How does Stargate Finance solve the Bridging Trilemma?

Modified on Thu, 02 Feb 2023 at 04:04 PM

Currently, it is difficult to transfer or exchange digital currency created on a different blockchain as the system requires a pool to be transferred on both blockchains. For instance, if you wish to transfer USDT on Ethereum to Solana, there should have at least two pools of USDT, one on Ethereum and one on Solana. This system is called “fractured liquidity.”

The problem that may arise in the event that one of the pools has insufficient coins is the possible failure or delay of the trade. Moreover, it may result in an inaccuracy in the received value.

Stargate Finance solves this problem by implementing a unified liquidity system, instead of pulling coins from separate pools on different blockchains. This system uses only one main pool, which makes it possible to eliminate problems that may arise from using the fractured liquidity system.

Stargate is capable of doing so since it is built on LayerZero, a protocol designed for interoperability between blockchains (Cross-chain).

Learn more at Bitkub Blog

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