DeFi (Decentralised Finance) provides many opportunities. Yet, dealing with different blockchains can be a challenging task for beginners. Crosschain swapping of assets, which involves multiple steps, can be difficult. LI.FI helps with this by making cross-chain swaps easier and making the most out of DeFi for all users.
The Challenge: Blockchain Silos And Complex Swaps
Blockchains, by design, are secure and independent networks. However, this very independence creates silos where assets are locked within specific ecosystems.
Imagine having your Bitcoin on the Bitcoin network but needing it for a DeFi application built on Ethereum. Traditionally, accomplishing this required several steps:
- Bridging: To get from BTC to ETH, you would need to identify a ‘bridge’ – essentially a service that ‘freezes’ your Bitcoin on the Bitcoin network and ‘creates’ the same value, ‘wBTC,’ equivalent on the Ethereum network.
- Swapping: When you’re on Ethereum, you need to utilize a Decentralised Exchange (DEX) to change your wrapped token (wBTC) into the asset you want on Ethereum.
This procedure might be difficult because it involves multiple platforms and could result in high costs. Plus, it can consume lots of time and tech skills to find the most link and DEX combo.
LI.FI: A One-Stop Solution For Cross-Chain Swaps
LI.FI tackles these challenges by offering a user-friendly and comprehensive solution for cross-chain swaps.
It acts as an aggregator, bringing together various bridges and DEXs into a single platform. LI.FI simplifies the process with its:
Seamless interface
LI.FI provides a user-friendly interface where you simply select the token you want to swap, the desired token on the target chain, and the amount. It takes care of the complexities behind the scenes.
Aggregation power
LI.FI aggregates multiple bridges and DEXs to find the most efficient route for your swap. This ensures you get the best exchange rate and minimizes transaction fees.
Security focus
LI.FI prioritizes security by integrating with well-established and audited bridges and DEXs. They also conduct frequent audits of their own smart contracts to ensure the safety of your assets.
Benefits of Using LI.FI
Using LI.FI for your cross-chain swaps offers several advantages. Some of the most noticeable are simplified workflow, optimized swaps, security, and flexibility.
LI.FI eliminates the need to interact with multiple platforms and protocols. It streamlines the process, making it accessible to users of all experience levels.
By aggregating liquidity from various DEXs, LI.FI finds the most efficient route for your swap, potentially saving you on fees and slippage (the difference between the expected price and the actual price obtained during a trade).
But aside from that, LI.FI prioritizes security by integrating with reliable bridges and DEXs and conducting regular audits. With exceptional security, it also supports a wide range of assets and blockchains, allowing you to swap between various DeFi ecosystems.
The Underlying Infrastructure of LI.FI
LI.FI makes user interaction easier, but we should also recognize the infrastructure that fuels cross-chain exchanges. Various blockchains have unique safety features and economic structures that are often termed tokenomics. Grasping tokenomics, such as the widely recognized Axelar Tokenomics (AXL), offers additional insight into how bridges and DEXs function within the DeFi system.