Stargate Finance ($STG)

Stargate Finance is a fully composable liquidity transport protocol built on LayerZero technology. If your unfamiliar with how this works read through Layer Zero Network. LayerZero aims to enable the transfer of funds between several blockchains. Stargate has achieved over 1B in TVL (total value locked) in just 5 days since launch.

Stargate is the first and only bridge that solves the bridging tilemma which I will cover in more detail below. Stargate will allow users and dApps to transfer native assets ($ETH, $SOL, $AVAX, $FTM, etc) via their unified liquidity pools that offer instant guaranteed finality. Users can transfer, provide liquidity, farm and stake on the protocol.

Video preview — Video example of how LayerZero works and how Stargate can do what it does

HOW DOES IT WORK

Stargate at it’s core is a composable bridge. Stargate is the first and only bridge that solves the bridging trilemma. To understand how Stargate works let’s first dive into what the bridging trilemma actually means when broken down.

Transferring liquidity between chains is a crucially important part of the user experience in todays landscape. The movement of this liquidity is made possible by bridges which are services that facilitate cross-chain token swaps.

Current bridging architechture/infrastructure runs into the issue called the bridging trilemma, meaning they have to choose only one or two of the following features below and make a compromise and give up on the others.

Instant Guaranteed Finality: the guarantee of funds on the destination chain when a transaction is successfully committed on the source chain.

Unified Liquidity: the shared access of a single liquidity pool between multiple chains.

Native Asset Transactions: the user-desired assets (native or most liquid synthetic) on the destination chain.

Instant Guaranteed Finality

For example traditional bridges to achieve instant guaranteed finality will use synthetic assets or a lock + mint and burn + redeem mechanism.

This achieves instant guaranteed finality since the bridge locks the users assets on the source chain and then mints the new synthetic assets on the destination chain. However this leaves users with a synthetic asset that they now have to swap for the real asset they need.

Additionally if a transaction needs to be reverted for any reason the bridge has to do either of the below all of which are cumbersome, expensive and inefficient.

Let the user manually revert

Collect sufficient gas for reversion from the user upfront

Finance the reversion costs itself

Unified Liquidity

Traditional bridges use what is called fractured liquidity. This approach keeps a separate pool for each pairwise connection allowing exclusive access to deposit and withdraw from its assigned pool of liquidity. This approach provides guaranteed finality.

However the fractured liquidity approach has a major flaw. Whenever a new chain is added to the network a new liquidity pool must be created on every exsisting chain. This means that the required number of pools scales quadratically in relation to the number of chains in the network. Because of this fractured liquidity is undesirable and impractical in achieving any size of meaningful scale.

Cross-Chain Composability

Traditionally, “composability” has described the ability to combine multiple smart contracts in a single transaction on a single chain.

Cross-chain composability describes allowing a cross-chain transfer to be composed with smart contracts on the destination chain. This feature is not present on any exsisting bridge. Currently bridges can only provide traditional composability as described above, allowing composition with other smart contracts on the source chain but not the destination chain.

HOW DOES STARGATE SOLVE ALL THIS

Stargate has created the Delta (∆) algorithm, which is a novel rebalancing algorithm which, combined with omnichain communication via LayerZero solves the bridging trilemma by enabling unified liquidity without compromising instant guaranteed finality.

Bridges that are built with the ∆ algorithm (∆Bridges) so Stargate in this case, can conduct native asset transfers through unified pools of liquidity while achieving instant guaranteed finality. The combination of these 2 enables cross-chain composability and scaling which solves the bridging trilemma.

∆Bridges eliminate the overhead of lock-and-mint providing benefits to both the users and the liquidity providers (LPs). Users no longer have to bridge their assets multiple times on multiple different UIs to end up with native assets on the destination chain. No more swapping out of unwanted synthetics on the desitnation chain.

LPs can also achieve higher capital efficiency via staking into single-sided asset pools without impermanent loss (IP) and the ability to collect fees from all incoming transfers regardless of their source chain.

The unified liquidity design capabilities also allows ∆Bridges to scale across many networks of chains overcoming a key limitation of exsisting bridge infrastructure/design.

COMPOSABILITY

Solving the birdging tilemma unlocks true composability allowing bridges to enable transfer and call on the destination chain rather than just the source chain. This opens up the door to an endless amount of composability and possibilities like the example below. The video at the top also gives you a good idea of what will be made possible with LayerZero and Stargate.

Applications can now wrap a Delta (Δ) Algorithm Enabled Bridge (ΔBridge) to perform actions like swap → bridge → swap all in one single transaction from the source chain.

For example, suppose a SushiSwap user wanted to swap $wBTC on Ethereum for $JOE on Avalanche. In that case, they could now do this in a single transaction on the source chain and without ever leaving the SushiSwap UI.

This enables a complete unified experience for multichain applications like SushiSwap, Abracadabra, and many more.

TOKENOMICS

LayerZero is auctioning off 10% of the total token supply of stargate tokens (STG), some 100 million tokens, which will be sold in an auction using a bonding curve. The auction plans on raising $25 million in USDC from the public, at a maximum price of $0.25 per token.

The token sale will end once traders have purchased $25 million in USDC or after 48 hours have gone by — whichever comes first.

The $25 million raised will be paired with 50 million STG tokens and placed into a pool on the decentralized exchange Curve. It will open for swaps at $0.50 per STG token.

The 100 million stargate tokens sold during the auction will be frozen for up to a year followed by another six months of linear vesting.

Here is a breakdown of what happened during this event - https://twitter.com/StargateFinance/status/1504568944551673856?s=20&t=_RppYhszp_r8bt7qO9URvA

TEAM

LayerZero is co-founded by Bryan Pellegrino, CTO Ryan Zarick and Caleb Banister.