At a time when decentralized finance (DeFi) protocols have seen a significant outflow of funds from the market, maintaining liquidity has become even more challenging. Liquidity plays a central role in the DeFi ecosystem, and many protocols have, over time, come up with various new solutions to keep liquidity pools brimming. The current trend in liquidity markets is to focus on cross-chain solutions.
Experts believe cross-chain solutions represent the future for DeFi. Symbiosis Finance, which is a liquidity protocol, has created a stablecoin-based crosschain liquidity option. The protocol uses stablecoins to ensure liquidity providers (LPs) don’t incur any impermanent loss.
Co-founder and co-founder at Symbiosis was Nick Avramov. He said that Symbiosis had secured initial liquidity through Binance Labs Blockchain.com and Amber. The protocol is looking to increase its LPs once it reaches a transaction volume of approximately $100 million.
Related: Liquidity has driven DeFi’s growth to date, so what’s the future outlook?
Avramov explained the importance of stablecoins over other crypto assets. He said that stablecoins can not only eliminate impermanent loss, but also allow seamless transactions across multiple blockchain platforms. This allows for one-click swaps. Avramov explained:
“We enable native assets swaps, not just pegged illiquid yet-another USDTxyz.”
Symbiosis Finance allows cross-chain swaps among any blockchain that allows the generation of EdDSA or ECDSA keys. This means that anyone can exchange an ERC-20 token, such as for tokens on Polygon, Solana or BNB Smart chain tokens. Avramov expressed concern about the future Web3:
“The quest of interoperability is vital for further adoption, so cross-chain and multichain solutions are the very building blocks of the Web3 economy.”
The interface has been carefully designed by the liquidity provider to provide a smooth experience for the user at the front. Swaps can be performed without switching between different virtual networks. Smart contracts are used to automate all the process.
Cross-chain platforms are being targeted by bad actors. Some of the most heinous heists have taken place on crosschain protocols. Avramov stated that security was a priority and that the network had passed several audits from established companies.
Symbiosis Finance was awarded a strategic investment by Binance Labs in February. In March, Symbiosis Finance launched a beta network. This protocol has been integrated with many platforms and has attracted multiple partnerships.