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Solving DeFi Industry’s Liquidity Fragmentation and Clunky Protocol Interoperability

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The recently upgraded ETH Berlin on April 15 increased the gas limit size, resulting in lower transaction fees and increasingly active Ethereum. The DeFi (decentralised finance) model is the dominant factor driving activities on the network. Ethereum expects to resolve its scaling issues by the time the Merge upgrade occurs, when the Eth1 and Eth2 chains merge resulting in the complete switch to Proof-of-Stake.

A project or DeFi user seeing the traction of Polygon, which has now eclipsed the Ethereum network’s transaction count, can simply take advantage of Pontoon Finance relayer network feature to take advantage of both ecosystems from one vantage point. Pontoon developed the protocol in such a way as to make it fully composable and integrate into any DeFi application. Poon provides Liquidity Providers with the opportunity of adding liquidity to its cross-chain liquidity pool.

For so long, centralised exchanges held sway, until Uniswap brought in the DEX revolution that has continued to lead to the current DeFi industry. The result is poor liquidity across DEX due to high transaction cost, the risk of impermanent loss, and other concerns. Still, due to high transaction cost, risk of impermanent loss and a few other concerns, numerous AMM options keep proliferating, seeking to either ride on the success of their predecessors or extinguish their earlier competitors, a case which the industry has come to describe as Vampire mining attack.

Incentivised Relayer Networks and Liquidity Mining for Liquidity Providers across the chains Pontoon Finance solves continuous fragmentation of liquidity and trustless interoperability across protocols. Ponoon uses a decentralized relayer network to facilitate crosschain transfers that are gas-free, whether on sidechains, Layer 1, Layer 2, or commit chains such as Polygon trustlessly. A project or DeFi user seeing the traction of Polygon, which has now eclipsed the Ethereum network’s transaction count, can simply take advantage of Pontoon Finance relayer network feature to take advantage of both ecosystems from one vantage point. More importantly, the Pontoon staff designed the protocol to be highly interactive and easily integrate into any DeFi application. It offers Liquidity Providers the ability to add liquidity to the channel through its cross-chain liquidity pool. For this, LPs get TOON, Pontoon’s native token, to put forward governance proposals and staking for income.

By having the ability to farm new tokens through Pontoon's day-one multichain liquidity readiness, users can build access to multiple exchanges through a single liquidity pool. This image belongs to Miloslav Hamrik from Pixabay. In the recent ETH Berlin upgrade, on April 15, the gas limit size was increased, resulting in a lower transaction fee and heightened activity in Ethereum. A critical driver of the network's activities is DeFi, or decentralised finance.

The main problem is liquidity fragmentation across the different chains with protocols trying to take advantage of the reduced fees on BINANCE Smart Chain, Layer 2 solutions, or Polygon. Moreso, Pontoon team designed the protocol to be composable and seamlessly interact with any DeFi application.

Pontoon affords It was only until Uniswap ushered in the DEX revolution that we saw more DeFi solutions that existed. The result is fragmented liquidity across DEX, which is typically not native to the Ethereum chain. This fragmented liquidity is the result of high transaction costs, the danger of impermanent loss, and a few other considerations. Liquidity fragmentation needs to be resolved.

 

 Image by Miloslav Hamrik from Pixabay
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 5/6/2021

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