It is becoming increasingly clear that we’re headed towards a multi-chain future. A whole plethora of alternate L1s will and continue to flourish. Optimistic and zk rollups will play a key role in scaling Ethereum, as such, L2s will continue to gain widespread adoption too. Then there are standalone ecosystems such as Cosmos and Polkadot, which are incredibly ambitious and will undoubtedly capture a % of the market. As a result, the need and demand for swapping native assets cross-chain will continue to rise. Certain solutions do exist, however, there’s probably a massive opportunity here to serve this largely untapped segment.
The lion's share of current DEXes are confined by the blockchain they’re deployed on - this is a drawback, not a feature. I personally see wrapped tokens and cross-chain bridges as unsecured and tedious solutions. There are major risks associated with these implementations - as I’m sure you’re well aware of.
If you’re a blocmates regular, then I’m certain you’re aware of LayerZero. In a nutshell, LayerZero is building an omnichain interoperability protocol and messaging transport layer that enables blockchains to communicate with one another and connect them. It’s building a crucial piece of the tech stack at the infrastructure layer. You can learn more about it in our in-depth guide.
As such, any protocol that intends on leveraging this impressive solution will be 100% chain agnostic, omnichain and truly a unique interoperable decentralised application - ain’t that impressive?
With that said, let me introduce you to InterSwap. Simply put, InterSwap is the first fully composable native asset cross-chain AMM with unified liquidity that is built on the LayerZero network. InterSwap facilitates the secure and smooth exchange of native assets across different chains in just one transaction without the need for an intermediary chain, bridge, or wrapped tokens. The vision is to build a one-of-a-kind, novel AMM DEX that can frictionlessly initiate a single transaction trustless swap.
InterSwap is a new-gen cross-chain AMM DEX. Unlike other DEXes, it isn’t deployed on a single blockchain. As I said, it is completely chain agnostic. It’ll have coverage over EVM and non-EVM networks. Do note that InterSwap is completely different from a multi-chain DEX.
Multi-chain DEXes are simply deployed on multiple networks, but they do not support native cross-chain swaps. On a traditional multi-chain DEX or DEX aggregator, you can swap crypto within a network, and you will have multiple chains to choose from, but you won’t be able to move your funds cross-chain. For that, you’ll still need a bridge.
In this article, I intend to explain the current cross-chain landscape, the problem, what InterSwap is, its features, its benefits, and much more.
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The Current Problem of Bridges
The proliferation of Automated Market Makers (AMMs) is continuing at a brisk pace, but none of the current cross-chain AMMs fully meet the criteria for trustless and verifiable delivery.
Currently, cross-chain solutions available on the market rely on intermediaries for cross-chain transactions, which can be divided into three categories:
- Wrapped/pegged Assets
- Bridge Tokens
- Intermediate Chains
These implementations are imperfect, to say the least. Cross-chain bridges have experienced major hacks and exploits. Ronin’s $625 million hack, Wormhole’s $320 million exploit, and Harmony One’s $100 million Horizon bridge hack, just to name a few. Vitalik, of all people, is sceptical of cross-chain bridges, too - it surely can’t get worse, right? We’ve already established that we’re headed towards a multi-chain future. Thus, novel solutions like InterSwap are needed to realise this dream. Furthermore, these cross-chain bridges have become a singular large attack vector that has obviously impacted the various wrapped tokens too. If the underlying token is at risk, well, then holding a wrapped token adds another layer of risk.
There are solutions such as THORChain that use pairwise liquidity pools to transfer tokens between third-party chains. Each liquidity pool binds a specific third-party token to RUNE, which acts as a common intermediary between the two chains.
Whilst this is a workable solution, it comes with certain glaring disadvantages. It is a cumbersome overhead in the transaction process that makes a simple operation quite complicated. This is evident in the complexities of the THORChain transaction algorithm. InterSwap will enable direct cross-chain swaps without THORChain’s inherent scalability bottleneck, cumbersome intermediate currency, or heavyweight protocol.
What is InterSwap?
InterSwap enables a secure and seamless exchange of native crypto assets across different blockchain networks through the use of the LayerZero network, providing a trustless solution. This is achieved without any intermediaries and in a single transaction. Now that’s something, eh?
Just think about it, the opportunities are endless. As an example, suppose I want to swap some of my ETH for GNS - a token on the Polygon network. Currently, based on the tooling we have, I will first have to swap ETH for MATIC on Ethereum. Then I will have to bridge MATIC from Ethereum to Polygon. Then finally, I will be able to swap the MATIC for GNS. I mean, do you see how much of a hassle that is? The gas, time and manual labour expended is surely a pain in the ass! With InterSwap, it is a simple cross-chain swap from ETH on Ethereum to GNS on Polygon in a single transaction. If that doesn’t get you excited, I don’t know what will.
ANOTHER THING! If people have used Stargate in the past then they may have been met with some quite high transaction fees... InterSwap have been working hard in the background to drastically reduce the cost of performing a swap to make it more in line with what you would expect to pay.
I won't get into why Stargate and InterSwap are completely different projects and products here... I will save that juicy alpha for the next article. But, if you are thinking well... we already have stargate... then you aren't paying close enough attention. Any asset, any chain... Stargate isn't that. Anyway, I will leave the good stuff for later 👀.
Furthermore, InterSwap’s AMM DEX will also be an attempt at solving the issue of fragmented liquidity in DeFi. In case you’re unaware, currently, liquidity providers must choose a specific pool for each chain, fragmenting liquidity in the process. However, with LayerZero’s underlying tech, that’ll be a thing of the past. InterSwap will provide unified liquidity across all chains, allowing LPs to receive fees from all incoming transactions across the pool. The introduction of such a feature will give CEXes a run for their money. One major reason why users trade on CEXes is because of deep liquidity and accurate price discovery. However, the reason why DEXes struggle with attaining this deep liquidity is that it is fragmented.
It’s also important to note that InterSwap is building a composable solution. Thus, the movement from chain to chain will be seamless and frictionless - true interoperability.
At launch InterSwap will have the following use cases:
- Single transaction native assets cross-chain swaps
- Liquidity Integration level:
- Multichain AMMs can enable native cross-chain swaps
- Multichain lending protocols can go cross-chain
- Bridge aggregators can gather additional routes
- Multichain wallets can enable cross-chain exchanges for their users
Features & Benefits of InterSwap
I meant it when I said that InterSwap is a one-of-a-kind AMM DEX. As such, they boast some impressive features, such as:
- Open Cross-Chain Markets: InterSwap is a decentralized Automated Market Maker that operates without any restrictions. It allows anyone to establish cross-chain liquidity pools using either native tokens or ERC20 tokens. Imagine a single liquidity pool with USDC on Ethereum, BNB, Polygon etc. - you get the idea! As a result, it’ll help in building unified liquidity in DeFi.
- 8+ supported chains: At launch, users can swap cross-chain across 8 EVM seamlessly, non-EVM chains will be added during the expansion phase.
- Custom liquidity rewards: DeFi farmers might be interested in some rewards, eh?
- Chain Agnostic: Interswap Protocol supports any type of blockchain and has coverage over EVM, non-EVM, Cosmos, Sui, Aptos and other blockchains.
The advantages of such an implementation may not be apparent right away. Don’t worry, I’ll help you.
- Security & Autonomous: InterSwap is realised as a collection of open-source, permanent, and unalterable smart contracts that are deployed on supported networks.
- No Intermediaries: InterSwap does not utilise wrapped or pegged assets, bridge tokens, or intermediate chains. This helps both LPs and users - as exposure to wrapped, synthetic and intermediary assets increases systemic risks.
- Multi-Asset Pools: InterSwap introduces two kinds of cross-chain liquidity pools for multiple assets: Weighted Pools for non-pegged tokens and Stable Pools for tokens pegged at a 1:1 ratio.
- Cross-Chain Smart Routing: InterSwap brings together existing liquidity and enables seamless any-to-any swapping through its own liquidity and cross-chain universal messaging, becoming a one-stop solution for all cross-chain exchanges.
It’s easy to predict the potential here. This is literally disrupting the DeFi landscape and spinning it on its head.
Of late, innovation seems to have taken a back seat in DeFi. It seems like we’ve been in fork szn forever. But it’s good to remind ourselves that gigabrains are hard at work and are building groundbreaking products that will help with DeFi’s mass adoption.
Comparison of Bridges
As mentioned with THORChain above, you can probably gauge that certain cross-chain swapping solutions already exist. However, it’s important to note that InterSwap offers a lot more.
My smol brain analysis interprets that InterSwap is building a truly innovative product on bleeding edge tech. Not many projects have the balls to speak openly against their competitors and objectively prove that they’re better. Healthy competition is needed in DeFi, it helps in raising the bar and keeps the builders on their toes at all times - in the end, benefitting the end users.
Current Status of InterSwap
At the time of writing this article, InterSwap is currently at the closed Alpha stage. The DEX smart contracts have been deployed on the testnet for 8 EVM chains, currently working on the 9th. Furthermore, the swap feature is available via the front end. As per their latest announcement, the front end is complete.
I sure as hell can’t wait to take the protocol for a spin. Wen open testnet? Thankfully, it looks like I won’t have to wait for long. As per the team, the testnet will be launched this quarter.
In the end, if you cannot already tell, I’m super hyped about InterSwap. I’m excited to see the future of cross-chain liquidity pools. I’m certain that they’ll unlock a host of opportunities for yield farmers. More importantly, they’ll aid in building unified and deep liquidity in DeFi. This will inevitably motivate traders to trade on decentralised exchanges. LayerZero’s underlying architecture, which InterSwap is leveraging, will also help in building composable solutions for the masses. We may reach a point where it doesn’t matter what chain you’re on, in fact, you likely won’t even know - as all the Dapps are composable and interoperable. It’s like in the TradFi world, everything is deployed on the TCP/IP protocol, but who cares? It’s the apps that are the differentiating factor.
That’s it for today, frens. I hope you found this article interesting and helpful.
Pitch Deck: https://www.interswap.io/PitchDeck.pdf
Telegram chat: https://t.me/InterSwap_Chat