Cross-Chain Crypto Token Swaps For Almost Free
Let’s clear it up straight away. No, the title is not click-bait...
Pando offers near-free, cross-chain token liquidity swaps, finalised within seconds. Here’s how it works.
Screenshot made in November 22, 2022
The Problem
If you have spent any time in the crypto space you will completely understand this pain point. With over 10,000 different crypto tokens all operating on different blockchains, swapping them around is a “banging your head against a brick wall” kind of task.
If you’re a bit newer to this space then the best way to imagine this problem is to think of it like trains running on different tracks. Each blockchain represents a train track, and each crypto project(token) represents a train. Any train(crypto token) that is running on the same track(blockchain) as another, can easily journey anywhere they like on that track, and interact with each other. The tokens on the same track can easily be swapped for another as they have the same foundational base(train track). Now imagine we need to take a train from one track and place it on another.
You would need to either take the train apart and rebuild it on the new track, or bring in a massive fleet of heavy-duty cranes to lift each carriage. From there you’d need to transport it somehow, and then finally place it on a new track. A very large, very costly and time-consuming job. And for a very long time, this is what it’s been like trying to swap crypto tokens that exist on different blockchains.
To cross-chain swap manually you need to...
- Swap your current token into $USDT(paying fees)
- Make sure you can bridge this correctly onto the desired chain(takes time)
- Bridge your $USDT onto the new chain(paying fees)
- The buy your new asset(paying fees)
All of this takes time, costs money, and involves lots of concentration to ensure at each step of the way you are inputting the right crypto wallet addresses, ensuring your funds are going exactly where they need to.
Pando has completely removed this headache with 4swap. Utilising the platform you can swap a whole variety of tokens with each other, for a small fee, almost instantly!
Screenshot made in November, 2022
So how is this possible?
The Mixin Network
Pando is built on top of a cross-chain functionality, decentralised network, called the Mixin Network. The Mixin Network enables the transfer of cross-chain Crypto assets that are what you would call “off-chain”. We can use a pivotal time in history to explain how this process works.
Throughout the ‘gold standard’ financial era, banks needed a way of transacting with one another without having to physically send gold every single time. It was for this very issue that fiat(paper) money was created. The fiat notes or ‘coupons’ as they were known back then, served as an official redeemable amount of gold for when the holder decided to collect. Now as I’m sure you can imagine banks were processing so many transactions that this service was essential. They would often process thousands of different transactions over a period of the month, and at the end, they would total up all transactions and send the other bank the final amount of gold. All of the paper transactions would be calculated “above” the gold, and only once the month was over would they officially lodge the transaction on the gold reserves. The Mixin Network works as the fiat money in this example.
A blockchain such as Bitcoin can send funds to the Mixin Network through the Cross-chain functionality, and a transaction will be lodged. Once on the Mixin network, it now works like paper money in our example, transacting as many times as needed “off-chain”. But only once the Bitcoin is sent back off the Mixin Network are all the transactions calculated, and the final transaction is then processed. This means users can send multiple different tokens from different chains on the Mixin Network, and transact as many times as they like with one another.
Mixin now supports 2473 assets across 44 different blockchains. 4swap supports every single asset supported on the Mixin Network.
It’s great being able to connect the chains, but how are they able to swap various different tokens instantly, and almost free?
The ‘Cocktail’ Liquidity Pools
To clarify firstly, they are not actually called “Cocktail Liquidity Pools”. But you can probably guess by now that we’re going to have another analogy.
To be able to swap any asset with another, at any time, a fairly large pool of liquidity(money) is required. This liquidity acts as a reserve of money so users can go ahead and sell their tokens when there is not a buyer on the other end of the transaction and vice versa. If you didn’t have a pool of liquidity, every time someone wanted to sell a token they would have to find a buyer first, which isn’t convenient in the slightest. So, utilising the Cross-Chain capabilities, Pando has built liquidity pools of assets that enable users to come along and swap any asset they have listed for any other. Back to the analogy...
If you go into a cocktail bar they will often have hundreds of different ingredients behind the bar. At any moment they can take a different ingredient and provide it into a drink for the customer. This allows them to create an almost unlimited variety of drinks, all of which are instantly ready. Now imagine the bar is the Cross-Chain Liquidity pools and the ingredients are the crypto tokens(liquidity). As soon as a customer comes along who wants to receive some $ETH or some $AVAX, the bar has it stocked up and ready to go.
Screenshot made in November, 2022
Where do they get all these tokens from?
Liquidity Providers
Pando has close to $100m in liquidity(tokens) on their network. Creating and holding this amount of capital would be an arduous task. Most crypto exchanges and projects aren’t in a position where they can provide such a large amount of liquidity that is required to be able to facilitate all these transactions. So instead, they utilise a liquidity provider service.
Liquidity providing is where crypto investors provide Pando with their assets in exchange for a fee, or interest if you will. Pando then takes all of this liquidity and makes it available for users to be able to make their cross-chain swaps, for which they have to pay a fee. The fee is between 0.3–0.4% of the transaction, and some of this is then sent back to the liquidity providers in the form of interest or APR.
So the users get to swap cross-chain for a small fee, saving a huge amount of money and time. The liquidity providers have an opportunity to earn interest on their crypto tokens, which is actually paid from money generated from transaction fees. And finally, Pando provides a valuable service and generates revenue.
Everybody wins.
How To Use Pando (4swap)
Accessing 4swap is very easy and can be done with various web wallets such as Metamask, Mixin Wallets & Fennec. We have created step-by-step guides on exactly how you can do this if you need further assistance. You can find that by clicking here.
For more information check out our other articles or the links below to our official channels.
Have a great day.
The information contained in this article is for informational purposes only and does not constitute financial, investment, or other professional advice. The views expressed in this article are those of the author and do not necessarily represent the views of the company or organization they work for or Pando. Any investment decisions made by the reader should be made after consulting with their own financial advisor and conducting their own research. The author and the company or organization they work for and Pando will not be liable for any financial losses incurred as a result of reliance on the information contained in this article.