A New Approach to Synthetics in DeFi: Improving Liquidity of Altcoins and NFTs
There are thousands of ideas feeding on the inventiveness of crypto entrepreneurs. Of the many, DeFi has been definitive in the last two to three years.
DeFi is an umbrella term describing efforts to replicate traditional instruments in blockchain circles. The integration of the public ledger eliminates intermediation.
Accordingly, DeFi protocols ride on trustlessness and are markedly different with non-custodial capabilities.
However, the central lynchpin in DeFi operations lies in the ability of users to tokenize real-world assets. Synthetics have been a game-changer in DeFi and can be attributed to the unlocking of numerous benefits, subsequently boosting financial inclusion and improving liquidity.
What is the xCarnival Project?
The xCarnival project will leverage its synthetics-creation ability to boost liquidity, improve accessibility to the masses, and lower entry barriers.
It will launch from the Binance Smart Chain (BSC) first before later launching in Polygon and Solana. This is due to the multichain nature of the xCarnival system.
They have adopted a multi-prong approach, introducing various products towards this end. The creators of the xCarnival project envision a future where synthetics anchor liquidity in the burgeoning DeFi space.
In their assessment, xCarnival views every asset—altcoins or NFTs-- as collateral that should be adopted quickly and injected into the DeFi ecosystem, improving liquidity. As such, the protocol will introduce a unique synthetics solution that’s not part of their competitors’ offerings and unavailable in the current financial markets.
Through their XArena, the project plans to integrate valuable assets' synths smoother, making them accessible to the masses.
For instance, XArena provides users with a variety of adjustable parameter templates. Out of this, users would easily convert their ideas into open, public synthetic coin and contract to earn money.
The XArena is xCarnival's primary function and would democratize the creation of financial products with the inspiration of how YouTube devolved video making, rewarding content creators.
Besides, xCarnival's XAdapter provides open oracle interface to third-party partners for more on-chain and off-chain data tracking solutions. This innovation is designed to increase the possibility of different synthetic topics supported in XArena.
Meanwhile, there is XBroker which uses a pledge model and is optimized for illiquid assets. Using this product, a user can, for example, get money from their NFTs without necessarily selling the asset. It’s a unique solution for NFTs pledge requirement on the market right now.
Moreover, Megabox allows users to liquidate their long-tail assets, which are typically relatively illiquid quickly. Their assets can include altcoins and liquidity provider tokens. By liquidating these assets, users would be in a better position to borrow.
Addressing the Challenges Facing Synthetics in DeFi their approach circumvents some common challenges facing the DeFi and synthetic scene. Revolutionary as DeFi is, users yearn for more.
For example, only a few valuable assets have been converted to synthetics, not forgetting the custody requirements. By only supporting a few assets, most of those who can convert and obtain the "correct" assets are left out, dumping down liquidity.
Second, synthetics' foundational nature renders these derivatives technically useless unless they are used for farming. They are unattractive since competing creators don't strive to resolve users' pressing needs, presenting even more problems.
The situation is further complicated considering how complex synthetics creation is. Ordinarily, to convert a valuable asset in the current architecture involves multiple transactions.
Each, in platforms like Ethereum, is expensive considering the high cost of Gas. Conservative users, although excited from DeFi and synthetics, steer clear.
XCarnival wins the BSC Hackathon, Plans to Launch the Mainnet in Q3 2021
Because of their value proposition, uniqueness, and objective of providing a differentiated synthetics solution, XCarnival won the BSC hackathon.
Sponsors said their new-gen approach and inclination to resolve liquidity in assets such as NFTs and Altcoins stands to become a "synthetic revolution."
From XCarnival's roadmap, the project aims to develop a liquidation mechanism of crypto assets—inclusive of NFTs—and launch farming.
In Q3 and 4, the project plans to research and develop a contract of the XArena model before the mainnet launch.