Boris Povar, the author of the EYWA cross-chain platform idea, talks about tokenomics, development of the cross-chain data transfer protocol, Gasless technology and ready-made solutions for bridges.
About the development of a cross-chain data transfer protocol
We are concurrently developing a cross-chain data transfer protocol and an application solution based on this protocol.
The task of transferring information between blockchains is not limited to transferring only tokens. If we are talking about smart blockchains with smart contracts, you can transfer calls. The idea is that we create a ready-made framework for blockchain and DeFi developers so that they don’t have to privately solve the problem every time they have an idea for some decentralized cross-chain application.
If you look back at the existing bridges between blockchains (there are already around 40 of them), it would be nice if there was such a protocol that allows you not to waste time on most of the bridges. As a rule, they are developed in order to solve some specific problem of some crypto-project. Accordingly, the task is to provide such an Open Source that will rely on a decentralized network.
Reviewing a lot of the serious protocols that are already working, it turns out that everything there relies on Proof-of-Authority.
One way or another, everything is run by some consortium or alliance of 20-30 organizations. This is considered to be enough.
We want to make a protocol in which the number of participants can run into thousands, and anyone can join in. But at the same time, it will work safely.
And, accordingly, integrate the maximum number of different DeFi ecosystems, blockchains with different structure (such as Solana, Free TON), give them such a gateway for interaction with each other at the level of building some applications, which will initially be cross-chain.
Now we see the following trajectory of DeFi development: protocols are created in one blockchain, and then they become multichain. They connect the same thing, deploy their smart contracts to each blockchain, and can work with one blockchain at a time.
Here, it will be possible to build the kind of logic that will allow multiple blockchains to be used simultaneously. It is clear that we will not have this protocol right away, we will implement it in parts. We’ll have to use Proof-of-Authority first. Then we will switch to full decentralization, where the DAO will manage the protocol, which works on voting, based on tokens, and, in fact, using smart contracts.
In addition, there is an applied solution, which is the transfer of liquidity, the transfer of tokens from one blockchain to another, and the functionality of decentralized exchanges.
We plan to have symmetric logic in each final blockchain, which allows assets to be moved, creating some kind of synthetic derivatives pegged to each other when they can be converted back. This is the first component, but it is not the only one. We add our own DEXes on the final blockchains with different automated market-making mechanisms.
Business logic will gradually evolve. We originally planned to have a DEX version of Uniswap V2 in each blockchain. Now there is an understanding that this is not enough, it will be necessary to have DEX for the exchange of stabelcoins, similar to Curve.fi.
We will deploy these DEXes in different end blockchains, thereby making a multichain service for users, which will give them various possibilities, such as cross-chain Yield Farming without impermanent losses. People will be able to deposit money and profit from cross-chain farming and from a referral program to attracting liquidity providers.
Another cool feature is Gasless technology — you can send a transaction to exchange an asset, and pay for gas with any asset you have, instead of a native token like ETH.
For example, you have stablecoin, and that’s enough to make a transaction without Ether at all. The same situation arises even on a larger scale, when you, for example, are a liquidity provider, and you need to provide liquidity to a cross-chain pool, for example, from two blockchains, and there you have to pay commissions. And that’s where the Gasless case will be used.
First of all, token emission must be fixed and limited, and at the same time, quite substantial. Secondly, when the EYWA Relayer Network is fully launched with Proof-of-Stake, the tokenomics at the Relay level will be such that you have to make a deposit in order to participate in this consensus. After that, you create an individual staking pool to which you can attract stakers and assign a commission from this pool, additional income for validators. Emission Rate will be law (around 10%), the validator will be able to earn 30-50% per annum. Similar principles are used in Solana, Free TON, and Avalanche.
As for the farming and DEX we will have, the principle Is as follows: since the lion’s share of liquidity providers in DeFi consists of farming, my idea is: the protocol will take a commission for trading in our pools and our DEXes, we will not give them to liquidity providers, we will compensate them for adequate yield with our token.
But the commissions that we will get from trading will be used to support the rate of this token. Because the token emission is limited, we can’t mint it endlessly. That’s how we make the economy complete. You make a profit with the protocol, and that profit is returned to the token. Accordingly, the number of tokens is not growing, and here you can balance the system so that the token value increases.
Then you can use two approaches: either take and, for example, burn half of the redeemable tokens, and invest half in the “treasury” or place them all into the “treasury”. Then use that money for grants, because we’re creating an infrastructural history.
When you have a limited fixed emission, the protocol generates profit, which returns to the rate, then the token will not fall if you keep this balance.
All tokenomics is based on smart contracts. In smart contracts, you can set the Emission Rate, then you can reduce it, then you can move the network nodes to hybrid remuneration. The idea is to dynamically monitor the parameters of this system, to adjust it.
We won’t have crazy farming. We will set up a specific farming program on each pool for a certain period of time to calculate how much liquidity we are ready to provide.
Based on a large decentralized network of nodes, additional business logic can be added in the form of DeFi oracle services. For example, add price feeds, VRF and start trading them.
The main problem of liquidity providers in AMM DEX is that the amount of liquidity that can be put there is not limited, that’s why the yield is falling so rapidly. For cross-chain trading purposes, $1 billion is not needed in the stable pool. We will limit the number of LP tokens that can be staked in order to get a farm. This will allow us not to overpay.
This makes it possible for liquidity providers to predict their income, because they have only one variable left — the price of the token. And the token price will be supported by the profit that is derived from trading and other points of protocol monetization.
In addition, there are various interesting mechanisms for blocking rewards. There are mechanics where liquidity providers are incentivized with rewards that can be unlocked by providing liquidity with your token for a while. This makes the system balanced and fair. We make offers to a limited number of liquidity providers for a limited amount, allowing you to get profitability 1.5-2 times higher than the market on this asset.
About current development and short-term prospects
At the moment, we have an oracle network that works with any EVM blockchains that we may add, and we need to deploy our smart contract infrastructure on each of these networks. On testnets, we already have Ethereum, Binance Smart Chain, Polygon, Huobi and Avalanche. We are now teaming up with RSquad to integrate Solana. There’s a different logic for processing data and accounts, which is quite an interesting task. I also want to connect TRON, Moonriver and possibly NEAR. Then — “Chinese comrades” — NEO, Ontology, etc. But you need to clearly understand the market conditions.
The first thing we will do is create liquidity hubs with the most popular assets (stablecoin, Ether, and Bitcoin). A hub is when you have a pool in one cheap blockchain with many assets, essentially the same, but they are synthetic assets that are issued by our system. In this hub, you can exchange whatever you want, getting into the blockchain you need. This can be done with or without Gasless. From a business point of view, there is no point in duplicating all pools across all blockchains.