To address Ethereum's scalability constraints, Web 3.0 developers are consistently working towards building multiple Layer 1 and Layer 2 networks.
These solutions are playing a vital role in onboarding an increasing number of users onto the DeFi ecosystem by reducing gas costs and improving network throughput.
However, the proliferation of such networks also means that the user base of the Web 3.0 ecosystem is now fragmented across these multiple siloed networks instead of being concentrated on a single network such as Ethereum.
This is inhibiting the true potential of the entire ecosystem.
Current；After Router Protocol
An obvious solution to the existing multi-chain paradigm is to build frameworks that enable seamless cross-chain communication between these siloed networks.
And that’s where Router Protocol comes in:
What is Router Protocol?
Router Protocol is a cross-chain communication protocol that works on an infrastructure layer above the smart contracts of various blockchains. One of the first applications of the protocol is a cross-chain bridge that can transfer or swap any token across any of the 9 supported layer 1 and layer 2 networks (Ethereum, Polygon, BNB Chain, Avalanche, Arbitrum, Optimism, Fantom, Harmony, Cronos).
In a broader sense and in the long-run, Router Protocol enables dApps, or smart contracts, to have cross-chain capabilities via Router Protocol’s SDK: CrossTalk Library.
CrossTalk is an extensible plug-and-play library that enables generic messages and state transitions between different chains in a secure and seamless manner. With a simple call, it has the ability to give your smart contract the ability to communicate with another smart contract that is deployed on a different chain.
It can help developers build use cases like cross-chain staking and farming via Uniswap on the ETH mainnet from Fantom.
What is unique about Router Protocol?
Router Protocol is unique in several ways! It features:
- Swaps between any token across 9 supported L1 and L2 networks
- Flexible bridging fees payable in 4 different tokens (native chain token, USDC, ROUTE, DFYN) with discounts up to 50% when paid using ROUTE/DFYN
- Pathfinder algorithm to find the most optimal route for cross-chain swaps
- A modular mesh network that blockchain networks can connect to, instead of deploying multiple 1-to-1 dedicated single bridges
How does Router Protocol work?
Here’s a video demonstrating how to (cross chain swap) swap/bridge any token to any token on any of the 9 L1 and L2 networks that Router supports. (Ethereum, Polygon, BNB Chain, Avalanche, Arbitrum, Optimism, Fantom, Harmony, Cronos)
Typically, using Router Protocol for a cross chain swap look like this:
Pathway 1
- Router uses a DEX on the source chain to convert your token to stablecoin USDC.
- The stablecoins USDC are locked on the source chain.
- An equivalent amount of USDC are unlocked on the destination chain.
- The unlocked stablecoins are converted to the desired token on the destination chain.
There are other possible pathways taken to complete the cross chain swap. Router’s pathfinder algorithm uses the most optimal route, out of some of these possible pathways:
- Native chain token (ie ETH) will be locked on chain A and an equivalent amount of ETH will be unlocked on chain B.
- Native chain token, i.e., ETH, will be converted to a stable reserve asset (USDC), which will be locked on chain A. An equivalent amount of USDC will then be unlocked on chain B to buy ETH and send it to your wallet.
- You want to transfer 5 ROUTE tokens from chain A to chain B. 5 ROUTE will be locked on chain A, following which 5 ROUTE will be minted on chain B. While transferring ROUTE back from chain B to chain A, ROUTE tokens will be burnt on chain B and unlocked on chain A.
- Your X tokens will be locked on chain A and an equivalent amount of X tokens will be unlocked on chain B. These unlocked tokens will then be used to buy Y tokens.
- Your X tokens will be swapped for Y tokens and locked on chain A. On chain B, an equivalent amount of Y tokens will be unlocked and credited to your destination wallet address.
To proceed with the cross-chain swap, users are required to pay a bridging fee.
Bridging Fees: With Router, users will have the utmost flexibility in choosing which token to use for transaction fees. Users can choose between:
- Native gas token on the source chain (default)
- USDC
- ROUTE (50% concession on transaction fees)
- DFYN (20% concession on transaction fees)
CrossTalk enables cross-chain communication between dApps, i.e., cross-chain staking, governance, borrowing, and lending. It gives your smart contract the ability to communicate with another smart contract that is deployed on a different chain. With CrossTalk, you can:
- Build native cross-chain applications.
- Port a single chain DApp to multiple chains.
- Launch chain agnostic NFTs.
- Integrate a cross-chain bridge on your platform.
- Create stablecoins with built-in cross-chain capabilities.
- Hold cross-chain governance in your existing DApp.