Axelar - Squid Router

    Date of analysis : 2023-04-23

    INTRODUCTION

    Squid: Single Click Cross-Chain Swaps and Messaging

    Squid is the application that makes cross-chain mainstream, and invisible.

    Blockchains are about digital value, and Squid is a protocol for sending value across chains. Single chain ecosystems have incredible permissionless composability, famously dubbed “DeFi legos”, but this has been missing across-chains until now.

    Squid makes it trivial to build legos between chains, and for users to play with legos that live anywhere. Squid will bring a new era of interacting with applications, rather than infrastructure.

    Generalised message passing > Bridges

    Bridges do not allow us to build cross-chain legos. No one can buy an NFT across chain or connect a derivatives exchange on one chain to a multi-chain yield aggregator using a bridge. Bridges fragment liquidity, require hops between many applications, and result in users taking on unnecessary risks. Bridges are not enough to keep expanding the crypto ecosystem.

    Instead, Squid uses general message passing. General message passing allows us to get value across chains without locking up more assets on a bridge and creating a massive honey pot, ripe for hackers.

    What is Squid?

    Squid is the liquidity and messaging router built on Axelar. We allow applications to implement fast, secure and seamless cross-chain logic into their products, making life easier for builders and users alike.

    Smart contracts

    Squid has a smart contract on every EVM chain which Axelar connects to. When one of Squid’s contracts is called, it executes some swaps and then asks Axelar to call a Squid contract on another chain. Our contracts act as agents which act on behalf of the user on other chains, be it swapping tokens, making a deposit cross chains, or buying an NFT. However, the contracts never have special permissions or tokens locked to them, they’re like an instant postal service built on Axelar’s highways.

    API + SDK (backend)

    Tell our API that you want to swap from AAVE on Ethereum to WNEAR on Aurora, and our backend passes back a bit of data which you can sign with Metamask or ethers.js. This makes it trivial to build cross-chain swap transactions, and extend them with further contract calls.

    Front-end widget

    Squid has built a reference implementation front-end which you can use in your app. It is a react component that can be easily rebranded and installed into a front-end. For teams who want to go cross-chain with only 1–2 days dev work, this is your solution. The widget also supports simple bridging, and cross-chain deposits.

    How it works: Hub & Spoke liquidity

    Squid uses Uniswap, Curve and other supported DEXes to swap any token between any chain via Axelar. Every swap is into or out of the bridging token axlUSDC. What this means is that users don’t ever need to hold wrapped assets in their wallet, and Squid can support any token with the addition of only a single axlUSDC/USDC liquidity pool.

    Squid is built on simplicity. We do one thing, and one thing very well: cross-chain messaging and swaps. Axelar Axelar is a layer 1 blockchain like any of the trusted L1s we use daily. Its purpose is to provide general message passing between other blockchains, and Squid realises the potential of this by providing user and developer friendly tools and interfaces. Axelar is the most secure and reliable interoperability solution on the market.

    Security

    Squid’s contracts are designed to never hold assets, and to be as general as possible while remaining reliably secure. Squid’s contracts have been audited by Ackee Blockchain and Consensys Diligence.

    24 Chains, Hub and Spoke scaling

    Currently Axelar supports 24 chains, and is ramping up quickly and securely thanks to its Hub and Spoke design. A Hub and Spoke model with 24 chains requires 24 cross-chain connections to function, while a point to point model requires 288 connections for full connectivity.

    Other interoperability projects are stalling at supporting single digit numbers of chains while Axelar races ahead. Squid supports all chains which Axelar supports. All supported chains can be seen at AxelarScan

    All of the tokens

    Squid supports any ERC20 token. There are so many amazing teams building innovative DeFi, and we don’t need to re-invent the wheel trying to deploy our own way of swapping assets. We just focus on cross-chain. We are working closely with DEX teams to enable cross-chain via their applications. Think of it as cross-chain as a service. CCaaS? 🧐

    Speed

    As fast as 15 seconds. If you’re swapping between two instant finality chains, Squid will do a cross-chain swap and/or message in about 4 blocks. This will get faster with time and could eventually approach 1 block across both chains. For chains that don’t have good finality characteristics, like Polygon, the user will need to wait longer. This is becoming rarer as layer 1 technology improves. This speed is thanks to Axelar.

    Fees

    Squid currently charges no fees. The user only pays for gas on the source chain, Axelar’s chain and the destination chain.

    Composability

    Unlike nearly all other cross-chain swaps and bridges. Squid is built on top of generalised message passing, built from the ground up for composability. The implications of this are far reaching across many different verticals. Buy an NFT on any chain, no matter what asset you have in your wallet, and what chain you live on. Build a dashboard for any DeFi opportunity on any chain. Deposit into a margin account on a decentralised exchange in one click.

    Generalised message passing enables any token to anything in one click

    Scaling the cross-chain future After integrating Squid, and possibly one of the fiat on-ramp partners, the total addressable market for an application becomes essentially anyone with a credit card, bank account or a crypto wallet. On one end, Squid partners with decentralised applications, and on the other with fiat on-ramps and wallets, to enable a user experience which is totally unparalleled. If you’ve heard of it, you can get it via Squid.

    db_img
    db_img
    db_img
    db_img
    db_img
    db_img

    Squid Router: Crossing the Cross-chain Chasm

    One Click Away From Native Cross-Chain Interoperability(February 23, 2023)

    I love cliches. Ever since I can remember, I’ve been looking for rules that can explain “everything”. Clichés are clichés because they are universal. They are (mostly) timeless and (mostly) true everywhere (across cultures). They are so self-evident and obviously true, that “everyone” keeps repeating them, even centuries after they were first articulated.

    Naturally, I was drawn to natural science and STEM and eventually became an engineer. All STEM is based on universal rules, heuristics, first principles, and rules of thumb. But for every rule, there is an exception to the rule. So what is the rule for choosing rules?

    A Fork in the Road When we are talking with crypto projects, one of the most important questions facing the team is: where to deploy it? Each blockchain has its pros, cons, trade-offs, risks, and opportunities.

    Ethereum has the greatest network effect, but is (still) slow and expensive. Solana is one of the fastest blockchains but it’s less on the decentralized side of the blockchain trilemma. Cosmos has a great community of users and devs, was designed for interoperability, but still has a way to go before coming head-to-head with Ethereum. And, once upon a time it was (seemingly) a great idea to build on Terra.

    The answer to this deployment question has a multitude of ramifications: from technological tradeoffs to network effects that will determine and cap your project’s long-term potential. Choosing poorly can be a forking pain in the neck, leading you to a blind alley.

    But why is that even a question? Today, you don’t ask someone “who is your service provider?” before calling their cell – you just call them and you are automatically routed through. Everything behind the scenes is abstracted from you. It is transparent. As it should be.

    A Spoke In The Wheel Doing the right thing at the wrong time is like doing the wrong thing. (Most of the time). In real estate, location is everything (location, location, location). But this is true in the broader sense for all products.

    If a tree falls in a forest and no one is around to hear it, does it make a sound? Maybe.

    But If you build the next big thing on a “nowhere” chain (or in a forest of competitors), it does not exist. If all your roads lead to Rome and Rome falls, you’ve reached nowhere. That’s why the first rule of investing is diversification.

    Failure to Communicate Almost 15 years have passed since the Bitcoin whitepaper, and blockchains are still mostly siloed, closed, walled gardens.

    Siloed blockchains are limited in their functionality because they can’t interact with other blockchains. This limits the types of applications and use cases that can be built on the blockchain. The lack of interoperability creates a fragmented ecosystem, with different blockchains serving different purposes – making it difficult for users to access and use the services provided by different blockchains. Siloed blockchains also can lead to inefficiencies in resource utilization and capital inefficiency.

    Failing to plan is planning to fail. Blockchains and smart contracts are much more complicated than “classic” code development. Some decisions you make along the way are like a one-way function.

    For example, if you choose a centralized architecture and different components assume performance based on that structure, it is almost impossible to change course. Same goes for Tokenomics. Few projects have successfully overhauled their Tokenomics with their DAO’s approval, some comparing it to changing an airplane engine mid-flight.

    Going Multichain – FOMO or Fo’ Sho’? The naive, brute-force, and simple (but not easy) solution is going multichain. Yes, chain diversification decreases the risk of missing out or even fear of becoming irrelevant (FOBI?), but one thing is for sure – it has a high cost and introduces additional risk.

    Don’t get me wrong – this can be an ok or sometimes fine solution, but it requires a lot of overhead and extra work. Large and experienced teams may be able to deal with the added complexity. For an early or small team, this can be a Sisyphean race to nowhere. Some of the most fundamental rules to SOLID software design are Separation of Concerns, Cohesion, Decoupling, and in general KISS (keep it simple stupid) and DRY (don’t repeat yourself). Manually building different versions for different chains will break most of the rules just mentioned and will remove vital time for building, improving, and innovating on the product. That said, this is a training wheels solution IMHO and should be replaced as early as possible.

    I’m Sorry, You’re Breaking Up To overcome this, two dominant solutions have emerged: a temporary fix and hackable hack called a blockchain bridge (or bridge in short). The other more wholesome solutions are protocols that are designed and planned with interoperability in mind from the foundation up, notably Polkadot, Cosmos, and Axelar.

    Bridges have gained notoriety of their own accord. There are many downsides to bridges (here’s an outstanding “bridges 101” by Axelar’s team). Over 2 billion dollars have been hacked from bridges; the current champ is Polynetwork with $611M hacked in 2021.

    Source: https://www.elliptic.co/blog/540-million-stolen-from-the-ronin-defi-bridge That’s a Wrap! Wrapped crypto assets are cryptocurrencies that are pegged to the value of another asset, such as a fiat currency or a commodity, through a process called "wrapping." The wrapped asset is typically issued by a centralized entity and can be traded on a blockchain network.

    The biggest wrapped asset (depending on the definition) is WBTC. The upside and reason for the existence of wrapped assets is that they provide crypto users with access to the benefits of other assets, such as increased liquidity or stability, while still utilizing the advantages of blockchain technology.

    That being said, there are several risks associated with wrapped crypto assets that investors should be aware of, and they’re listed below. A good rule of thumb is that with each additional smart contract involved, the risk or attack surface grows.

    Counterparty risk: Wrapped assets are typically issued by centralized entities, which means investors are exposed to counterparty risk. If the issuer becomes insolvent or goes out of business, investors could lose their funds.

    Security risk: Centralized entities that issue wrapped crypto assets may be targeted by hackers, which could result in the loss of funds. In addition, the smart contracts that underpin the wrapping process may contain vulnerabilities that could be exploited by malicious actors.

    Price risk: Wrapped crypto assets are subject to price fluctuations, just like any other cryptocurrency. If the value of the underlying asset changes rapidly, the value of the wrapped crypto asset may not be able to keep up, as with Lido’s stETH scare.

    But once in a while, along comes a solution that delivers the best of both worlds: native-interoperability.

    Choosing Everything: The Inkredible Squid

    One for all One of the leading and fast-growing Interoperability protocols is Axelar. Axelar delivers secure cross-chain communication for Web3 with an infrastructure that enables dApp users to interact with any asset or application, on any chain, with one click. Axelar's General Message Passing (GMP) enables developers building on one chain to call any function on any other connected chain.

    Squid is building perhaps the most ubiquitous application on top of Axelar’s infrastructure.

    To solve the interoperability and wrapping problem, Squid is building and running a trustless cross-chain swap and liquidity router. At its core lie the foundational building blocks required to power seamless cross-chain payments. Squid's stack is powered by the Axelar network, and both teams are actively collaborating on building the initial blocks.

    Squid utilizes existing DEXes to swap and send any native token between the supported chains which can be done via Squid’s SDK, Front End interface, or Contracts directly.

    Squid has (successfully) put a lot of effort into creating a slick, simple, single-click UX, minimizing friction to as little as possible. Buying NFTs from any marketplace, using multi-chain DeFi, and playing a game on another chain, all without signing multiple transactions or downloading multiple wallets.

    As of now, Squid already supports the native cross-chain swaps to 25 blockchains; Swaps are composable with Axelar's generalized message passing, so Squid can enable one-click transactions between any application and any user, using any asset.

    Squid has undergone 4 audits: 3 by Ackee Blockchain and 1 by Consensys Diligence. Some of the major players in the crypto space have already announced they will be integrating Squid, including QuickSwap, Pangolin, Ledger, and BitKeep.

    Squid recently went live on Ethereum, Moonbeam, Binance Chain, Arbitrum, Avalanche, Polygon, Fantom, Celo, Cosmos Hub, Crescent, Injective, Juno, Kujira, Osmosis, Secret Network, Terra-2, Agoric, AssetMantle, Axelar, Comdex, Evmos, Fetch, Ki, Regen, and Umee.

    Life is full of multiple choices, and it's easy to get overwhelmed with too much stuff on your plate. It’s nice to know that sometimes you can get a helping hand (or a few tentacles) from a trusted Squid friend.

    DESTINATIONS
    TRANSACTIONS AND AMOUNTS
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    Loading...
    SENDER AND RECEIVER
    Loading...
    Loading...

    Let's take a look at the charts

    The chart below shows the number of transactions from Arbitrom, Avalanche, Binance Smart Chain (BSc), Ethereum and Polygon that have interacted with the Squid router contract in different time frames (left chart). The chart on the right shows the volume of transactions.

    According to the Flipside database, the following 5 networks have interacted with squid router contract

    Avalanche

    Avalanche is a blockchain platform with the native currency AVAX. Avalanche is a competitor to Ethereum that prioritizes scalability and transaction processing speed. AVAX is used to secure the Avalanche blockchain and pay transaction fees across the network.

    Binance

    Launched by the cryptocurrency exchange Binance, BNB Smart Chain (BSC), previously Binance Smart Chain, is a blockchain network. It supports smart contracts and decentralized applications (DApps). BSC runs alongside the BNB Chain, previously Binance Chain.

    Ethereum

    Ethereum is a decentralized blockchain platform that establishes a peer-to-peer network that securely executes and verifies application code, called smart contracts. Smart contracts allow participants to transact with each other without a trusted central

    Polygon

    Polygon is a blockchain platform which aims to create a multi-chain blockchain system compatible with Ethereum. As with Ethereum, it uses a proof-of-stake consensus mechanism for processing transactions on-chain. Polygon's native token is named MATIC.

    Arbitrum

    Arbitrum is a new layer-2 scaling solution for the Ethereum blockchain developed by a new york based company known as Off-chain labs. Layer-2 scaling solutions are networks which sit on top of layer 1 blockchains to provide cheap and fast transactions.

    According to the charts,Polygon network has more transactions than other networks and this shows the interest of users in this network.

    The chart below shows all the transactions and their volume in these 5 blockchains(that have interacted with squid router contract)

    Polygan had the largest number of transactions with more than 15 thousand transactions

    Of course, in terms of volume, Ethereum is the first and Polygon is the second

    Total transactions in all networks were 27,768 thousand transactions

    The volume of all transactions was 11.2 million

    The charts below show the transfer destinations of these 5 networks

    These charts are shown based on the number of transactions and the volume of transactions

    The number of Polygon to Moonbeam transactions has been much higher than other transactions

    The total transactions made to Moonbeam were more than 12 thousand transactions

    The volume of moonbeam transactions has been more than other networks

    Moonbeam is a smart contract platform that enables developers to build applications that operate across multiple blockchains. Developers can use popular Ethereum tools to build or redeploy projects created using the Solidity programming language and Substrate.

    You can view all these transactions through the table on the right

    db_img
    db_img
    TOKEN SYMBOL

    The chart below shows the number of transactions and the volume of transactions according to the symbol token

    axlUSDC had the highest number and amount of transactions

    Only in the ethereum network, USDC instead of axlUSDC has the highest number and amount of transactions

    USDC is a stablecoin that is pegged to the value of the US dollar, meaning that the value of 1 USDC should always be equal to 1 USD.

    axlUSDC and axlFIL are both ERC-20 tokens built on the Ethereum blockchain. axlUSDC is a token issued by the Axelar network, which aims to provide a decentralized interoperability solution for blockchain networks. axlFIL, on the other hand, is a token that represents a wrapped version of the Filecoin cryptocurrency, which is a decentralized storage network.

    WBTC is also an ERC-20 token, but it is a wrapped version of Bitcoin. This means that for every WBTC token that exists, there is an equivalent amount of Bitcoin held in reserve. WBTC is designed to allow Bitcoin holders to interact with decentralized applications on the Ethereum blockchain.

    In these tables and charts, you can see the top 10 senders and receivers according to the number of their transactions

    Loading...
    Loading...
    db_img
    All details and conclusions