Velas x Multichain

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Dmitriy

26 Oct 2022

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Seamless Integration, Boundless Possibilities: Velas Full EVM Compatibility for DApps.

Seamless Integration, Boundless Possibilities: Velas Full EVM Compatibility for DApps.

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Teriano Porter

7 Mar 2024

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Dmitriy

11 Aug 2023

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The Partnership

The partnership of Velas and Multichain will offer a simple, quick, secure, and cost-effective bridging solution to and from the Velas blockchain!

Demand driven evolution and expansion of the DeFi space simplified cross chain bridging processes, allowing a wider array of networks to became interoperable with one another.

Today cross-chain interoperability is a requirement for any competitive EVM, allowing for a broader range of create network to develop under a unified standard, with functionality in which liquidity is cross compatible and not fragmented.

This partnership will allow for liquidity to flow from all leading blockchains to Velas and vice versa, without being encumbered by low liquidity bridging solutions, allowing Velas to join the ranks of the top EVMs in the space by expanding its competitive advantages in the competition for TVL.

What is Multichain?

Multichain is the industry-leading interoperability solution with over $2B in Total Value Locked (TVL) and $87B in Total Volume. Better yet, it is a fully decentralized Multiparty Computation (MPC) network operated by a multitude of SMPC nodes. By supporting any blockchain using either Elliptical Curve Digital Signature Algorithm (ECDSA) or EdDSA encryption, users can bridge over 2900 assets across a very long list of 65 blockchains. It is a significant upgrade from the current bridging infrastructure available on Velas, which is limited to Ethereum and Binance Smart Chain.

In general bridging protocols take a user’s assets on chain A, lock them and mint the same amount of a wrapped version of that token on Chain B. When the user wants to send their tokens back to chain A, wrapped tokens are burned on chain B and the assets are sent back to chain A.

Multichain works in a similar way, but has some extra features that aim to lower the liquidity requirements for its operations and facilitate the overall bridging process for the users.

Having a liquidity pool of each asset on each supported chain would only work if there was always enough depth for everyone to transfer in-between the networks. This, of course, cannot be guaranteed and therefore becomes a risk for the user. Thus, the decision was made to at first transform all deposited tokens into “any-tokens”, which are nothing more than a 1:1 backed version of the original token. When a user wants to bridge $USDT from chain A to chain B, their tokens are swapped to $anyUSDT on chain A and an equal amount of $anyUSDT is minted on chain B. If there is enough $USDT liquidity on chain B, the user receives $USDT and the $anyUSDT gets burned on chain B. In such case, where there is not enough $USDT liquidity on chain B, the user will receive $anyUSDT that is redeemable on chain B for $USDT once the required depth is restored.

Furthermore, Multichain’s Cross-Chain Router allows users to seamlessly bridge the assets. This means that since the supply of “any-tokens” is controlled by Multichain’s smart contracts, there is always an unlimited amount of them on all connected chains. However, although “unlimited”, the supply of these “any-tokens” is always capped at the number of tokens deposited on the original chain.

Why Multichain?

Multichain is a trusted, established, and strong player in the DeFi space. Know by many to the standard of cross-chain interoperability and liquidity, with a track record of consistency and innovation, Velas wants to align their technology with those of similar vision. The vision of the standing and pushing the frontier of decentralised, transparent and user oriented evolution.

These cooperative efforts will benefit Velas in a variety of ways. The primal will be the ability for users across all the networks connected to Multichain to be able to bridge to Velas EVM, leading to more potential liquidity and protocol usage. Moreover, higher liquidity and on-chain activity will make Velas EVM more attractive to new and established protocols to deploy their software on the network, amplifying the effect and deepening Velas’ on-chain offering.

Changes

With the implementation of Multichain on Velas, the existing liquidity environment will experience changes and a transition to the new standard. In order to aid with that transition, the upcoming Wavelength AMM will be the first protocol to support the new liquidity standard. Along with it, in the documentation, current liquidity providers on Velas will be able to find the necessary information to aid them in the transition to Wavelength. From genesis, Wavelength will only support the bridged assets issued by Multichain.

Conclusion

Velas will fully maximise the support of Multichain in order to push its ecosystem to the new frontier of progress. The true capabilities of Velas can now be tested with Wavelength , showing the space what it is like to operate a protocol on Velas EVM.