In March 2020, Vitalik Buterin expressed frustration over the lack of a trustless solution for swapping between BTC and ETH. Fast forward to November 2023, and Chainflip has finally arrived, transforming swaps with a straightforward and seamless process for exchanging digital assets. Chorus One is proud to support the network as one of the genesis validators!
Chainflip is a cross-chain decentralized exchange based on a proof-of-stake validator network that offers users the simplest way to swap assets across different chains. Fully permissionless, it simplifies trading for users who can select the coins they want to trade and submit the transaction. No wrapped tokens, synthetic assets, KYC, P2P counterparties, or any other time-consuming complexities are requisite. Chainflip is designed to minimize slippage and offer great pricing for high-liquidity trading pairs.
Contrary to traditional AMMs like Uniswap, where liquidity is maintained through smart contract-stored pools, Chainflip operates with up to 150 validators constructing multisig 'vaults' on all supported blockchains simultaneously, collateralised by Chainflip's token, FLIP. The assets used for trading are held in these Vaults on chains such as Ethereum, Bitcoin, and so on, creating a decentralized ‘settlement layer’. This is paired with the ‘accounting layer’, the Chainflip State Chain, which is a substrate-based application specific Blockchain. Instead of traditional on-chain pools, Chainflip virtually trades assets on the ‘State Chain’, balancing accounts and settling with the real assets stored securely in Vaults. The State Chain oversees all activities in the Chainflip protocol, including but not limited to recording, executing, or triggering protocol events. Think of it like a unified wallet system in centralized exchanges, simplifying the tracking of user balances.
Trading and tracking assets virtually on the State Chain simplifies the work needed to support individual chains, as rather than needing to write swapping logic in a range of smart contract and scripting languages on external blockchains, it is entirely contained within the Chainflip State Chain environment.
Validators achieve consensus on every transaction within the Chainflip State Chain. FLIP is automatically purchased and burned with each swap, funding emissions for validators and offering liquidity incentives.
Additionally, all of the swapping and trading logic happens on the State Chain, meaning it’s fast, cheap, and dedicated for this purpose. The user experience is incredibly simple, requiring only a destination address for a swap, without any setup: The user selects the coins they want to buy/sell and submit the transaction. No wrapped tokens, synthetic assets, KYC, P2P counterparties, or anything else complex and time consuming is needed.
The above animation by Chainflip demonstrates the path of a typical swap, where a hypothetical user swaps USDC (ERC20) for BTC (native), and Market Makers A & B compete to win the liquidity fee from the trade. Source: https://docs.chainflip.io
For a more detailed explanation of each step, visit https://docs.chainflip.io/concepts/swaps-amm/just-in-time-amm-protocol
Chainflip, a Proof of Stake network without support for native delegation, allows up to 150 validators in the protocol's authority set. Validators secure the network using collateralized FLIP as part of the active set. All Validators with sufficient $FLIP to outbid others in Auctions become part of the active set and similar to Ethereum, each authority member earns equal rewards per epoch. A fixed reward (much less than the Authority Set reward) is split between Backup Validators each Epoch. To be a Backup Validator, Validators must be Qualified and have one of the top 50 bids of non-Authorities.
We've collaborated closely with Chainflip since its inception, actively participating in the testnet.
While users can't delegate FLIP to public nodes, our institutional customers can get involved through Chorus One's whitelabel solution for Chainflip. We set up and maintain validator nodes on your behalf, allowing you to brand the node while we handle all the technicalities. To learn more about our whitelabel solution for FLIP, please reach out to us at staking@chorus.one.
Conversation with Simon Harman, founder of Chainflip on Epicenter Podcast -
Chorus One is one of the biggest institutional staking providers globally operating infrastructure for 45+ Proof-of-Stake networks including Ethereum, Cosmos, Solana, Avalanche, and Near amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures.
