The well-known scalability limitations of Ethereum have led to the migration of many Defi, NFT, and other decentralized applications, along with their users, to a mix of layer-2, sidechain, and alternative EVM-compatible layer-1 blockchains. Multi-chain and layer-2 infrastructure is here to stay, so this creates an increasing need to reliably and trustlessly communicate between these systems. It is also vital to Swing’s decentralized cross-chain liquidity protocol in navigating the fragmentation, high fees, bottlenecks, and complexity of existing networks.
Connext is a leading protocol for fast, fully trustless communication between blockchains. To date, the network has completed over $850m of cross-chain transactions across 9 supported chains (with another 10+ chains on the roadmap over the next few months). The project is funded by close to 100 of the top funds, layer-2 projects, defi protocol founders, exchanges, and staking service providers in the space.
The Connext network enables developers to build an ecosystem of natively cross-chain applications from simple bridges to more complex DEX aggregators and cross-chain swaps, ideal for Swing’s mission with significant advantages over other interoperable systems.
Interoperability and Liquidity
Connext’s protocol consists of a simple contract using a locking pattern to prepare and fulfill transactions across chains. It utilizes a set of off-chain nodes, known as routers, that provide liquidity and relay data between different chains, earning fees in return.
Users lock funds into a conditional transfer with a router on the origin chain, that unlocks automatically if the router creates a corresponding conditional transfer with liquidity on a destination chain. This enables Swing to access liquidity across the Ethereum, BSC, Polygon, xDai, Fantom, Arbitrum, Avalanche, Optimism, and Moonriver mainnets, with other chains planned for future support.
Connext’s virtual AMMs let routers price cross-chain transfers based on available liquidity, incentivizing arbitrageurs to rebalance liquidity for profit. Route auctions route transfers to whichever node can supply liquidity the cheapest before transactions are prepared and fulfilled, enabling aggregation and load balancing of liquidity between different routers.
Trustlessness and Security
Connext’s locking and unlocking mechanisms avoid introducing third-party validators that control assets. This makes it impossible for Swing user funds to get stolen even if routers in the network were to collude, delivering the trustlessness necessary for layer-2 adoption.
Connext utilizes the same security model as other locking systems but is also less vulnerable as all interactions across chains are with 1:1 assets, such as ETH on Optimism to ETH on Arbitrum. The team is also working on a slashing mechanism to penalize routers that do not complete transactions they have committed to.
Extensibility and Scalability
As Connext protocol works the same way on any system, it can easily and quickly expand to support new sidechains, layer-2 networks, or other layer-1 compatible chains. This allows Swing to scale efficiently as adoption and demand grows.
Connext can also leverage the network’s existing liquidity and infrastructure as a base layer, building a stack of additional interoperability protocols on top to extend its capabilities over time. Given the increasingly diverse nature of networks in the ecosystem, the extensibility of Connext provides the necessary tools to further the growth and functionality of protocols like Swing.
Low-Cost and Capital Efficiency
Connext allows Swing to avoid the high gas fees and slow transaction bottlenecks of Ethereum as its transactions don’t need to touch the base layer when moving between layer-2 networks or sidechains.
Connext also offers great capital efficiency, with the mainnet showing hundreds millions of dollars of volume routed from only tens of millions in liquidity, not only lowering costs for users but making the protocol attractive to liquidity providers.
Swing is a cross-chain liquidity protocol on major EVM networks such as Polygon, BSC, Avalanche, xDai, Fantom and more. It aggregates major liquidity sources and bridges to execute the best price and lowest slippage on trades and transfers. The project helps crypto traders and yield farmers move crypto capital efficiently across blockchains via a web application and upcoming API product.
Connext is an open network for fast, trustless communication between blockchains. Unlike most other crosschain bridging systems, Connext does this without weakening economic security, instead offering the same trust considerations as the underlying chains.
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