Why Validated Event Data?
Today’s leading decentralized finance (DeFi) dApps such as Uniswap, Compound, and PancakeSwap often operate in siloed liquidity environments. As such, services such as lending, asset transfers, and yield farming cannot be unlocked across heterogeneous blockchain ecosystems, disenfranchising dApp developers and users on those networks.
If the events occurring in these dApps were linked to each other such that one event in, say, dApp A on chain X, triggers an action in another application, say dApp B on chain Y, then we could unlock the liquidity fragmentation in these networks. For example, most DEXs operate as order books, similar to centralized exchanges (CEXs), where users buy and sell orders at their preferred prices.
However, without sufficient liquidity to back the trading volumes, a DEX can become unstable and subject to price swings and slippages. This forces users to leverage multiple decentralized finance (DeFi) protocols on different chains to swap tokens. Besides the long waiting times, high transaction costs, and slippages that users face, there is also the possibility that liquidity providers in a given pool will experience impermanent loss.
Analog network can allow users to create multi-chain order book DEXs where validated event data allow smart contracts to partially fill bids across different liquidity pool networks. This infrastructure solves the problem of liquidity fragmentation without any centralized bridges or wrapped assets.
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