Structures a network of the blockchain where the distributed database allows digital assets to be securely exchanged.
To achieve the most convenient and fastest cross-chain swap process, XY Finance introduces X Swap and Y Pool. While X swap, as a decentralized non-custodial interoperability solution, communicates and connects different chains, providing a convenient interface for users to transfer a wide range of tokens to different blockchains and L2 roll-ups, Y pool maintains an efficient cross-chain liquidity pool as a pillar of X swap.
With these two prominent mechanisms as the infrastructure for our XY ecosystem, we are thus able to create more opportunities for this cross-chain network to extend further and further non-stop. User experience-wise, XY Finance is friendly and intuitive for individuals and institutions alike that intend to transfer their assets to other chains and cash in on their capital as liquidity to obtain high yield return.
How a transaction is processed & how Y Pool supports X Swap
X Swap is a decentralized full cross-chain DEXs aggregator. It aims to help users gather the most efficient cross-chain paths/routes amongst the DEXs on our supported chains and take care of the trading details and trivialities in the midst of the transactions. With X Swap, those who are agonized over the cumbersome cross-chain swap procedures can now transfer their funds to any chains in an instant with just one click.
X Swap is mainly composed of two parts as listed below.
Swapper is a smart contract deployed on different blockchains. It handles the transfers for users of X Swap, you may as well think of it as some sort of wallet of cross-chain liquidity or an address that helps store your funds in a specific form during the bridging process. Once a user initiates a transaction to Swapper with a quotation, Swapper will automatically find the best routing using our thoughtfully-designed algorithms to bridge the user's token to the bridge token (tokens recognizable and acceptable to the bridge). When the other essential component of X Swap,
Consensus, will verify and then confirm the data, message, and resources of the cross-chain transaction, Swapper on the destination chain will receive the "processed" (technically speaking, another) transaction from
Consensusand then utilize the liquidity in its wallet to swap the desired token to the very user.
Consensus comes in as a role of what we call the "actor," "validator" or "verifier", whatever floats your boat. You may think of it as some sort of catalyst for the bridging solution to continue smoothly and securely.
Security-wise, it is comprised of multiple nodes from different parties to guarantee the correctness of the cross-chain swap process and the validity of X Swap. As noted earlier, Consensus detects the user's request for cross-chain transfer and calls for Swapper to execute the swap transaction on the destination chain. Once the execution is completed, Consensus will validate the swap transaction and claim the credit by calling the Swapper on the source chain. While finding the best routes (bridging), Consensus plays the role of a verifier between blockchains to enable communication and overcome the trust boundaries. Further details are given in the hyperlinked box below.
Y Pool is a cross-chain liquidity pool protocol. Users can provide their liquidity to Y Pool and earn rewards in proportion to their contribution from the swap fees and the liquidity mining. What makes Y Pool exceptional is that it manages and processes the liquidity on different chains simultaneously. For instance, a stablecoin-based (i.e. USDC, USDT, etc.) Y Pool will manage the stablecoin liquidity on Ethereum, Binance Smart Chain (BSC), and Polygon Network and then provide the liquidity to X Swap wherever necessary, yet as to how Y Pool tackles the cross-chain liquidity, here we present to you the notion of
A Y Pool settlement contract is deployed on a decentralized settlement chain in order to keep track of the cross-chain liquidity and the balance of each liquidity provider (LP). The settlement contract updates the record whenever ➊ LPs deposit/withdraw their assets or ➋ X Swap capitalizes on the cross-chain liquidity.
As liquidity providers provide their assets, their liquidity mining rewards begin to accumulate as well. The rewards consist of two parts: ➊ cross-chain fees and ➋ XY Token ($XY) rewards. While cross-chain fees need to be earned from users who experience X Swap services, XY Token rewards, on the other hand, are distributed by XY Finance to incentivize XY Protocol contributors. More details with regard to Y Pool are given through the hyperlinked box below.
With the X Swap and Y Pool, XY Finance establishes a thorough cross-chain swap mechanism and seamless user experience for both brands and traders. Besides, we have also devised a rewarding mechanism for crypto holders to increase their yields through participation. That having been said, this is just the beginning. XY Finance will continue to extend ourselves and keep evolving with the DeFi community to introduce new features. With the Research & Development Team's creativity and XY DAO community's engagement, XY Finance will constantly vet our own products and do the utmost to develop more diverse functions to further stabilize this ecosystem.