FusySwap Technical Overview

Enabling Cross-Chain Swaps with FUSY Token

Introduction

FusySwap, is designed to swap ERC-20 tokens on EVM-compatible blockchains. Traditionally, such swaps occur within the same chain. To transcend this limitation, FusySwap introduces cross-chain support, enabling the exchange of tokens across distinct blockchains. This expansion leverages the platform's native multichain token, FUSY, which operates across multiple chains via LayerZero, an interoperability protocol.

Problem Statement

The core challenge lies in facilitating the exchange of an ERC-20 token X on chain A with another ERC-20 token Y on chain B, without the authority to mint or burn the involved third-party tokens.

State of the Art: Concepts

• Token Bridges: Token bridges are essential infrastructures that facilitate the transfer of tokens between chains. They work by locking tokens on the source chain and unlocking the corresponding amount on the destination chain, ensuring the conservation of token supply across ecosystems.

Fig. 1: Token Bridge

• DEX Aggregators: These platforms optimize liquidity sourcing from multiple DEXs within the same blockchain, ensuring users receive the best trading rates without manual price comparisons.

• Cross-chain DEX Aggregators: An evolution of DEX aggregators, these platforms extend liquidity sourcing capabilities across different blockchains, addressing interoperability challenges between decentralized networks.

FusySwap Cross-Chain Proposals

To integrate cross-chain functionality into FusySwap, three proposals are under consideration:

1. Intermediary Cross-chain Token: Utilize a FusySwap-owned cross-chain ERC-20 token (denoted as K) present on both chains A and B. Users can swap token X for K on chain A, transfer K to chain B, and subsequently swap it for token Y. This process is graphically detailed in the provided figures and relies on the controlled liquidity and regulated minting of token K.

2. Swap + Token Bridge: Leverage existing token bridges between chains for token X or Y to perform a swap followed by a cross-chain transfer, or vice versa. This method is dependent on the availability and reliability of token bridges.

3. Mix: Analyze the costs of using the Intermediary Cross-chain Token approach against the Swap + Token Bridge method via DEX Aggregators and select the most cost-effective solution.

Figures and Workflow

The figures provided illustrate the conceptual operation of cross-chain swaps:

• The first figure demonstrates the process of swapping token X for an intermediary token K within chain A, transferring K across to chain B, and then swapping K for token Y.

Fig. 2: Intermediary Cross-chain process

Fig. 3: Swap and then cross-chain transfer (bridge for the output token).

Fig. 4: Cross-chain transfer and then swap (bridge for the input token).

• The second and third figures depict the Swap + Token Bridge proposal, either bridging the output token post-swap or the input token pre-swap.

Innovative Solutions with FUSY Token

• Intermediary Token Approach: FUSY, the platform's native token, acts as the intermediary in cross-chain swaps. Users can swap token X for FUSY on chain A, then transfer FUSY to chain B using LayerZero, and finally exchange FUSY for token Y. This solution leverages the multichain nature of FUSY and the efficiency of LayerZero.

• FUSY Token and LayerZero: As a multichain token, FUSY is uniquely positioned to streamline cross-chain swaps. LayerZero provides a seamless and secure channel for FUSY's transfer across different blockchains, supporting the swap process.

Technical Process

1. Swap on Source Chain (Chain A): Users initiate a swap of token X for FUSY on chain A.

2. Cross-Chain Transfer via LayerZero: The FUSY tokens are then securely transferred to chain B through LayerZero's interoperability protocol.

3. Swap on Destination Chain (Chain B): Once FUSY arrives on chain B, it is exchanged for token Y.

Key Observations

• Controlled Liquidity: FUSY's liquidity is carefully regulated across chains, ensuring the stability and reliability of swaps.

• Non-dependence on Token Presence: There is no requirement for token X to exist on chain B or for token Y on chain A, thanks to the intermediary role of FUSY.

• Pricing Dynamics: The value received in token Y for the given token X is determined by the prevailing price of FUSY on both chains.

Conclusion

The introduction of FUSY as an intermediary multichain token, combined with LayerZero's interoperability protocol, represents a significant advancement for FusySwap. It not only simplifies cross-chain swaps but also fortifies the platform's position in the DeFi space by leveraging its own native token to bridge diverse blockchain ecosystems.