Cross-Chain Donations for Turkey | $JOE Launched as OFT | Kado Integrates LI.FI | OP Drop #2 & More!

Last Week In The Multi-Chain Ecosystem (06 - 12 Feb '23)

and

Feb 13, 2023

Welcome to LI.FI’s Cross Chain Insider newsletter. If you want to join this community of cross-chain aficionados learning about bridges, interoperability, and the multi-chain ecosystem, subscribe below:

You can also check out LI.FI’s research articles, and follow us on Twitter!

Bridge Updates

1) Cross-Chain Donations for Turkey — Powered by Connext 👏

In collaboration with TURKIYE Earthquake Relief DAO, Connext has launched a system that allows the DAO to accept donations from multiple chains in a non-custodial manner.

You can now donate by sending tokens or ETH to the following L2 addresses: Optimism and Arbitrum.

2) Trader Joe Partners with LayerZero 🤝

Trader Joe announced its integration with LayerZero which will see $JOE launching as an ‘omnichain fungible token’ (OFT). JOE can now be bridged across Avalanche, Arbitrum, BNB Chain, and other LayerZero-supported chains in the future.

(There will be more on this later!)

3) Kado Integrates LI.FI 🔥

Kado, a web3 payment infrastructure provider, integrated LI.FI into its on-ramping solution and will soon launch its onboarding services on three Ethereum L2s, starting with Arbitrum, allowing users to buy USDC and ETH on Arbitrum, Optimism, and Polygon with fiat.

4) LI.FI Teases Launch of a New Interface 🤌🏻

LI.FI is teasing the launch of its new optimized B2C interface. As per Philipp Zentner (Founder & CEO of LI.FI), the new interface will be much more optimized, will load faster, and will be actively promoted within the crypto space.

Users can get beta access to the interface and earn rewards by giving feedback. Join the whitelist now.

5) Rainbow Bridge Paused 🧐

Alex Shevchenko (CEO of Aurora Labs) announced that the Rainbow Bridge (the native bridge between Ethereum and NEAR) was paused as a precautionary measure. No funds were lost, and the team is working on restarting the bridge.

Multi-Chain Ecosystem Updates

1) Passed: Deploy Uniswap V3 on BNB Chain 🫡

The vote to deploy Uniswap V3 on BNB Chain with Wormhole as the bridging solution used for cross-chain governance has been passed.

2) Critical Vulnerability on BNB Chain Fixed 👏

A critical vulnerability on BNB Chain that Jump Crypto reported was fixed via the joint efforts of the BNB Core team and Jump’s security researchers. A technical write-up with the details of the vulnerability can be found here.

3) Shapella Activated on Zhejiang Testnet 🔥

The Shapella upgrade has now been activated on the Zhejiang testnet (the first of three testnet simulations of Shanghai). This means that the testnet successfully simulated full and partial withdrawals of staked ETH for the first time.

4) Optimism’s OP Airdrop #2 🔴_🔴

Optimism announced OP airdrop #2, distributing 11.7M OP to over 300k unique addresses that have delegated the voting power of their OP tokens and/or spent more than $6.10 on L2 gas since March 25, 2022. The airdrop rewarded positive-sum governance participation and power users of Optimism Mainnet.

5) Acala EVM+ Live on Mainnet 💪

Acala Network announced the mainnet launch of Acala EVM+, an EVM-compatible chain running on Polkadot Substrate. This enables developers to launch Ethereum-compatible dApps on Acala’s DeFi app-chain and Polkadot’s liquidity hub with minimal changes to their EVM-based smart contracts.

What’s Popping?

Unlocking Multi-Chain Connectivity with LayerZero’s Omnichain Fungible Tokens (OFTs)

Omnichain Fungible Tokens (OFTs) are a new token standard introduced by LayerZero to enable tokens to expand across the multi-chain ecosystem. Big tokens like Avalanche’s BTC.b, PancakeSwap’s CAKE token, and Trader Joe’s JOE have already adopted this standard.

What exactly are OFTs and why are blue-chip DeFi teams adopting them? Let’s take a look.

WTF are OFTs?

We’ve reached a point in the multi-chain expansion where instead of unifying liquidity, bridges are creating isolated silos themselves.

The difference is that earlier these silos existed between blockchains. However, thanks to bridges and their power to mint wrapped tokens, these silos have shifted to tokens and contract standards unique to each bridging solution.

In a nutshell, the problem we’re facing in our quest to go multi-chain is the non-fungibility between wrapped assets created by different bridges.

Bridges mint their own assets. These assets are not fungible with each other. Users find it difficult to use wrapped assets across dApps. Therefore, user assets now live in wrapped asset silos.

To overcome this issue, LayerZero launched a new token standard fit for the needs of the multi-chain ecosystem — Omnichain Fungible Tokens (OFTs), an extensible token contract that enables tokens to be externally composed in any type of dApps, across any DeFi ecosystem, just like an ERC-20. This means tokens can now have a unified standard for all protocols and blockchains, making it seamless for users to swap cross-chain and use the token on any dApp on any chain.

This token standard is fairly new, but we’re already seeing some big names adopting it.

Avalanche’s BTC.b — Making Bitcoin on Avalanche Multi-Chain

Avalanche and LayerZero partnered to launch BTC.b, an OFT representing Bitcoin on Avalanche that was automatically bridged (transferred cross-chain) in Core. Since BTC.b is an OFT, it can be transferred to and from Avalanche to LayerZero-supported chains like Polygon, Arbitrum, Ethereum, Aptos, etc., quickly.

This enables users to:

Use their native Bitcoin on dApps as BTC.b and quickly convert their BTC.b back to native Bitcoin. For example, users can transfer Bitcoin using Core and receive BTC.b, which can be used across Avalanche DeFi dApps.
Use Bitcoin Bridge to transfer BTC.b to any chain supported by LayerZero and use it across dApps in that ecosystem.

CAKE as an OFT — PancakeSwap’s Expansion to Aptos

In December of last year, PancakeSwap announced that it had partnered with LayerZero to launch Aptos PancakeBridge.

While the announcement and the guide clearly state the goal (multi-chain expansion and deployment on Aptos) and implications (CAKE becoming a multi-chain token existing on both BNB Chain and Aptos), at that time, most didn’t realize that this means that CAKE is now an OFT.

Despite the original PancakeBridge announcement failing to mention OFTs, CAKE is an OFT and this means CAKE on Aptos is equal to CAKE on BNB Chain — and users can bridge CAKE tokens between these two chains with a 1:1 ratio.

Joe goes Multi-Chain with LayerZero — $JOE’s Evolution into an OFT

Now to the news that compelled everyone to take a closer look into OFTs. Trader Joe partnered with LayerZero, launching JOE as an OFT.

What does this integration unlock?

Connectivity for the JOE token across all chains supported by Trader Joe (Avalanche, Arbitrum, BNB Chain).
JOE becomes a native, multi-chain token that can be bridged across different blockchains with a 1:1 ratio.
JOE and the Trader JOE DEX transform into a truly omni-chain dApp.

Stargate — The Linchpin of LayerZero’s OFT Adoption

In order to bridge OFTs, users currently need to access unique webpages specific to the OFT and the application that has issued it. For instance:

To bridge BTC.b, users have to access the Core app.
To bridge CAKE, users have to access the PancakeSwap Aptos Bridge.
To bridge JOE, users have to access Trader' Joe’s Bridge.

As a result, it’s evident that there’s a need for a single UI that lists all the different OFTs out there and enables users to bridge them. And which project would be better suited to provide this UI than Stargate, a liquidity network built on top of LayerZero.

In mid-December, the Stargate community passed a vote to add LayerZero’s OFTs to the protocol.

As per the proposal, Stargate will become a hub for all OFTs. This would be a win-win for all the parties involved:

Stargate — Stargate drives more volume through OFTs and also adds another source of revenue by charging a convenience fee of 2 bps for supporting OFTs. Moreover, this will allow Stargate to expand its list of supported assets, enabling the protocol to also capture more long tail token flow.
Users — Users can move a wide variety of tokens cross-chain from a single interface.
STG token holders and partners — The 2 bps fees will be split proportionately between protocol fees (Stargate), veSTG fees (token holders), and partner fees (Trader Joe, PancakeSwap, etc.)
dApps adopting the OFT standard — Since OFT tokens rely on the LayerZero network for consensus, no new pools are required and no rewards are required to incentivize liquidity on Stargate.

The first of such partnerships can already be seen live with Trade Joe’s JOE token and BTC.b on Stargate. The best part is that there’s no need for liquidity pools as OFTs can natively move across supported chains.

Closing Thoughts

In conclusion, Omnichain Fungible Tokens (OFTs) have become a popular new token standard in the multi-chain ecosystem. There’s no doubt of the benefits OFTs have to offer. For token issuers, the OFT standard enables composability across the ecosystem and the ability to own their contracts, security, and fees explicitly.

In terms of adoption of the OFT standard, Stargate is expected to play a key role in the use of OFTs, becoming a hub for all OFTs and providing a single UI for users to bridge them. In fact, the strategic positioning of Stargate in the cross-chain ecosystem can be the reason why many projects adopt OFTs for taking their token multi-chain.

OFTs are set to play a big role in the future of DeFi and the multi-chain ecosystem. Such innovations are key to achieving a truly composable and efficient multi-chain ecosystem. It’ll be interesting to see who will be the next project to adopt LayerZero’s OFT standard.