What Is Stargate Finance Crypto? What Does Omnichain DEFI Mean? – Explained!!

What Is Stargate Finance Crypto? An overview of Stargate finance, how to protocol works, and how it enables cross-chain liquidity transfers?

Stargate unlocks a new era of cross-chain t5  apps and pushes the ceiling on the deployments   of new ideas and protocols that are not specific  to a single ecosystem this is an overview of the   first protocol built on layer 0 called stargate  i’ll go over how the protocol functions what   also some risks that come with the

Protocol   hello everyone welcome to one life investments  where i break down complex crypto topics and   create helpful guides and content that anyone  can understand before jumping into the video   a quick disclaimer that none of the content on  this channel is any financial advice including   this video the videos

Are only for educational  or internment purposes and you should always do   your own research before investing or using any  protocols or services if you’re not familiar with   layer 0 and how that works please watch the video  after this and the video will be in the top right   corner or the description and learn more about 

How they are achieving this omnichain future   chapters to skip forward to a section you’re   most interested in alright so let’s dive in first  let’s start with the definition from the website   itself they say stargate is a community driven  organization that’s building the first fully   composable native asset bridge and

The first app  built on layer zero there’s quite a lot to unpack   there so basically stargate’s vision is to make  cross chain liquidity transfer a seamless single   transaction process i’ll get into the technicals  just after i after we go through the platform   and if you are looking to learn more about the  technicals

And i would like to know more about   the consensus and all that stuff the documents  or the links to all the documents and articles   will be in the description and as always as you  know that i try to keep it as less technical as   definitely miss out on a lot of things that   are in the documents alright so make sure

That you  if you want to learn more go through the documents   so if you look at target finance websites target  is considered a cross-chain liquidity transfer   protocol what does stargate of finance do it helps  you to transfer liquidity or carrier transactions   throughout different blockchains by staying on one  spot

So for example what happens is if you go to   uh transfer uh since it’s a liquidity transfer  protocol that’s how they’re defining at the moment   you can transfer different assets from a different  blockchain for example i can transfer ustc from   ethereum directly to bnb or any of these networks  in one transaction i get a pay

Transaction for you   example if i transfer let’s say 20 usd c   send it right so so that’s that’s basically   any asset from one network to another network   directly and you get native assets as well and if  you’re wondering how this is different from bridge   i’ll explain that in just a second the main thing  is

You’re getting native asset and not a wrapped   asset like you get on a bridge but more on that  later so so the basic understanding is target is   a liquidity transfer layer or a liquid transfer  protocol or technically a bridge that allows   blockchains from one click and you pay the cash   fee or the transaction fees once

Right and you  also have a pool so you can ask you can stake your   there is a fee on all the transactions or each   and every transfer of liquidity you can provide  liquidity for different assets and you can earn   fees as a part of you providing those liquidity  and on top of that you can use that liquidity pool  

Tokens and go to farming and you can farm your  liquid pool tokens to earn stargate as well and   will be able to stake their sdg tokens and get   ve sdg which allows them to vote on the future  of the protocol right so that’s basically what   this target finance is if someone else wants to  incorporate stargate they can do

That as well   that’s my understanding so if uni uniswap wants  to uh enable cross chain transfer cross chain uh   algorithm to do so all right so how does target   this before i can explain how stargate makes it   possible or why stargate is first of its kind  let me explain a little bit about bridges i   went

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Over this topic in the other explanation  video for layers here as well but since this   is very closely connected to these two protocols  or stargate is actually built on layer zero and   concepts i’ll just use the same photo so at   the moment there are a lot of different bridges  that we have wormhole synapses and there’s

A bunch   of different bridges um specific to different  blockchains okay and at the moment if i want to   the only option i have is to use a bridge   and now what’s the problem is the way the bridges  function how the bridges functions is two main   ways how a bridge functions so when i use a bridge  and i try to

Transfer an asset called x that’s on   ethereum to solana what happens is once i initiate  the transfer from the bridge the first scenario is   either the asset gets locked on the bridge the  bridge confirms that the asset is locked and   then it will unlock a wrapped asset on the other  end okay the second way is the assets are

Sent   to the bridge the bridge burns there’s assets and  actually mint a wrapped version of the same asset   and gives you that asset on the other end so if i  send x at the moment using a bridge i’m getting a   wrapped or wx on the other end the risk here is uh  this point of failure is the bridge and we’ve seen  

Multiple times that the bridge can be exploited  and there’s a lot of hackers that i have been able   to withdraw millions and millions from the bridge  by attacking the bridge so what does it attacking   the bridge means is because you’re dealing with  two different assets here one is a wrapped asset   and one is a native asset

So even though it’s  a wrapped asset it’s basically a different kind   of acid on the other end so what happens is the  exploiters they can confuse the bridge in thinking   that they’ve actually locked or burned the acid  on one end and since the bridge thinks that you’ve   actually burned your acid on one end you will 

Give you the acid on the other end thinking that   you’ve actually done it and there’s a lot of other  ways to confuse a bridge so basically the point   of failure is the bridge and the risk that your  assets might not reach the other end the assets   might get locked up in the bridge is very high so  if the bridge fails while

You’re transferring a   huge amount of money then the chances of you not  getting your asset on the other end are very high   so it’s if it’s a small amount it doesn’t really  matter you understand more on that and what the   issues are you should read about the bridging  trilemma i’ll leave the link to this article in  

The description as well or the medium medium link  this is from ryan and he’s actually co-founder   and cto of lazier labs and he actually goes into  detail on what the trilemma is and how stargate   actually uh solves this issue i’m going to go  a little bit into this as well but since it’s   very technical i’ll try to keep

It very short and  easy to understand right so this is basically a   works so if i want to send or if i want to   send an asset or seller asset called x that is on  ethereum at the moment i want to transfer that to   solana ecosystem or solana blockchain i can use  stargate and in one transaction if i send or if i  

Sell whatever then it sends the information to  target and target handles that and then you’ll   the other end now there’s few things you need to   understand is the first is the concept of finality  right so as you if you remember here in the bridge   we talked about how the bridge might be exploited  sometimes if you send your

Fund and if the bridge   is not in a perfect condition then you my your  assets might be locked or worse questionnaire   your asset might be lost in that case right so  uh finality means that if i send a transaction   through from one end then the it’s guaranteed that  i’m gonna get the end result of the transaction  

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Asset called x using stargate finance if i   initiate transactions saying sell x on solana then  i send the transaction through this target finance   it is guaranteed that that transaction will go  through and i’ll get that end result on my end   other algorithms as well that make sure that  without the user actually sending

That asset   to stargate finance it won’t execute the second  transaction or the final transaction that has   oracle which is your chain link usually   can use chain link you can use uh or any oracle  services for example banned protocol as well and   once the oracle confirms that that transaction  or transaction that

You initiated is valid and   is true then that oracle confirms with target  finance and then that transaction is completed now   the point of failure is definitely the oracle or  the real layers that this target finance is using   i’m not sure how risky this is or how safe this is  but we should definitely see as time moves on

And   people deploy more apps on it it will definitely  expose more risks or more opportunities as well   there and this concept of native asset as well so   stargate finance has developed a delta bridge and  also a algorithm called the delta algorithm so   delta bridge enables native assets so as compared  to your

Traditional bridges where you are getting   a wrapped asset which technically represents the  value of the same asset that you sent using target   example if you have an asset called x on eth for   example let’s say you have usdt on on eath there’s  no need to get a wrapped usdt or wsdt on the other   end using stargate

Finance if you send an asset x  you are getting that asset x meaning native asset   not the wrapped asset so achieve this by something  called delta bridge it’s basically the bridge   um this target finance itself and the telco delta  algorithm is something that’s very interesting in   the image what you see is on the left is

Your  target finance liquidity pool so if you don’t   know what liquidity to pool is so when you’re  trading on a decentralized exchange or using a   decentralized dap there is a liquidity pool that  holds the asset that you’re trying to transact   with so on the left this is the liquidity pool for  ustt and on the right a

Liquidity pool for usdt on   unit swap so on the left as you can see there’s  different sections within that liquidity pool as   well until now the liquidity pools are always  the same asset or two assets in one pool but   what’s target finance is has done is it has split  the same liquidity pool into different sections  

Depending on the blockchain that it is connected  to so example earlier we try to transfer usdt   that case what happens is target finance will   take the ustt from ether and it will transfer  the liquidity to the avalanche section and why   they do this is to have something called unified  liquidity what this means is you look at

Different   amms or different taxes for example for example  sushi swap unit swap you have one inch or you   have oraca you have different textures different  tabs right and each and each and every tab has   their own liquidity now one tap might have more  liquidity than the other dab and those protocols   might be on

Different blockchains as well so you  can see that there’s fragmentation on it and at   the moment if i’m using a tap on solana i’ll be  restricted to solana ecosystem or anything that’s   with stargate unified liquidity as long as that   stay on one tab and then tap into the liquidity   of different apps and different amms

Different  taxes that are on different blockchains for   example i can stay on unit swap and then i can  sell buy whatever assets on solana or aurica for   that matter so i hope that was clear if you didn’t  understand the idea of unified liquidity please   reach out to me on the comments or on twitter  at one life investment

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And hopefully i’ll be   able to explain it much better and the final is  native assets you are not getting your wrapped   asset like i mentioned before and stargate also  enables composability so what this basically means   is i can create a dab that speaks to multiple  blockchains and i can have a single transaction  

That actually that actually comprises of multiple  transaction within one and within those multiple   transactions some transactions are on a different  blockchain for that matter for example uh they   explain it very nicely here for example suppose  a sushi shop user wanted to swap wrapped btc on   ethereum for joe on avalanche you

Can imagine  what you need to do if you want to do this   now you need to swap your app ptc for something  else you need to bridge that to joe or avalanche   and then you can swap that to joe and then you  probably will have to swap that back to something   else and there’s it’s it’s a mess but imagine  that you are in social

Shop you just connect to   stargate finance protocol whatever and then you  click one button and you swap your wrapped btc   for joe directly and you get native asset joe  on um sushi shop so that’s what composability   is it’s connecting those that gap between two  bridges and allowing developers to to run programs  

That actually communicates and utilizes both the  blockchains in that one transaction or in that dap   probably missed out but that’s basically how   the bridge works uh let’s talk let’s look into the  token mix a little bit all right so the token mix   it’s not the best but the odd thing is that the  only thing is that it’s

Locked for 12 to 24 months   so there won’t be any dilution straight away but  there’s something definitely you got to keep in   mind so a team has 70 17.5 percent to investors  the protocol launch was was 15 born income 15.9   were taken or bought by alameda research and   not too bad right so as you can see this  

Release schedule as well as you can see that we  won’t have much dilution until 2023 so that’s a   good thing but if you are thinking on a long term  i would definitely keep that in mind that almeida   holds uh almost all of the tokens that was meant  to be for the public looking at dune analytics the   users uh it’s on a nice trend

The total user are  increasing uh wallets with over tennessee is 4 000   as you can see this distribution is something   that i’ll be careful about so i’m not sure so let  me know your thoughts if you are in stg what are   your thoughts on it what what is your current  experience and what are you looking forward to  

What are my thoughts on it i am very bullish   target finance but the protocol layers here   very excited it has actually opened up the doors  for t5 3.0 i would say because now the developers   can build a tap that taps into or communicates  with all the blockchains and that opens the that   at the moment with liquidity

I’m having to   people don’t really understand the complex uh   setup that we have on different blockchains and  stuff like that so this definitely enables that   this helps the retail like a normal person to  download one app and that app will they can   use that app to purchase almost anything on any  blockchain

And they don’t have to even bother   which blockchain they are on so that’s pretty  fascinating and that is definitely a good news   for anyone that is building on d5 or building on  building any dap in crypto for general because now   they can build a hybrid app that can capture users  from any blockchain right i hope that was

Helpful   uh if you have any suggestions or any project that  you got excited please let me know in the comments   or reach out to me in twitter at onelifeinvestment  and if you made it to the end of the video like   you in the next one thank you and take care you

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What Is Stargate Finance Crypto? What Does Omnichain DEFI Mean? – Explained!! By 1Life Investments