Polkadot is a relatively new blockchain that is believed to have higher scalability and lower transaction fees than its predecessor, Ethereum. Cross-chain transfer through its parachains is one of the major reasons responsible for the popularity of Polkadot. With this feature, different types of digital assets including tokens can be transferred from one chain to the other.
Polkadot achieves its high scalability by allowing transactions to occur on the numerous chains that it has. Unlike Ethereum that suffers from congestion and invariably low scalability, Polkadot curbs this issue by creating several parallel blockchains that operate simultaneously.
Blockchain projects like Polkabridge are using Polkadot as their ecosystem because it allows them to deploy a tailor-made chain seamlessly through the use of the Substrate framework. Projects also use Polkadot because the ecosystem can undergo a systematic upgrade, no matter the level, without hard forks. Adaptability is an important element in the ecosystem.
With the launch of its parachain feature, the project’s building on Polkadot has been on the rise. According to Polkadot, the parachains are “advanced, next-generation layer-1 blockchains that transcend the limitations of legacy networks. Specialized and interconnected, parachains make up a diverse ecosystem of independent platforms, communities, and economies improving the way we connect online. While other blockchain protocols only allow developers to build dapps using smart contracts, Polkadot gives them full control over the underlying blockchain itself. This flexibility gives parachain developers the maximum freedom to optimize for any use case—which means better and more secure DApps and services for all.”
What is Polkabridge?
Polkabridge is one of the first platforms to build on Polkadot and Substrate technology, and it is a multi-chain ecosystem that includes decentralized finance features. It is building the typical features noticed in an ecosystem that wants to attain the title of one-stop hub for DeFi activities. According to its website, it aims to be “A multichain & cross-chain decentralized all-in-one platform to include AMM, farming, lending, launchpad, prediction, NFT, and more.”
As a multi-chain ecosystem, Polkabridge will be supported on multiple chains such as Polkadot, Solana, Binance Smart Chain, Ethereum, and Polygon. Its cross-chain functionality will allow the seamless transfer of assets from one network to the other.
The ecosystem utilizes the deflationary mechanism, which means that tokens will be bought back from the open market and burnt. This means that the number of tokens in supply will be reduced in the future. The deflationary mechanism is focused on profitability, while the inflationary mechanism improves the stability of an ecosystem.
As part of its quest to improve its functionality, Polkabridge was fully audited by Certik, and the report was made available to the public.
What Features Are On Polkabridge?
Polkabridge has different features, and they are border on offering the major decentralized finance functionalities that a user may require in a DeFi platform.
- Swapping tokens
On Polkabridge, tokens that are supported by the Polkadot network can be swapped for one another. It also allows users to swap Polkadot-based tokens for tokens on other blockchains and vice versa. As its name states, it acts as a bridge between the Polkadot universe and other networks.
- AMM
AMM or Automated Market Maker injects liquidity in exchanges that do not use the traditional order book, but automated trading.
AMM-based decentralized exchanges work with liquidity pools that are injected by users. Providing liquidity in a typical AMM-based exchange comes with revenue for the user. A liquidity provider is usually given a liquidity provider token or a percentage of the trading fees. The reward system is dependent on the liquidity pool that they use.
Polkabridge has an AMM exchange on the Polkadot network, while on Ethereum, the popular exchange that uses the AMM mechanism is UniSwap. For the Binance Smart Chain, Pancakeswap fills the role.
As an AMM exchange, Polkabridge’s users supply liquidity and earn rewards from it, while the liquidity fuels the exchange process in the exchange. This AMM has multi-chain and cross-chain features, with the ability to redistribute the earnings to different pools.
- Farming
The third feature on Polkabridge is the yield farming option. It can be likened to depositing money in the bank for a period and earning interest in return. For example, when someone deposits their funds in a fixed deposit account for a specific period, they know the potential returns in percentage that they will earn at the end of the stipulated period. Their deposited money is lent out to borrowers or used by the banks to invest or trade. This is what happens in farming.
A token holder that wants a passive income stream can lock their tokens for a period and earn an APY after it ends.
The annual percentage yields (APY) that accrue to farming usually depend on different factors. Some platforms may have a higher APY than their counterparts. It could also be dependent on the number of tokens that are locked and the period attached to them. Polkabridge has this feature with a lucrative APY attached to it.
Generally, the concept of yield farming may seem lucrative, but it is not devoid of potential risks.
Firstly, pools and smart contracts attached to them have been hacked in the past. When a hack occurs, it leads to the loss of locked funds. The protocol handling the farming process may refund the stolen tokens in full or partially. In other cases, the tokens’ owners are made to bear the loss alone.
Secondly, there have been cases of developers pulling the rug over their investors and disappearing with the funds.
Farming is a great option on Polkabridge because farmers “earn 90% of transaction fees by providing liquidity to liquidity pools “, as at the time of writing this.
- Launchpad
The fourth feature that is available on Polkabridge is its launchpad. A crypto launchpad is a platform where new crypto startups can display their innovations to a community of potential investors. Different blockchains have varying launchpads that cater to startups that are launching their innovations on the network. For example, in Solana, the notable launchpad is Solanium.
On the Polkadot chain, Polkabridge is building a launchpad for projects that will operate on Polkadot and Substrate.
Typically, before a crypto startup is allowed into a launchpad like Polkabridge, they have to be vetted thoroughly. A potential crypto investor is wary of the projects that they invest in, not minding how tailor-made their whitepaper or innovations sound on paper. The ICO period of 2017 and 2018 taught investors that, sometimes, the hype is the only feature that a crypto startup may have, and when the hype disappears, the project fizzles.
This is why launchpads were created because they vet the owners of a startup to see their level of credibility and the innovations that they are offering. On the Polkabridge launchpad, only vetted projects are allowed, and potential investors can decide on which projects they want.
Investors are not the only ones benefiting from a launchpad. The crypto space is fierce with competition from thousands of innovative platforms. To stand apart from competitors, crypto startups that are admitted into a prestigious launchpad can access an existing community of investors that want to buy their tokens and fund the development process of the project.
Polkabridge has a launchpad that acts as a bridge between potential investors and innovative crypto startups.
- Prediction Market
In a prediction market, users speculate the outcome of an event, and if they are right, they are rewarded by the smart contract automatically. On the other hand, they may lose their stake if their predictions were wrong. The prediction market on Polkabridge works similarly by rewarding those that accurately forecast the outcome of a future event with smart contracts. Events in a prediction market could be anything from the future price of Bitcoin to the winner of a popular match.
- Lending
Polkabridge has a lending pool that rewards those users that deposit their tokens to lend them out to others. There is a specific percentage of rewards that accrue to lenders, while the borrowers have to pay fees for using this feature. On the Polkabridge lending feature, borrowing and depositing funds are made simple and easy.
In Conclusion
- Polkabridge is building an ecosystem that will be a one-stop hub for decentralized finance features on Polkadot.
- The swap feature allows users to exchange one token for another.
- As a launchpad, crypto projects can carry out fundraising activities from potential investors.
- With the liquidity pool, those that inject liquidity through depositing their tokens are rewarded.
- The prediction market rewards users that speculate the accurate outcome from an array of options.
