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Sifchain is the world's first omni-chain decentralized exchange. Built with the Cosmos SDK, Sifchain is 100x more efficient than current leading DeXes. Sifchain inherits the cross-chain capabilities of Thorchain and uses pegged tokens to support cross-chain transactions across a wide array of blockchains.
Sifchain will support cross-chain transactions for 20-25 of the top blockchains such as Bitcoin, BinanceChain, Polkadot, and EOS. These blockchains represent the overwhelming majority of all cryptocurrency trading volume and will setup Sifchain to be used with a wide variety of cryptocurrencies. It will also simplify the process of blockchain integration, lowering the barrier of cost and development for the open-source community.
Unlike Bitcoin or Ethereum, which work on probabilistic finality of blocks, the Cosmos SDK provides finality guarantees. This is important in relation to the confidence that a block will be finalized. Since Sifchain is built on Cosmos, this feature is automatically baked in, which is essential for cross-chain token swaps.
In order to accomplish this cross-chain support, Sifchain uses a concept called 'Peggy' to create a pegged token model. This model is inspired by the Cosmos’s peg zone model. A 'peg zone' is an account-based blockchain which bridges 'zones' within Cosmos to external chains like Bitcoin or Ethereum. These peg zones are what allow assets to be easily transferred between Sifchain and the external chain. Peg-zones can even be used for cross-chain transfers between a finalistic and probabilistic blockchain.
Peg-zones can also be thought of as a blockchain that tracks the state of another blockchain. By doing this, it acts as an adaptor zone or a “finality gadget”, which translates finality for probabilistically finalized blockchains by imposing a “finality threshold” at some arbitrary number of blocks to achieve pseudo-finality. Generally, this “translator” zone design can be classified as a 2-way peg (2WP).
Sifchain uses a two-way peg protocol, which allows the swapping of pegged tokens. For example, a trade of currencies LTC for TRX would be executed as transactions of pegged versions of those tokens (cLTC and cTRX) on the Cosmos SDK blockchain. Sifchain users will trade with pegged tokens within the Sifchain system.
In Peggy's mature state, not only does the usage of these pegged tokens create a highly scalable design, it also has unique crypto-economic incentives for its participants. For instance, Sifchain validators only need to run 'Sifnode' (Sifchain's network) and can leave the cross-chain transaction labor to peg zone validators. Each peg zone validator only needs to run a node for the peg zone blockchain and the external blockchain (ie. Bitcoin or Ethereum) and can then send assets to and from Sifchain through Inter-Blockchain Communication (IBC).
Sifchain's initial Peggy design will be slightly different than this due to the immaturity of IBC. At initial launch, Peggy and Sifnode will co-exist together within Sifnode. This allows Sifchain to support cross-chain transfers, adding & removing of liquidity, and token swaps from day 1 without the reliance of IBC. Once IBC has matured and is production-ready, we will shift to this model to realize its scalable benefits.
Sifchain is actively evaluating multiple cross-chain software frameworks that appear to have successfully implemented cross-chain data or value transfers. These include Gravity, ChainBridge, Rosetta, Substrate-IBC, the Nomic Bitcoin bridge, PolyNetwork, and other projects.
Liquidity pools ****enable you to buy or sell an asset for another asset on a crypto-currency exchange. Think of each liquidity pool as a mini-market within the larger market, ensuring reliability and expediency when you trade two different tokens.
Liquidity pools are important in decentralized finance (DeFi) ****— particularly decentralized exchanges (DEX). Because Sifchain is the world’s first omni-chain DEX, this technology is fundamental to our vision. We use something called a Continuous Liquidity Pool (CLP).
Centralized exchanges (e.g. Coinbase, New York Stock Exchange) use order books: marketplaces where buyers and sellers come together, respectively trying to buy at the lowest possible price and sell at the highest possible price.
Sifchain uses a hybrid model with both an order book and CLPs.
Inspired by Compound, YFI, and Synthetix, Sifchain will make use of decentralized governance with SifDAO.
SifCore (the core team of Sifchain) is very focused on the development of SifDao and a total transition of governance power over all aspects of the protocol. We expect to follow best practices from metagovernance including the restructuring of SifDao’s governance on a regular (most likely quarterly) basis.
For true self-sovereignty, Sifchain’s development should be self-funding and self-sustaining. We look to models like Linux and Wikipedia as examples of institutions that have maintained the funding needed to continually produce critical open-source resources. We’re exploring a partnership with a research lab at UC Davis to formalize properly funded open-source development as a hallmark of Sifchain’s governance.
We want the market’s inherent super forecasting abilities to be turned towards optimizing Sifchain’s development. Governance will engage market-based performance evaluation within SifDao through tools like alpha bonds. Wherever possible, we want the market to govern Sifchain through on-chain crypto-economic incentives for SifDAO members.
Feel free to see our Tweets on how the SifDao could possibly take shape: https://twitter.com/sifchain/status/1323162320382517248?s=20
To ensure the security of the sifchain ecosystem, the SifCore team will lead the development and deployment of each bridge. The SifCore team intends to give all bridges the same security guarantees as described in the general case and model extensions. We may use Rowan as the collateral for these bridges or we may create another token solely to be used by these peg zones depending on a successful implementation of the rebalancing mechanism and market conditions.