by The DCo Podcast
October 2023
For crypto investors and builders, this summary unpacks how LI.FI is tackling the multi-chain complexity that hinders mass adoption. Discover their unique VM and solver marketplace, designed to streamline user journeys and accelerate tokenized asset distribution.
The fragmented crypto ecosystem presents a massive hurdle: executing multi-chain strategies requires multiple, complex transactions. This friction limits user adoption and the utility of tokenized assets. The DCo Podcast speaker details how LI.FI is building the infrastructure to abstract this complexity, making sophisticated DeFi accessible.
"So instead of having to do that, Lei built a multi-chain transaction rail. This rail is a set of smart contracts that lives on all these chains and allows us to combine a variety of transactions into one."
"So over the past two years we have developed a virtual machine and that virtual machine really expresses a domain specific language in Typescript."
"So in a sense we are the best solution for anyone who tokenize assets to actually find distribution and find their access into wallets of any kind from a ledger to a treasure to a Robin Hood to a Metamas to a Phantom."
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I want to understand which assets are available on which chain ever and at which price are these assets available. On top of that, I need to understand if I want to get from A to B, what are the potential routes? So, smart order routing, all of that is still on data level.
Then you would ultimately end up with scenarios in which you would have to swap an asset so that you can bridge and then swap again. So, this is complex and it implies the user would have to sign three transactions.
So instead of having to do that, Lei built a multi-chain transaction rail. This rail is a set of smart contracts that lives on all these chains and allows us to combine a variety of transactions into one. So we can swap bridge swap with the one transaction.
Instead of sending a transaction to a bridge directly, it goes to our smart contract and then the smart contract sends it to the bridge and the bridge sends it back to our smart contract and then it gets back to the user.
The ability to send meta information alongside that, unpack that, make sense of it, do that in a as gas efficient way as possible. That has been asked for the past few years.
Now we are doing two new things: we have been able to swap with swap and we have also been able to leverage the idea of sending of calling any smart contract at the end of this complex transaction.
But here it already becomes difficult, right? The idea of calling any smart contract at the end of such a transaction, maybe another deposit or morpher deposit or maybe pandle or hyperlink whatever. This is obviously hard to scale if you think about it. All these protocols have different smart contracts.
So you can't it's really hard to abstract that. We offered that and with many enterprise clients we went down the road of writing custom smart contract integrations for all of these things. It was just not that scalable.
So over the past two years we have developed a virtual machine and that virtual machine really expresses a domain specific language in Typescript. You can essentially type whole user journeys of check my wallet balance if big enough then if bigger than $1,000 take $1,000 swap it into X and then deposit as collateral into AVA take out a loan as much as possible or just 75% of that and then take this further to swap it into something else.
Right these kind of strategies multi-chain are now able to be we can now express that in Typescript and we are getting executable call data out of that virtual machine. Not only that it has its own transaction simulator which is super fast and cheap.
So we have actually call data we can rely on and this allows us to make multi-chain journeys much more scalable. It is very unique. We have really put in a lot of R&D into all of this and we are rolling this out with big clients like Alip Pay now and that's great.
This is one thing another thing we have been doing is so instead of just aggregating because aggregation is also hard to scale we now are pairing this with an open solver marketplace.
It's essentially an intent system and it takes an intent and then it auctionizes it across a network of solvers. I don't really believe that the market is ripe for very decentralized massive solver systems yet because there are not enough solvers and it's already profitable to run them and the space is more fragmented than solvers could cater to them in an economic way.
So aggregation is still the the key solution for everything but it allows us to plug in third party liquidity. It allows all these people that tokenize assets to bring their own liquidity and market make it themselves and we have all the distribution power.
So in a sense we are the best solution for anyone who tokenize assets to actually find distribution and find their access into wallets of any kind from a ledger to a treasure to a Robin Hood to a Metamas to a Phantom.
Again here Leifa is really the middleman that brings these two sides together and they can actually accelerate the adoption of tokenized assets and that's something we are super bullish on and what we're heavily investing in as a company right now.
