0x Cross Chain Scaling Possibilities

0x family! I’m back from months of research into yield farms, light contract auditing and governance experimentation! Thank you for inviting me to 0xpo 2020, which opened my eyes to the amazing work happening on Ethereum and 0x

I want to share some ideas with you about cross-chain integration with ZRX, expansion of ZEIP Governance reach, and cross-chain Matcha integration possibilities.

I used Solana as an example.

If you are able to draw 1 good idea or concept that becomes reality from this, it will have been a benefit!

Agenda:

  • Goals for 0x Cross Chain Scaling
  • Cross Chain Migration Options
  • Incentivization
  • Governance Farming
  • Liquidity Gladiators
  • Outcome

Open to your feedback.

-Drew @CryptoHydrate

1 Like

Another way to scale is to take a margin of cross-chain transaction savings (Let’s say ETH fee is $5, cross chain fee is $0.50, so you slice off $0.50) and add to liquidity permanently, allowing fees to benefit LP holders.

#SAV3 just implemented this today (not cross-chain, just on $ETH), it’s worth a look. Not a shill, this is an unaudited experiment.

11/19 1AM UTC update: 25% of all #SAV3 / $ETH LP tokens created so far are already locked into liquidity forever, constituting almost 2 million SAV3 and 647 $ETH, around $621,000 USD at current prices

Under the hood:

Thanks @cryptohydrate - there are a lot of interesting ideas in your presentation (thank you for taking the time to package it in this format as well).

If I understand correctly, you’re exploring the problem: how to bring ZRX tokens to other blockchains?
What you’re exploring as a solution is interesting. Another variable to consider is the fact that bridges already exist (example), and technically speaking, it is already possible to bring ZRX. I think what you’re rightly raising is a question of 1) convenience and 2) incentive.
On the convenience side, I see the integration of the ‘transfer/shipping’ flow in products like Matcha could help. Being able to, for example, sell 10 ZRX for ETH and prompt the user ‘wanna transfer 1 ZRX to Solana at the same time?’. Interesting, that should help. But then the question goes to 2): why would a user do it? That’s the piece I’m not entirely sure I capture from the deck. Would you mind re-iterating here?
By the way I am using the assumption that we’re not changing the universal supply of ZRX.

On the governance piece: as you say, intuitively a ZRX in another L1 should be treated as a ERC20 ZRX with regards to voting power. A NEAR ZRX holder should be able to vote and have the same voting power of an Ethereum ZRX tokenholder. Both can vote on the local protocol versions on both L1s. They’re able to stake (and receive liquidity rewards) from MMers active on Ethereum and another L1.
I think the DEX Hub we mentioned in the latest blog post around the topic is the venue where to orchestrate that. Given the ethos of 0x mission, the asset bridges needed in a DEX Hub architecture will have to minimize the underlying centralization, a concrete technological challenge that requires more research and experimentation. assumptions.

It seems also you bring up another concept of ‘time-dependent’ voting power. It’s something interesting and orthogonal to the other discussion. I am not entirely sure it’s a fair model and afraid it introduces distortions/asymmetries. I am always wary of asymmetries :slight_smile:, it’s just an approach based on intuition, not facts. I would like to discuss this too.

Tagging here a few folks that I think would find your contribution interesting @abandeali1 @Remco @0x_peter

Thank you Theo!

I have done a little bit of SPL experimentation: (here’s me wrapping an experimental ERC20 yield farm token into SPL ERC20s)

I actually wrote a guide on how to list pairs on the Project Serum dex if you’re interested in checking it out. I used Solana SPL tokens I wrapped in Sollet.io

Few options:

  1. Check difference between fee on Ethereum and cross-chain fee. Share with the user that they will save 90% of the difference, and 10% of the fee savings is wrapped for them on Solana and can be redeemed. If they do not redeem it, it’s effectively burned and could then go into the liquidity pool to reward providers after 90 days. If they generated solZRX, they’d automatically get enough SOL gas when they establish their first wallet. They could then pair solZRX with Ethereum on Solana, and benefit from LP pool function with lower swap fees. Lastly, their solZRX, in LP or not, would give them enhanced Governance power on ZRX.

  2. As for the universal supply of ZRX, no, we would never want to increase the supply. Rather, we spread the supply from ERC20 to other blockchains to allow them to be voting blocks on ZEIPs, trade ZRX with less fees, further interconnecting the ecosystems.

For this one, what I’m encouraging is, incentivization of transactions on Matcha through converting a tiny % of each ZRX transaction to solZRX for example, and the solZRX could have enhanced voting power for a certain time frame. This could incentivize groups that do large amounts of transactions to adopt Solana, and at the same time, guarantee liquidity for solZRX.

Example:

I buy 10,000 ZRX on Matcha for $3700 USDT
The 10,000 ZRX is locked up in the Solana ERC20 contract
$3700 is unlocked from the Solana ERC20 contract and given back to me
The actual swap takes place on the Solana chain.
If there is a reduction in fee due to the simplicity of the transaction (i’m not advanced enough to understand how it would work yet), a small margin of the fee is converted to solZRX/ETH and added as liquidity on Solana once a day when the little fees add up. See this as an example of the batch transaction happening where all the little fees added up are converted to LP https://etherscan.io/address/0x6E10AAcb89A28d6FA0FE68790777fec7E7f01890#events