Liquidity Bridging

How Liquidity Bridging Works

Liquidity bridging is a unique bridging architecture at ChainPort that utilizes decentralized liquidity pools for cross-chain transfers. These pools facilitate the smooth swapping of stablecoins between various chains. Anyone can become a liquidity provider by supplying single-sided or multi-asset liquidity and earn a portion of bridging fees.

When a stablecoin like USDC is bridged using ChainPort’s liquidity bridging, it undergoes a multi-step process. Initially, the USDC is exchanged for a newly minted xUSD token. xUSD is a stablecoin backed by assets from the liquidity pool, providing stability and liquidity. Subsequently, the xUSD token is swapped back to USDC on the target chain, completing the bridging process. Notably, the xUSD tokens used in this process are systematically burned, ensuring transparency and efficiency.

Current Bridgeable Assets:

USDC, DAI, USDT, xUSD (ChainPort USD)

Wrapped Asset Bridging

A legacy bridging method creates a wrapped version of an asset on the target chain and locks it with fund segregation on the source chain.

External Cross-Chain Protocols

ChainPort is connected to external bridging protocols that allow permissionless burning and minting of native tokens.

Native Token Bridging

ChainPort provides a platform for bridging assets originally minted on multiple chains but managed by their issuer and guaranteed instant finality.

ChainPort Liquidity Bridging - Unique Features

Securing Value and Credibility

Liquidity bridging ensures that mainstream tokens like USDT maintain their value and credibility across different blockchain networks. Users can trust the tokens' authenticity and usability across multiple chains.

Fully Decentralized

Liquidity bridging eliminates central custodians by leveraging community-powered liquidity pools for secure cross-chain transfers. Doing so ensures decentralized control and transparency in asset movements across blockchains.

Rewarding for Liquidity Providers

Liquidity providers receive a portion of bridging fees and earn a share of ChainPort’s success. For some pools, the LP token can be staked, earning the liquidity provider an even higher APR.

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