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Pioneering Efficient Cross-Chain Interoperability
Ax Protocol is engineered to rectify two critical problems in the DeFi ecosystem: (1) the inefficiency of cross-chain asset transfers, and (2) excessive dependence on centrally-issued assets.
By eliminating the friction created by the two problems mentioned above, Ax Protocol seeks to accelerate the world's transition to a more decentralized, efficient, and globally-accessible financial system.
It is currently difficult and inefficient to move assets across different chains. This is due to fragmented liquidity pools and high fees from bridges or custodians, resulting in issues like slippage and impractical wrapped assets.
Ax Protocol addresses these issues with USX, a cross-chain native stablecoin pegged to the US dollar. As an enhanced ERC20 smart contract, USX eliminates the need for wrapping or pooling during cross-chain transfers, thus maximizing capital efficiency. Furthermore, Ax Protocol requires users to cover only gas fees for USX transfers across chains, with no additional percentage-based charges, regardless of the transfer amount.
As the ecosystem continues to evolve, it is becoming more apparent that the multi-chain nature of the ecosystem is not going away, and Ax Protocol is pushing towards a future where this feature is mostly abstracted away from end-users.
DeFi is excessively reliant on centrally-issued assets, such as bank-backed stablecoins or wrapped custodial assets, for market liquidity and price discovery. This presents a systemic risk in blockchain consensus mechanisms, since they rely on user-activated soft forks to uphold chain integrity against potential corruption by miners or validators. The reliance on permissioned assets like USDC and USDT jeopardizes this mechanism. The entities controlling these assets can exert disproportionate influence on determining the canonical fork, thereby limiting the ability of individual users to influence the process.
To address this issue, Ax Protocol will first leverage Curve liquidity pools to gather USDC, USDT, and DAI as collateral for USX. Subsequently, USDC and USDT will be replaced in the backing pool with decentralized assets. Finally, to maximize capital efficiency, Ax Protocol plans to create a money market that backs USX, enabling users to create more intricate long and short positions.