The Sifchain decentralized exchange is the first of its kind in the world (DEX). It implements Thorchain as a model, but there are some key distinctions that we’ll go over below.
Sifchain uses the Cosmos SDK and the Inter-Blockchain Communication Protocol (IBC). It processes significantly more transactions per second than Ethereum. Therefore, it makes it 100 times more efficient in terms of trading fees and transaction speed than Uniswap, the current leading Ethereum-based DEX.
Cross-Chain Software Development
Thorchain makes transactions on the native chain for any external asset using native tokens. Sifchain has a pegged token paradigm. Users trade pegged tokens that can be redeemed for their native underlying token at any time on the blockchain.
Sifchain employs a two-way peg protocol that involves the exchange of pegged tokens. A trade of YFI for COMP, for example, would be completed on a Cosmos SDK blockchain as transactions of pegged tokens (cYFI and cCOMP).
In the Cosmos network, each source chain would have its own peg chain (known as a peg zone) with its own validators separate from Sifchain. Through the IBC, Sifchain would authenticate the transactions of peg zone validators.
Validators in peg zones must only run full nodes for their peg zone blockchain and the blockchain to which they are tied. An Ethereum peg zone validator, for example, simply needs to run a full node for the Ethereum peg zone and blockchain.
The key advantage of using a native token is the ability to participate in the native token’s set of validators, miners, or other nodes’ consensus mechanisms. However, the deployment of a pegged coin based on a combination of technical and crypto-economic incentives is more beneficial.
Generalized Model of Liquidity Allocation
In its token economics study, Sifchain lays forth its key assumptions about liquidity pool architecture. Users do not subject to any formula.
Sifchain will likely employ Thorchain’s slip-based fee formula at launch. But this will have revisions soon such that holders of our native token, Rowan, can vote on the liquidity pool formula on a per-liquidity-pool basis.
Sifchain also balances rewards for validators and liquidity providers. Beyond validators and liquidity providers, our rebalancing strategy is a vectorized extension of Thorchain’s Incentive Pendulum, which can apply to any number of subsystems.
SifCore (the core team of Sifchain) has been functioning on SifDAO and handing over procedure management power to the society. Through a cooperative research project with MetaGov, we’re actively cultivating best practices.
Sifchain should be self-funding and self-sustaining in order to achieve full self-sovereignty. For example, we take inspiration from Linux and Wikipedia.
We’re working with a UC Davis research lab to make properly financed open-source development a cornerstone of Sifchain governance.
Within SifDAO, governance will use tools like alpha bonds to engage in market-based performance evaluation.
The market should govern Sifchain wherever practicable, including on-chain crypto-economic incentives for SifDAO members.
Finally, both Sifchain and Thorchain are excellent items. The team behind Sifchain is a major supporter of Rune, Thorchain’s network asset.
We hope that this essay has clarified the technological distinctions between Sifchain and its Rowan token, as well as the unique value proposition of Sifchain’s Rowan token.
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