The crosschain market: Is there a niche for everyone?
Since the beginning of 2020 it has become clearer than ever that the future of cryptocurrencies will be multi-chain. We have different chains with enough relevance in the market to presume that they will survive for a long time.
This has led to a tendency to try to solve the problem of communicating these chains with each other while maintaining the maximum possible amount of security without depending on a centralized entity.
Within this trend, there is the THORChain protocol, which allows token exchanges between BTC, ETH, BNB, DOGE, LTC, and BCH chains. No other has achieved this goal to date, which has led to more and more interfaces being built using this technology, including Swapper!
What we want to discuss in today's article is whether it makes sense to continue building interfaces of this type or, on the contrary, the moment has passed and there are enough existing alternatives.
Clarification: In this article we will leave aside centralized exchange platforms, we will talk about them in future articles in a more specific way.
There are two types of competition for decentralized multi-chain exchanges.
• Traditional decentralized exchanges
• Other decentralized multi-chain exchanges
Traditional decentralized exchanges
In this category, we can include all those decentralized exchange protocols that were conceived to work in a single chain, such as Uniswap, 0x, PancakeSwap...
These are the protocols that currently have most of the volume and technically they work better and better, but they do not improve the user experience that much. The most serious problem faced by these applications is that they are limited to offering only the assets available on a single chain. This problem has been addressed in several ways.
The leading applications in this category have become aggregators, they have been able to integrate all the protocols in the same interface, for example, Zapper, Zerior, or 1inch. The results are quite good as long as the user has a broad knowledge of the world of cryptocurrencies. If not, you may end up with a cryptocurrency you don't want or on the wrong chain. For these applications, there is a limitation and that is that even if the protocols are aggregated into a single interface, the protocols are still different. So the user will have to make overly technical decisions that they may not understand.
This is the reason why these applications are becoming obsolete, their only alternative is to redesign their entire interface and create integrations with more modern protocols to become a decentralized exchange based on multi-chain protocols. That is, instead of being an interface that brings together many protocols from different chains, the protocol itself brings together many chains. This allows the interface to offer the same functionality but presented in a much simpler way.
For applications such as Swapper these other applications are not seen as competition but as a source of users since he will be able to provide the same if not more functionality by supporting native assets such as Bitcoin or Monero and with better user experience and lower fees.
Decentralized exchanges based on multi-chain protocols
Currently, THORChain is the only multi-chain protocol that allows exchanging native assets between chains such as ETH and BTC. This makes it easy for us to find which can be Swapper's competition within this category. Published on the THORChain website we can find the following applications.
All of them are direct competitors of Swapper since they have and will have a large number of features in common in the future. Seems like a lot, doesn't it? But it would not make much sense to take into account only the number of interfaces that exist, we must also take into account the size of the market.
Without going into too much complexity, to predict how the world of cryptocurrencies could grow, let's take a look at the current volume traded on traditional decentralized exchanges. We can see it in the graph below.
All this volume is likely to be redirected through the interfaces of protocols such as THORChain since they offer added value to their users. The THORChain network in April had a volume of $327M while the total DEX was $9.26B. That is just 3.5% of the total. Both the teams working on building interfaces and the teams building multi-chain protocols are working around the clock, so it seems to make sense to think that with better tools we will be able to get better results.
Three reasons keep the Swapper team focused, motivated, and fearless of competition they keep working hard and are confident that they are building the future.
The first reason is that, as we have seen in the previous data... no one has started the road, the road is not even painted on the map. The market is huge and has just started to grow, remember that we are talking about 80M per day captured vs. a possible capture of 2B.
The second is the early stage of the cryptocurrency world and in particular the niche of multi-chain projects. Any technological improvement can render the applications that are currently at the top of their game completely obsolete. We have already seen this with traditional decentralized exchanges. So, at this point, it could be said that none of the projects has an advantage. What counts is the team behind it, the desire, motivation, knowledge, and vision of this market... a picture is worth a thousand words:
And finally, our vision is that the Blockchain and DeFi can be the banking platform of the future so that the number of users is equal to the number of people using traditional bank accounts today.
Do you still think that nine projects are too many to cater to an audience of this magnitude?
Swapper is not an exchange, not a wallet, not a lending system, Swapper is born with an ambitious but clear objective, to be a bank where there is no one you have to put your trust on but yourself and technology.
Join us on our journey!