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