Introduction: Breaking Down Silos in Blockchain Data

As blockchain technology proliferates, data becomes increasingly siloed, creating barriers to its full potential. In this exploration, titled "Planting the Seeds of Omni-chain Growth," we delve into how true intercommunication technology within blockchains can unlock a future of application innovations. By focusing on decentralized applications (Dapps) and presenting specific architectural proposals, we aim to deeply understand these possibilities.

Understanding Lending Protocols

To understand the significance of Omni-chain Lending, it's essential to first grasp the basics of lending protocols in the blockchain context

These are decentralized financial systems that allow users to borrow tokens on a blockchain by depositing collateral assets. The borrowing limit is based on the value of these assets, with mandatory liquidation if the asset value falls below a certain threshold.

Current Challenges in Single Chain Lending Protocols

Expanding lending protocols across multiple chains presents two major challenges:

1. Liquidity Fragmentation: Existing lending protocols do not ensure overall protocol liquidity, leading to liquidity fragmentation across chains.

2. User Preferences vs. Cost: Users prefer to hold assets in secure chains like Ethereum but face high transaction fees. Current protocols do not support cross-chain withdrawals, forcing users to bridge assets to Layer 2 chains, compromising user experience (UX).

The Omni-chain Lending Solution

Omni-chain Lending allows handling of lending protocols from any blockchain. It enables the deposit, withdrawal, and return of assets across chains, addressing liquidity issues by treating deposited assets as a shared liquidity pool. This approach incorporates a Hub chain for overall data management and Spoke chains for lending operations. The infrastructure uses Futaba for secure cross-chain data access and a messaging protocol for inter-chain communication.

Glossary of Key Terms

Hub Chain

The Hub Chain plays a central role in the Omni-chain Lending architecture. It serves as the primary chain that manages data across all chains, sending messages to other chains as needed. Specifically, it oversees the liquidity data of all chains, including Spoke Chains, and performs rebalancing to maintain consistent liquidity levels.

Spoke Chain

Spoke Chains refer to all chains other than the Hub Chain. On these chains, all functions related to lending – such as lending, depositing, and repayment – are executable. This allows the Omni-chain Lending system to offer flexibility and a wide range of access.

Futaba

Futaba is an infrastructure that enables secure data retrieval across different chains, allowing its use as variables in smart contracts. This inter-chain data coordination and synchronization enhance the efficiency and security of the Omni-chain Lending system.

Messaging Protocol

Messaging Protocol is a collective term for the infrastructure that facilitates data transmission between different chains. It allows for smooth communication and data transfer between various chains within the Omni-chain Lending system, improving the overall cohesion and efficiency of the system.

Key Features of Omni-chain Lending:

• Universal Asset Handling: Allows deposit, withdrawal, and return of assets from any chain.

• Shared Liquidity Pool: Cross-chain deposited assets contribute to a common liquidity pool.

• Hub and Spoke Chain Design: Utilizes a central Hub chain for data management and multiple Spoke chains for functional operations.

• Futaba and Messaging Protocols: Ensures secure cross-chain data handling and communication.

Functional Breakdown

• Deposit: Function to deposit assets from any chain.

• Withdraw: Checks collateral and borrowing status for asset withdrawal from any chain.

• Borrow: Processes borrowing requests, ensuring sufficient collateral across chains.

• Repay: Handles repayment requests and confirms borrowing status using Futaba.

• Rebalance: Utilizes tools like Gelato or Chainlink Automation for liquidity management across Hub and Spoke chains.

Revisiting the Evaluation Framework: Understanding the Four Pillars

In assessing the potential and impact of the Omni-chain Lending concept, we focus on four critical aspects:

1. Profitability: Economic benefits of Omni-chain implementation.

2. Community Impact: Ability to positively engage existing and new communities.

3. Innovation: Fundamental innovations compared to single-chain solutions.

4. User Experience: Improvements in user interaction and transaction efficiency.

Evaluation of Omni-chain Lending Using the Framework

Profitability

Omni-chain Lending significantly reduces transaction costs compared to traditional bridge-based methods. It allows for depositing, borrowing, and repaying in just one transaction, thereby lowering gas fees. Additionally, the unified liquidity across chains is likely to increase liquidity providers (LPs) and enhance efficiency, potentially raising the APR.

Community Impact

The Omni-chain model enables users to borrow consolidated assets across various chains while retaining their assets on their current chain. This flexibility accelerates cross-chain community interactions, fostering a more interconnected and dynamic blockchain ecosystem.

Innovation

The Omni-chain approach marks a considerable leap in liquidity management, transcending the limitations of single-chain protocols. By facilitating seamless integration of new chains, it addresses and substantially resolves existing challenges, contributing to unprecedented impacts in the blockchain domain.

User Experience (UX)

The Omni-chain Lending model dramatically reduces the number of required transactions, thereby enhancing the overall lending experience. Furthermore, if destination chains (like Layer 2 chains) adopt gasless transactions, users can easily hold assets in chains they have never interacted with before, significantly broadening accessibility and ease of use.

Challenges in Omni-chain Lending

• Latency Risks: Use of Futaba may introduce latency, potentially leading to malicious MEV (Miner Extractable Value).

• Token Handling: Additional considerations for token minting and burning, similar to AAVE's aToken.

• Interest Rate Setting: Need for detailed economic models for shared liquidity benefits.

• Price Discrepancy Management: Strategies to handle token price variations across chains.

• Scalability: Architectural readiness for integrating new chains.

• Rebalance Strategy: Deciding liquidity distribution percentages across chains.

Conclusion: The Future of Omni-chain Lending

Omni-chain Lending represents a pivotal advancement in blockchain technology, offering significant improvements in efficiency and user experience. This approach addresses the limitations of single-chain protocols by enabling seamless asset management across multiple blockchains, thereby enhancing both liquidity and connectivity.

While promising, Omni-chain Lending faces challenges like latency risks and scalability that must be addressed. Nonetheless, its potential to reshape decentralized finance is immense. We invite blockchain professionals and enthusiasts who are intrigued by Omni-chain Lending to explore and contribute to this innovative field. If you are interested in being a part of this transformative journey, please feel free to reach out to us.