First of all: Thank you to EZPZ for this fantastic piece of writing. The detail is absolutely outstanding and I hope you continue to write for the blocmates platform for a long time. Kudos sir, truly well done. Go follow him!
Crypto is like the wild west, a digital gold rush, and those who sell you the shovels and picks will always win in the end. For a long time, traditional banks and society sold us on an illusion of ambivalence; they preached good monetary practice and fiscal policy while creating predatory loans, destroying the lives of millions, and leaving us to become debt slaves living paycheck to paycheck. This precisely is the origin of Defi (decentralized finance) - or rather what its antagonistic creation was designed to combat. However, this effort has been encumbered by poor user experience, hacks and exploits (and yet another BAYC owner giving his seed phrase away), and these problems are all too common. Defi as a business model for mainstream adoption has yet to prove itself, and up until now, it's been extremely difficult to onboard especially for users to easily jump from one chain to another. This large knowledge gap has benefitted early adopters with sufficiently large funds who know how to navigate the system. Decentralised Finance is supposed to be by the people, for the people; right now the concept is there, but the practice isn't.
This is how Chainge Finance is changing the game…
What is Chainge Finance?
Chainge Finance is built on the Fusion blockchain which allows for seamless cross-chain interoperability and automated financial services with an easy one-tap application, all while allowing the user to maintain custody of their own funds.
“When it comes to cross-chain, Chainge is the leading authority in the DeFi space. With 24 integrated chains and counting, the app supports over 100 assets so that users can maximize their wealth’s potential and enjoy a secure, flexible & worry-free financial life.” (Chainge Finance).
The Fusion Blockchain
I have a quick disclaimer on the dilemma I faced when writing this paper since I started researching this defi app: I quickly realized that a big part of Chainge’s innovation isn’t just built within the app, but also the blockchain on which it's built, which is called Fusion (FSN). I could go into depth about Fusion, but that is for a separate article, so I’ve decided to give the reader enough about the Fusion blockchain to more fully understand what Chainge has to offer. That will mean a gross oversimplification for this piece, but enough to grasp what sets the building blocks of this protocol apart (and readers choosing to skip the technicals and scroll down to the “Chainge Finance App” section).
3 Innovations out of Fusion
1. DCRM Tech Hack Immunity
“DCRM, or Distributed Control Rights Management, is a Fusion innovation that seeks to solve one of the blockchain community's largest hurdles, interoperability.” - Fusion Foundation.
DCRM was built out by four of the brightest and most creative minds in cryptography: Rosario Gennaro - Professor of Computer Science at CUNY, Steven Goldfeder, Ph.D. Department of Computer Science at Cornell University, Louis Goubin a professor of Computer Science at University of Versailles, and Pascal Paillier, Ph.D., CEO and Senior Security Expert at CryptoExperts. These four came together to validate, certify and help enhance the DCRM architecture, which was built specifically for token portability and token exchange across all networks. The way it works is similar to how centralized exchanges work: they have custody wallets on the blockchain and then transfer them to you. Essentially, the protocol has custody of different assets (BTC, ETH, AVAX, etc…) on an external blockchain. When people want to move their assets, the Fusion chain will use these external wallets to distribute the funds to the user. DRCM security is reinforced through a distributed key generation and signing algorithm, which, from my understanding, works like multisig custody: multiple people must sign off on a transaction to process it (with sharded Private keys for added protection) allowing for multiple backstops to prevent hacks. For example, if one piece of a cross-chain key is stolen, it can be blocked while maintaining access to the other uncompromised funds - therefore, no one can completely access the full private key, and its consensus works with no single node/validator ever obtaining full control of the assets. For you extra smooth-brained individuals, think of it like 2 Factor authentication but with more steps. (https://fusiondev.gitbook.io/fusion/ has a more in-depth look)
2. Cross Chain Interoperability/Universal Assets
DRCM technology allows for tokens to be exchanged, or simply moved, across different networks within seconds. What does that mean? Here's an example: let's say you have 100 USDC on Avax and Ftm, but you need it to move over to BSC. Normally you would need to bridge each individually to BSC, however with Fusion and the Chainge app you can automatically move all your USDC to BSC in one transaction. This ability to move your tokens through multiple chains all at once is what is what they called a “universal asset” - it allows for any token to be functional on any chain. Chainge Finance has fully harnessed this ability, and has become a unique player in the multichain paradigm (more on this further on)...
3. Time Frame Staking
One of the most interesting innovations from Fusion (and what initially drew my attention) is the ability to create "Time-Framed" assets aka Futures. Normally when you stake something, it is locked in a smart contract until you remove it; the asset only gains yield for as long as you leave it locked, and your rewards are distributed incrementally over time. However, time-framing assets allows the user to to stake their assets with full custody, while instantly receiving the rewards for their staked asset. As an example: let's say the APY for staking USDC is 10% and let's say you stake 1000$ worth of USDC. Normally, In order to get that 10% APY, you would need to leave that 1000$ of USDC staked for the whole year. However, if you instead staked using Fusion tech you simply set the duration of time you want to stake and receive the 10% instantaneously in the form of TF-USDC / USDC Futures. Your staked USDC would still have to sit there for a year, however, it is not locked in a smart contract: it is under your possession in the form of TF-USDC which you can send to other people, use it in other operations (for example writing options), or liquidate it back to spot in the Futures DEX and get regular USDC back if you change your mind about the duration of your stake. But first, let's look at the UX of Chainge:
THE CHAINGE FINANCE APP
So what makes Chainge so great? Simply put, it's the user experience.
I don’t think I’ve ever had an easier time using a defi app (i’ve used a lot of them); It's user-friendly and keeps things simple. You can set up an account with your phone number, or social media, and be ready to go, which can help onboard a lot of people who otherwise wouldn't know how to start.
There are two ways to use the app: Beginner Mode or Expert Mode. In beginner mode, Chainge finance holds your assets through your phone number, and then custodies it in a decentralized way so you don't have to worry about seed phrases. Overall, it simplifies managing wallets and protects beginners a little bit better. In expert mode, creating a fusion wallet is much like your standard wallet generation, and similar to metamask. This means you are responsible for the safety of your own funds and the safety of your seed phrase (important sidenote: when you decide to switch from beginner to expert, you will be creating a new wallet and will have to move your assets from your previous beginner wallet afterwards. You can find all of your old and new wallets in the “Wallet management” section of the app).
Another interesting feature Chainge finance wallet is that you can encrypt your seed phrase into a QR code that only you can open with your Chainge finance password. Fun fact, the founder Dejuan (DJ) Qian loaded up a wallet with 100 BTC and gave his QR code to the public and challenged people to try and hack it. As of today, DJ’s 100 BTC still remain in that wallet. According to DJ, safety is the #1 priority for Chainge and as of today, it has done amazingly well with zero hacks to this day (and for a multichain app this is relatively unheard of).
Let's talk about the functionality and what Chainge actually does…
INTEROPERABILITY: CHAINGE FINANCE’S MAIN SELLING POINT
Cross-chain, cross-chain, and cross-chain: Chainge Finance’s main selling point is its cross-chain solution. As we know, the crypto space is transitioning to a more unified and interoperable world. That said, I believe parallels can be drawn between the rise of globalization, and the international commerce of the past century, to what is going on now in the crypto space. What made globalization possible? It was the connection, transport, and overall technological maturity of markets - the infrastructure was there. Today in blockchain-based internet, we are seeing a trend toward multi-chain infrastructure, but have yet to build something fast, flexible, and secure enough for mainstream adoption. The infrastructure has not been there, until recently. Chainge’s solution with the use of universal cross-chain assets is a financial defi feature that has simply never been done before; we are now only limited by the operational possibilities of the assets, not their native chains. Chainge’s cross-chain roaming solution allows you to seamlessly move over 100+ assets on 24+ blockchains instantaneously (11 of which are non-EVM compatible! With more being added by the day). Native chains, and their fees, are no longer an issue when making transactions, using dexes, or adding liquidity. No more needing to use bridges each time you want to move your assets. No more wasting time waiting for your assets on the other side, and no more security headaches with protection from high-grade Fusion security. This roaming is both fast and affordable on Chainge finance, allowing for a shift out of defi’s current liquidity isolationism to a more cohesive and interoperable landscape. And people are taking notice with close to 450k users, 170 million TVL in liquidity pools, and an ATH of 4 million dollars in daily trading volume on the app. How long before the network effect takes hold for this project?
Cross-chain roaming solution: https://chainge-finance.medium.com/chainge-innovation-the-universal-cross-chain-solution-is-here-a9bee407762e
CHAINGE FOR PAYMENT SERVICES
It’s important to note that from the beginning, Chainge was designed to become an all-in-one banking app, with cross-chain at its core. However, it has grown into so much more by building a decentralized application and branching out into various complex DeFi tools such as an escrow service and a historical first decentralized Options DEX. And all of this was achieved through a focus on its underlying tech instead of corporate structure - this is something I commend them for because they have come a long way and added real value to the space. They still are building things for business integration, but they have really been pushing to build out their application’s utility, which brings me to my next topic…
One of Chainge’s most promising features is its dex trilogy (spot, futures and options) and its upcoming integration of a cross-chain liquidity aggregator. While the Spot DEX, Futures DEX and Options DEX are fully functional now, Change Finance will soon become the most liquid DEX on the market. Chainge will send queries to the top active DEXs on its backend, and find the best price for your target pair swap, automatically splitting the order between DEXs across 11 chains, and then returning with the absolute best trading rates.
The Chainge Finance DEX, empowered by the cross-chain liquidity aggregator, will combine the DCRM technology and swap pathfinder algorithm to facilitate traders’ cross-chain swap orders and guarantee top liquidity to its users.
At the time of this paper Chainge has integrated over 24 blockchains - both EVM and non-EVM compatible - with the ability to swap over 100+ assets, with more currencies being added by the day. What's so amazing about this, is that no other cryptocurrency protocol can do that. No current protocol is as interoperable as Chainge, therefore no other protocol can aggregate liquidity from so many chains.
The first version of the cross-chain liquidity aggregator is set to launch mid-May 2022 and to begin with, it will be aggregating liquidity from 33 DEXs on 11 chains as follows:
If you can get through this list without taking a breath then kudos.
How will it work?
Chainge.Finance deploys aggregator smart contracts on each of the 11 chains and 33 dexes. When a user wants to swap token A for token B, the smart router will query the aggregators and determine the real-time liquidity for the A/B pair in all DEXs on each chain. The smart router will return the best trade combined with the cheapest gas to execute the order. For example, a certain amount of token A swapped in any combination on Ethereum, in Uniswap + Sushiswap DEXs, and on Binance Side Chain in Pancake DEX etc. until the total swap amount of token A is reached.
After the user places the order, the following steps will be executed:
- Token A is wrapped into the fusion chain (no matter what chain token A is on)
- The transaction to burn all token A universal assets on fusion is signed
- The burn receipt is used to call different proxy swap smart contracts on each chain to use token A on those specific chains to execute the swap.
- Within the slippage margin, the swap order will be executed (and if the slippage margin is exceeded, the swap deal will be only partially completed and the user will immediately get the remaining portion of A tokens back)
Thus, the smart router finds the best route to get the user the highest possible token B amount when exchanging token A, and since the deal is split into multiple swaps on different chains, the user is actually benefiting from the sum liquidity of all DEXes on all integrated chains.
And that’s how Chainge guarantees its users the absolute best trading prices on the market.
Practical usage example
Elon is going to use 50 million USDT to buy ETH, and his USDT is distributed across five different chains: 10 million USDT on Algorand, 10 million USDT on Solana, 10 million on Tron, 10 million on Ethereum and 10 million on BSC. He would usually perform this swap on Uniswap since it has the best liquidity for the USDT/ETH pair. However, finding a simple + and cost-effective way of moving these assets to Ethereum is a horrible hassle and implies switching between CEXs and bridges, but - for the sake of this example - let’s assume Elon does manage to move the assets onto the Ethereum chain.
If he swaps all 50 million USDT for ETH in Uniswap he is going to get 4385.4ETH with a 69.1% slippage. He knows that the USDT/ETH pair is available in a lot of different DEXes on different chains like BSC, Polygon, Arbitrum, Avalanche etc, but there is only enough dex liquidity to cheaply swap 20 million USD on Ethereum, 12 million USDT on BSC, 10 million on Polygon and 8 million on Avalanche.
To avoid performing numerous transactions, and thus losing money, the Chainge cross-chain liquidity aggregator will find Elon the best route and automatically perform all required operations "behind the scenes” on the app's backend. In this example, through Chainge, Elon will get 5627.83 ETH on Ethereum, 3376.69ETH on BSC, 2813.91ETH on Polygon, and 2251.13ETH on avalanche, amounting to a total of 14069.56 ETH
If Elon uses the Chainge DEX he will have the assurance that he is getting a better price than any other DEX out there, as well as a smooth and simple one-click process to swap his assets. In addition, all received assets will be wrapped on the Fusion chain thus making them universal assets that can cross-chain roam to another chain within seconds.
So, to conclude, this use case should render obvious the huge advantages of using the Chainge Finance cross-chain liquidity aggregator, soon to be the most liquid DEX on the market.
Chainge/Fusion is the true king when it comes to the interoperability narrative.
ATOM and DOT, the kings of interoperability, don't come close to what Chainge has already accomplished (funnily enough, they are part of Fusion's list of compatible chains). Furthermore, the dex is super straightforward to use - you simply hit the exchange button on the front page and it works similarly to any centralized exchange. However, all the transactions are decentralized and the fees are super cheap. Chainge actually does not charge anything per se, and the fees you do pay are a result of the gas fees from the chains which you are swapping out of. Here is a breakdown of the fees Chainge does charge:
- SPOT DEX fee -> 0.1% to Chainge + 0.1% to LP;
- Futures/Options DEX fee->0.4% to Chainge + 0.1% to LP;
- Options exercising fee -> 1% to Chainge
- Cross-chain fee -> 0 % to Chainge + blockchain fees in the blockchains’ native coins — goes to the specific blockchains’ miners
- Blockchain fee -> variable depending on the blockchain you want to use - Escrow service fee -> 0.5% to Chainge (reduced to 0.3% when both parties use $CHNG as performance bonds)
- Fusion gas fee -> to use the FSN Blockchain. FSN Tx is super cheap though: gas is 1 gwei = 0.000000001 FSN (which is basically free)
Honestly, it's been really fun trying out the dex and app. What normally would take me 30 minutes (or sometimes hours) to bridge over a bunch and swap assets, is now executed within a couple of seconds. Recently, I needed to move assets from chains that I no longer was interested in; it wasn't a headache because, with Chainge, I was able to move everything back to the destination chain I wanted. The Chainge dex gets me good prices, it's cheap, it's integrated into almost every L1 I use, and I can seamlessly manage multiple wallets. It really is a game-changer: a bridge, dex, and wallet all in one place.
DEX FUTURES and Options
The Chainge dex offers more than just your standard dex features; it also offers a futures & options market. Traders can buy/sell and create their own options contracts. All of this is done natively on-chain in a decentralized fashion. Also, much like your standard dex, you can provide liquidity here for futures liquidity, options liquidity and spot liquidity.
Here is where they caught my eye: Chainge allows you to do single-sided staking in the form of time-framing with 12% APY on USDT and ranging APYS for other assets. Now, what makes this futures market possible? Let's get back to the idea of time-framed assets: essentially liquid interest-bearing assets with the ability to specify a purpose and duration period. Thus, when you “stake” your assets on Chainge, you have a maturity date at which your assets will return back to spot. You receive your rewards instantaneously in the form of TF-USDT. TF-AVAX, TF-CHNG, etc… Essentially these funds are locked in staking for the designated amount of time and are returned back to standard tokens upon reaching maturity. Here is a graphic for you visual learners:
Now, these timed framed assets aka futures are precisely what allows Chainge to have a futures market; now assets are not only given value based on quantity, but also based on the time till they reach maturity. This opens many strategies for you to use such as: a delta neutral strategy, hedging, time arbitrage, and other more original strategies. For example, you can provide liquidity to the futures market like the TF-USDT/ USDT pair gaining a 65% APY; what's advantageous about this strategy is that you gain the time-framing rewards instantly and now you can put that staked amount to work again by providing liquidity and continue to gain pretty good rewards in TF-CHNG (65% APY atm for the TF-USDT/USDT pair). However, take note that in a Futures lp pair, the APY applies only to the spot part of your pool. Why? Because you’ve already gained a generous APY instantaneously when time-framing the other half of your assets. While some might find it misleading, it does make sense since it’s only fair you don’t get an APY twice for the same asset. Furthermore, since the rewards are given in TF-CHNG, if you decide to liquidate your rewards in the Futures DEX before the maturity date, you will be exchanging them at the given rate, so it’s probably best to keep your rewards untouched til the end of the year if you want to get the full promised APY. But the beauty here is you can choose, which is more than most liquidity farming solutions offer.
Having that said, their APYs are still very competitive and amongst the highest on the market.
Another benefit of providing futures liquidity in this way (besides extra rewards) is zero impermanent loss, because you're virtually pairing the same token together. So at the end of the year the two “parts” of the pair just add up and become one. -This is where the ability to liquidate your time-framed assets back to spot comes from.
Overall, I love the dex, it’s fast, it's cheap, and it’s versatile. We don't see too many derivative markets (or projects creating derivatives) because it's difficult, yet Chainge has done a great job laying the groundwork, and they keep shipping day in and day out with updates to their app.
Decentralized Escrow Service
Chainge also offers a decentralized smart contract escrow service - I think this is really relevant with the whole Luna Kwon v Algo v GCR bet debacle (essentially GCR & Algo bet Kwon that Luna would be under 88$ in one years time; Algo bet 1mil, GCR bet 10 mil, and Kwon matched them). The problem was that they didn't have a decentralized way to lock the funds away so they had to send their funds to a third party (Cobie) to hold the funds for them, and then - after the year timeframe is up - distribute the funds to the winners. Chainge solves all of this third-party custody dilemma with the escrow service. Any user would be able to write up a contract and agree to terms without having to use a third party. This also has broader application than just taking bets - for example, a company could do business directly with other businesses without the need for a middle man. Traditional escrow services are expensive anywhere from 5-10% commission. However, with Chainge it's only a 0.5% fee. It’s important to note here that Chainge again is really the only one providing this kind of service. On the surface this might not sound all that amazing, but there's definitely a huge demand for this in the market..
If you want to read more about the decentralized escrow module or go through some walkthroughs, this is the place to do it:
As always we need to check out the tokenomics; often, tokenomics are more important than the actual product itself- at least, when it comes down to investing. So let's see what we got here starting off with the token allocation above.
As you can see the first 10% was generated from people signing up and becoming active users on the www.chainge.finance website. In the beginning, there was no Chainge app, so in order to market the project and get hype, the Chainge team decided to give CHNG to the community to spread the word. Then when the app launched, they allocated another 15% to referrals, bonuses, and other user promotions. 5% went to big liquidity providers and FSN holders (which I think was basically an airdrop to loyal members in the beginning) and the rest is pretty self-explanatory: 10% for partnerships, 30% for liquidity rewards, and another 30% to incentivize the use of the dex and other financial services offered by the app.
Now you're probably wondering where's the private sale, where's the team allocation, and where does the team secure the bag? Well, there is no private sale, no team allocation, and no one to dump their bags on your head. The team makes their profit through protocol revenue, which means that the team is forced to ship to reap the benefits; they are incentivized to make the project the best it can be, and the more traction it gets the more money they take home. It's a win-win situation for both investors and the team. Now let's move on to tokenomics:
Firstly, the team does a quarterly buyback-and-burn with 25% of protocol revenue. To be honest, I'm not a fan of buyback-and-burn mechanics - I'd rather they use the money for something more useful than a short-term pump that gets retraced or front run. But hey, it isn't the worst either. I don't know how much revenue they bring in, so I'm not even sure if the buyback has a big effect on the price. Secondly, if they take a percentage of every escrow transaction, they earn a greater distribution for escrows done with Chainge bonds.
Owning CHNG also gives you governance privileges, and CHNG that is time-framed earns rewards from the writing of options in the futures market. Lastly, and probably the most important detail: CHNG can be used as universal gas for any chain. Overall, I think the tokenomics are pretty good; they are not groundbreaking, but definitely better than most.
Furthermore, the private sale with no team allocation calls for natural growth and a real attachment to the project's future improvement. Overall, I'd give the tokenomics a B+ because pretty much all rewards are given to the community. If Chainge gains traction long-term and more people provide liquidity on the dex, CHNG will pump as a result and cause a demand for the token. So realistically, the way numbah-go-up for $CHNG is through growth of the dex’s usage and deeper liquidity.
Send and receive… through Twitter?!
One major update before we wrap this up…
A major hurdle to mass adoption is the complexity and bamboozling nature of operating self custodian wallets…
Those protocols that innovate and make this process as simple as possible will be able to address a market that is orders of magnitude larger than our current goldfish bowl.
So, as you may have guessed by now, Chainge have thought about this and came up with a beautiful solution.
Send and receive tokens through the Chainge App with the use of connected Twitter Handles… Yes, you heard the right.
If your recipient has the Chainge App and it is connected to Twitter, through a very simple process, they can then begin accepting tokens from others who have done the same procedure.
It is interesting to see projects look beyond the fourth wall and into the real world. Progress like this is much needed for this space to flourish into mass adoption. Kudos, team.
At my first glance of the Chainge app, all I saw was the single-sided USDT staking and earning passive income as the main selling point. However, once I looked closer and actually used the app, I immediately changed my mind: I realized Chainge’s main selling point was cross-chain roaming, and perfectly set up for this new multi-chain iteration of defi. I learned what true interoperability meant and what it looked like; the promises that ATOM and DOT gave us, Chainge Finance is fulfilling. In addition, over the past few weeks, I've seen this team ship day in and day out. They are constantly adding new blockchain integrations, new assets, new trading pairs, etc… The founder plans to have over 1000+ assets on the dex by the end of the year (which to me is incredibly bullish). Fusion is the only blockchain that is compatible with every blockchain in existence, and Chainge finance does a wonderful job of leveraging that ability and making a fantastic application.
This project’s token price is completely related to its strong community, and from my perspective, it seems that this project is very community-oriented. Chainge Finance’s dex and seamless cross-chain interoperability, as well as the implementation of the cross-chain liquidity aggregator, are going to bring them traction - it’s only a matter of time. Chainge finance has the tech and the tokenomics to make it a sizable project. And I think it’s currently undervalued for what it offers: a dex with derivatives, cross-chain roaming, escrow services, time-framing and interoperability. I'm truly excited about this project's future and what it and its team continue to add to the space as a whole. REALLY excited about their cross-chain liquidity aggregator which promises the highest liquidity & best trading prices in the crypto space.
I have included a list of links that can elaborate on all the topics discussed & more:
Time-framing and futures liquidity pools: https://chainge-finance.medium.com/2-risk-free-ways-to-get-passive-income-time-framing-futures-liquidity-pools-ab464b2bca17
Cross-chain roaming solution: https://chainge-finance.medium.com/chainge-innovation-the-universal-cross-chain-solution-is-here-a9bee407762e
Underlying DCRM tech: https://fusiondev.gitbook.io/fusion/learn/fusion-features/dcrm-1
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