[REDACTED} 2024 | Cross Chain Liquidity The Future of Multichain DEXs

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1. 0:00

   real quickly uh let's see who we're talking with today uh we have Franco from omn Lane Andy Cho from uh fra and AIT from okx I think you guys have already met Franco so AIT you want to give a quick intro about yourself yeah for sure so hey everyone my name is anit I'm a product lead at okx o uh what we are building is a an open source full stack developer platform uh that can be used to build all sorts of web three applications onchain any chain and um

2. 0:33

   yeah here today uh representing more of the Dex API team uh the Dex API used for a ton of different applications and excited to go into that today so uh hi guys uh so my name is Andy uh I lead ecosystem and strategies at fra Finance um at fra we do a lot of things in the D realm um right now we like to call oursel the decentralized bank of crypto so we do um through different types of stable coins we do our own subprotocols like permission lending

3. 1:03

   markets our amms uh which I think we're going to go over today uh we have our LSD and recently we launched our own L2 called fraxel um which is pretty interesting so yeah happy to be here awesome let's jump right into it um so what do you guys think are the main technical challenges to achieving seamless cross chain liquidity today Franco you want to start all right um so if I had to say kind of the two biggest things uh that are are a challenge for kind of cross chain liquidity I would

4. 1:36

   say the first is uh infrastructure um so nowadays in order to build um or in order to connect two different ecosystems you need a lot infrastructure deploy you need oracles uh you need uh maybe sometimes side chain uh validators and whatnot um and it seems like uh blockchains are coming up every day at a faster pace then you can integrate so infrastructure so or Solutions uh that kind of strive or want to connect this ecosystems need to kind of find a simpler infrastructure uh uh

5. 2:12

   in order to keep up with a pace and the second I would say is uh liquidity efficiency um I think amm are extremely valuable uh they feel if a big part on uh decentralized Finance um uh but they also have uh issues with efficiency a lot of money is used as sandbags for providing price assistance uh for sage and and whatnot um uh so I think uh if we are if if we will have tons of different blockchains uh coming up every

6. 2:44

   day we need a more Capital efficient solution cool um for me I think uh because you touched on great things as well I think for me it it would have to be security um obviously and then liquidity fragmentation with all these other you know l2s coming out I think in the future there's going to be more than like a thousand chains um and it's just the fragmentation is going to get worse

7. 3:08

   and worse and commenting a little bit about the infra side of things with oracles being needed um I think there's a lot of Innovations um that's coming out um I right now at fra we're doing something called borrowed automated Market maker which we're going to launch soon and um it's going to be per uh you know permissionless uh we're not going to need oracles because the liquidity is going to be provided by the lenders and um that's some I think eventually slowly

8. 3:33

   we're trying to figure out all these things Al together um and in terms of security I think it's always an issue where if it's controlled by like a centralized you know entity um so yeah I think those two are the main things that are kind of worrisome for me in moving into the future yeah and in uh in addition to the liquidity fragmentation and the security um the only thing I would add there is just the user

9. 3:56

   experience right so like making sure it's uh super uh as we're sort of connecting these different chains in ecosystems just making it making it super simple for developers to access the different chains because we know the future is going to be multi-chain so um a lot of the work that we're doing within OS right now is sort of connecting all these heterogeneous chains and now we have something like more than 20 networks supported more

10. 4:19

    than 20 Bridges and access to more than 400 different dexes so it's a it's a very sort of like uh almost like a cat and mouse game of like you know a new chain pops up new liquidity Source pops up we have to quickly access it you know and and bring it into our API so um yeah it's not easy but uh someone's got to do it and yeah we're just excited to open up these apis to developers too so great

11. 4:43

    great um how do you guys see the relationship between centralized exchanges and cross-chain dexes evolving on K I know that you guys have uh the okx Dex API i' love to hear your perspective and then down yeah we're definitely in a very unique position with the exchange and uh the Dex product uh being so popular within the okx wallet so definitely have a good like Vantage view of like what we're seeing uh on that side I think you know the two are very complimentary and in many cases

12. 5:14

    we're seeing that you know different Protocols are tapping into uh centralized exchanges for the liquidity and sort of most evidence by like private market makers um and I think at the end of the day like these are you know necessary systems to provide better rates for users uh and you know I think there are some trade-offs around centralization and essentially how we're sourcing these quotes but um and how we're actually decentralizing this this sort of whole network but um yeah I think as a as a sort of ecosystem it's

13. 5:45

    been um really cool to see that that grow now yeah no I think I agree I think it's complimentary um it's you know we can't deny the fact that it's a lot more friendlier and it's easier to use centralized exchanges for like people just getting into it and um D and even dexes um it's always been very uh there has been a learning curve for people to just come in um whereas like you can

14. 6:09

    just tap into for example in Korea or anywhere else it's very easy and seamless to just go into the market and get liquidity um for dexes you require an abundance of things and you need to actually learn how to use it um so commenting on like your UI ux experience I think that's very important and that's something that um eventually that dexas will have to figure out way to make it seamless and easier um and I think that

15. 6:33

    comes along with um probably like implementations in the future with like for example AI um where you can kind of tap into different dexes and get liquidity and kind of do these swaps uh instead of doing like six clicks and different transactions with just one click and choosing what what what kind of you know Network and what you want um just by a seamless click making that would be um a lot easier and I think

16. 6:57

    that would bring a lot of uh users and liquidity from over from centralized exchanges to Texas uh so I think there's a lot of opportunities for both you know players to work with each other um I think they're both competitors uh and there there could be potentially a relationship for Synergy I mean there's definitely overlap with cross chain swaps um or Bridges um also uh with intent based protocols and solvers coming up uh I've spoken a lot of them and they use usually um uh

17. 7:31

    exchanges in order to rebalance their positions um for continue you know serving into the intent based infrastructure uh so that's obviously a Synergy but uh also kind of a an overlap for crossing swaps um but I think you know they also serve different purposes because centralized exchanges they don't allow for much composability so you can't really connect uh a protocol uh directly with the onchain cost to something to happen inside the centralized change maybe that's a good

18. 8:04

    idea I'm just saying but um that for some reason until now it's not happening so um cross change swaps or decentralized exchanges still are the only way in which you can kind of build uh defi um so yeah I would say that frankco I'm glad you uh mentioned intense so today a lot of the liquidity and trading activity exists on amm and amm like Primitives do we think that future of cross chain liquidity continues to stay on amm transitions to order books or intent like

19. 8:36

    platforms um so I think one of the earliest um uh one of the earliest idea for dexas uh was I I wouldn't say inbase but peerto peer uh really uh and then uh thanks to banic post uh you know it's it's gotten to the point that amm uh was kind of the definite uh solution at the very beginning uh they they serve extremely well for price uh discoverability uh and for connecting two peers um uh so I I I think that amm steel are and will be uh a big part of

20. 9:10

    defi uh they also serve the purpose of being a great financial product uh for people that just want to get some interest on their assets um uh but also you know they uh they let's say suffer or they they are subject to um some kind of issues that intents don't necessarily have such as the sleep batch uh um the the m m uh attacks and things like that uh were intense going of separate kind of the negotiation phase from the settlement phase uh which uh essentially

21. 9:42

    gets rid of all that uh and allows uh for most efficient swapping yeah I agree heavily on that and coming from like a def5 project obviously I would like to think that you know amm are the ways to the Future and to be honest I like to think that we're still very early um into exploring and figuring out the solutions for different like defi or amm or you know dexes and liquidity fragmentation and I think every day we're getting closer um for

22. 10:12

    example for amm there's a lot you can do with it like you said um we're doing like something like twwm which is like a Time weighted average Market maker where users are able to you know provide liquidity over a long period of time and you know kind of Del Lo their liquidity over a long period of time up to I think years um and then we're launching like I mentioned borrow automated market makers and these are some things that you know a lot of people that are trying to

23. 10:36

    figure things out still on dexas and automated market makers um and we're slowly getting there and I think it's it's every every time there's a new solution and we're doing one thing better we're getting a step closer and um I think eventually and hopefully um well that it might be hot take for a lot of people but I think amm are going to be you know ultimately the solution yeah yeah definitely doing that I mean I don't think amm are are going anywhere

24. 11:02

    uh there's just like no easier way to just you know launch a market around some sort of new asset and yeah I think they're definitely here um I think intents are also uh you know I think seeing a lot of exciting stuff there I think that it's also important to like point out some of the risks with intense right I think that you know relayer networks not being decentralized is is sort of a a concern and uh hopefully

25. 11:27

    that gets better over time um also just like the you know you see like so many different intense standards uh especially in the ethereum space so how does it actually become standardized you know there's some like uh proposals around um you know new sort of cross rollup standards uh to enable like um more interoperability and really curious if you know even the near ecosystem is

26. 11:51

    kind of pushing in that direction but um yeah there's a there's a couple pieces to watch out for there uh but yeah for the long term at least for the the Dex API like we're looking to integrate whatever Solutions out there to again ultimately provide the the best rates and and the highest security so bridges are you know one of the largest categories that have faced hacks and exploits how do we improve the security standard across the space to

27. 12:17

    make sure that users feel safe about accessing liquidity and improving that experience across chains okay do you want to start yeah so I think uh on this on the bridges side you know whenever we're looking to integrate new chains like we actually do a lot of um a lot of sort of Upfront for upfront work you know we have to make sure that the dexes themselves have been audited and we run internal audits on our side um so I

28. 12:40

    think as a sort of like platform that's providing these apis like it's again really important that you know we're doing our due diligence so I mean that's like a start it's it's definitely not enough but you know we're exploring like Advanced uh ways to label potentially risky tokens you know things that might be honeypots and just exposing that in the in the end points itself um so yeah it's there's a lot of work to do uh but

29. 13:06

    yeah it's not an easy problem for sure though yeah for for us I think um there's a lot to comment on obviously uh I think it was like the last defi run defi summer we saw aot a bunch of um exploits on different Bridges and uh that kind of spooked the whole defi scene and that was actually the motivation for one of our products called fraf which is like an in-house bridge and obviously there is trust in involved but um I think it's a there's a

30. 13:31

    big trade-off um so for fraf it's the efficiency might not be the greatest it takes 24 to 48 hours for you to move assets but U the the good thing is that it's very secure um given that you have this formality of trust with us so the how it works is you're able we we have a 24 to 48 hour time frame to see if there's anything malicious in the middle and that's when we kind of you know

31. 13:54

    close the order um so that was actually the motivation the only bad not bad but the only hard thing about this is for us to support different chains or any other Bridges I think because we're doing a lot of things um it takes a lot of development work um and there's the question of decentralization um again uh to kind of decentralize fra fre I think it'll take another I guess you know a

32. 14:17

    period or quarter of work for us to kind of figure out um but again it's a very hard problem to solve and um but you know I I think eventually the security side of things will get better um like you said due diligence is the first start and this is this was another you know step forward for us and a case study to build and right now I think fraxy supports a few chains but ultimately I don't think it's the most

33. 14:41

    sustainable solution um and so yeah let's that's what I can comment on that one yeah um and my insight coming also from the developer uh World obviously you got you know due diligence and Audits and all stuff uh but from from a design point of view just keeping it simple as simple as possible I think that's the ultimate best uh way to to go about security uh the less moving Parts uh the less surface or error you'll have um you and ultimately yeah it's uh it's

34. 15:16

    less um probable that you you you'll encounter uh an issue uh on OPN Lane we're trying to kind of Oracle less Bridge less um anything kind of less um uh infrastructure and that has uh served us obviously it doesn't really translate to all the use cases but I would say in general just keeping it as simple as possible is kind of the way to go modularity has led to this you know explosion of chains uh but that

35. 15:48

    explosion has led to an increase of fragmentation of liquidity um what can teams launching new chains learn from what the ecosystem has built over the last few years to help access the liquidity that already exists versus further um aiding in the fragmentation um I can go um yeah so so I I don't think I can really help those teams uh with a with a a great answer yeah it's a tough problem um and you know what what I see is that there and

36. 16:21

    this is bad but probably uh a lot of projects because I I think I think like the cross chain um rich and kind of the the the protocols that are working hasn't um they I don't think they have uh caught up the pace of the kind of expanding uh uh demand uh so I think a lot of projects will see that they will kind of feel uh like choked they won't have liquidity to work uh they won't have kind of venues to to or or ways to go into their uh the different blockchains uh so I wish the best of

37. 16:54

    luck to those projects um and uh yeah I I hope that we can kind of move as fast as possible to kind of uh go go for rescue for those yeah for it's it's interesting because we launched our L2 as well uh not long ago called fraxel and um we actually did this and the reason why we did this was because we realized that there's going to be a thousand change and we wanted to be the Forefront of it and we saw that as like a final vision

38. 17:18

    for fra um but like you mentioned I think with upcoming all with all these chains there's going to be more fragmentation um and I think it's a simple like game of supply and demand and it's going to be I don't want to say it because we always do our our ideology is kind of positive some working together and we we are still working together but I don't think there's enough um like a thing like for example Manpower or you know in for them to support all these chain uh chains right

39. 17:48

    So eventually I think there's going to be an over an overhyped amount of chains coming out and then there's going to be a fall and it's going to hopefully decrease increase the fragmentation but it's I think that's one of the main problems that we're going to face in the future with all these chains coming out yeah I definitely can can relate to that because previously uh with the noex we were launching the the X layer blockchain which was with polygon cdk so you are seeing this sort of like uh at

40. 18:18

    least in the ethereum space again like this uh um sort of coales people coalescing around you know the super chain the op stack or agir or you know arbitrum orbits um so as a chain like at minimum you know make your life a little bit easier and at least be a part of one of these larger sort of economic zones um but you know if you're if you're a pro If you're sort of a dii protocol or you know uh

41. 18:42

    just just looking to quickly access the the multi-chain ecosystem I I'd really recommend checking out the Dex API because you know with something like the widget uh that we've created like a few lines of code you can just access you know help help people Bridge into your ecosystem and uh again make it super seamless so there are like stop gaps before we get to the full-blown interoperability that everyone wants so yeah great great thanks everybody I'm

42. 19:07

    sure we could talk about cross chain liquidity for hours but that's all the time we have today please give a round of applause for onit and Dean Franco