchain market, but lack the time and experience to ensure security.
Q: What will higher levels of interoperability mean for crypto traders and investors?
Investors and traders will see the greatest benefit in increased ease-of-use. Just like people don’t have to care where the money they spend was printed, neither should crypto users care what chain their assets are on. They’d be empowered to move assets between chains in a flash without worrying about security, high fees, long waiting times, or overly-complicated operations. Cross-chain aggregated Swaps are also possible with true interoperability. This means they’d access more liquidity and get significantly better prices for their swaps.
Q: Chainge is able to solve liquidity issues and slippage issues on all of the chain’s involved.
Simply put: Chainge Finance is currently a leading DEX aggregator that offers cross-chain liquidity. When a user initiates an exchange, the smart router will automatically split the transaction among multiple chains, depending on the liquidity of the transactions. The end result is that Chainge puts at the user’s disposal the sum liquidity across the most liquid chains, so the slippage is minimal, and the prices are verifiably better than on other DEXs or aggregators.
Q: Are there any cross-chain DEXes currently active? What makes Chainge different?
This is a great question, and while it’s easy to answer, it’s a bit tricky to understand because of a recurrent terminology issue. There is currently no cross-chain DEX available that can aggregate liquidity cross chain. They do cross-chain swaps. This means they bridge assets after-swap to specific destinations chains.
They only aggregate liquidity from DEXs that are based on one chain. Chainge can split transactions not only between multiple DEXs, but also across multiple chains at once. Chainge, unlike other platforms that are cross-chain (swap DEXs), is cross-chain and aggregated.
Q: What is the technology behind cross-chain liquidity broker aggregator?
Chainge combines the unique Fusion DCRM cross-chain technology and cross-chain swap pathfinder algorithm to facilitate traders’ cross-chain swap orders. Simply put, Chainge crawls active DEXs to find the best transaction rate for the user’s target pair swap & then automatically helps them split the order between the sources. It also splits the transaction across all integrated chains. This is why price output is higher than that offered by cross-chain DEXs, aggregators, or regular prices.
Q: What’s the future of cross-chain DEX aggregateion? What are the five most important trends in this space over the next five year?
I believe that cross-chain liquidity aggregation will become the norm. standard within five years. While extremely time-and-resource-consuming, some aggregators will start working on solutions similar to Chainge’s. But since we’re talking about highly advanced tech, this can take a while.
But the Chainge APIs are already availableThis allows instant access to cross-chain liquidity, without having to start from scratch or worry about security. Cross-chain DEXs are a bright future and could eventually replace CEXs.
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