CHAINFLIP LABS

CHAINFLIP LABS

Created using Figma
Created using Figma
5000 Flippies have been immortalised on the Ethereum Blockchain. Chainflip Labs is bringing the world cross chain swapping, but we can’t do it alone. Instantly recognisable across the metaverse, Flippy is more than a JPEG. It’s a signal that yells - I stand with interoperability, I won’t rest until friction is abolished between chains, I am here to help the cause, I am Flippy.
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About CHAINFLIP LABS

Roadblocks to the adoption of decentralised trading solutions have been both technical and psychological
in nature. Decentralised order book based exchanges such as Etherdelta, 0x and IDEX have largely failed to
attract large user numbers or liquidity due to the complexity associated with managing an orderbook in a
decentralised manner . Additionally, they often require ‘gas’ or native tokens to interact with the DEX
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(regardless of what is being traded), which greatly hinders the user experience of these applications.
Most successful decentralised exchanges have relied on liquidity pools instead. In these systems, liquidity
providers contribute an equal amount of liquidity to both sides of a liquidity pool, and a smart contract
that determines the price between the two assets and presents the price-as-a-ratio. Price imbalances are
corrected by arbitrageurs, who profit from buying or selling assets at values which are divergent from
external markets.
Uniswap’s ability to facilitate quick and convenient transfers between Ethereum tokens has demonstrated
the value of liquidity pools . However, with hundreds of mainstream blockchains, and thousands of tokens
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being used daily, it is clear the Uniswap concept must be extended beyond the Ethereum ecosystem. A
more generalised method to transfer value between blockchains is needed. As a basic example, Bitcoin is
recognised for its relative stability and use as a store of value, whereas Ethereum is generally utilised for
programmatic interaction with smart contracts and the creation of tokens. Allowing users to quickly and
trustlessly swap between currencies on different chains would represent increased flexibility and freedom
in the way capital is allocated across different blockchains.
However, the liquidity pool swapping concept has not yet been widely explored in a cross-chain context.
Most of the recent work in this area has focused on wrapping non-Ethereum assets into synthetic tokens
(also known as ‘wrapped’ tokens), allowing those tokens to be traded on Ethereum . This is not ideal, as
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these tokens must be ‘unwrapped’ before they regain the properties of their native chain. Furthermore,
each wrapped token competes for liquidity with all of the other wrapped tokens of its class, creating a
challenging adoption problem.
A system where tokens can be natively traded across blockchains without needing to obtain synthetic
assets or specific tokens to pay ‘gas’ fees would significantly improve the situation. This is what Chainflip
achieves.
Chainflip accomplishes this by establishing a network of bonded nodes which can collectively view, send,
and receive transactions from multiple blockchains in parallel. Using these new nodes, transactions from
any chain can be formed into liquidity pools. This allows any swap to occur between two pools, for
example, BTC can be swapped with ETH through a single transaction which executes two trades: BTC to
USDC, and then USDC to ETH. At no stage does the swapper need to have custody over any USDC, nor do
they require native Chainflip tokens (FLIP), as the network fees paid in FLIP are deducted automatically
from the swap and routed through the liquidity pools, where it is ultimately burned.

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