Welcome to Chainflip's FAQ. If you can't find what you're looking for, join our Discord!
Chainflip is a decentralised, trustless protocol that enables cross chain swaps between different blockchains. It's a bit like Uniswap, but allows users to swap assets between major blockchains without any wrapped tokens, traditional bridging, and at extremely competitive pricing using the JIT AMM. It is totally generalised, decentralised, and can be integrated with any chain using any transaction type.
The largest trading pairs in the cryptocurrency industry are between assets like BTC, ETH, SOL, and so on. However, these markets are dominated by centralised exchanges. Much of the time, users are forced to use centralised exchanges when they want to swap assets on different blockchains. Other alternatives would be to use bridges, however these too suffer from centralisation, tail risk, the use of wrapped tokens and unnecessary complexity, just to name a few issues.
Chainflip aims to become the go-to solution for cross-chain swaps. It's permissionless, easy to use, and decentralised. Developers can use it programatically, and users benefit from better pricing with minimal difficulty. Moreover, our user experience will be superior to that of a centralised exchange on top of taking capital efficiency to the absolute extreme. This will make it difficult to find a better avenue than Chainflip for on-chain trading. If you ever used Shapeshift back in 2017, you already know how seamless the swapping experience can be, but Chainflip takes that experience to a whole new level.
Consider a centralised exchange. At its heart, an exchange is a software system which manages private keys (to collect deposits and send withdrawals) in a settlement layer and handles the execution of trades for users in a logically separated accounting layer. Chainflip is not really any different at a high level, except instead of the software being run by a single entity, Chainflip is a consensus-driven software which relies on a quorum of Validator nodes. In order to manage wallets, Chainflip uses Multi Party Computation (MPC) (also knows as TSS) to govern high-threshold multi signature wallets (100/150) operated through the permissionless Validator network. The network requires a constant supermajority to function, and can safely operate so long as an honest superminority remains, which is guaranteed through strong economic security. The State Chain defines the AMM and accounting ruleset, and the Validator Software manages individual shares of the multisig wallets owned by the protocol.
In a nutshell, the Validators operate a virtual AMM system that facilitates swaps between the industry's most liquid and most traded assets.
Chainflip has its own Proof-of-Stake blockchain, called the State Chain. To build the State Chain, we're using Substrate, which is the framework used to build Polkadot & Kusama. Chainflip does not intend to become a Parachain, and will be its own standalone chain.
The backend Validator protocol is written in Rust, and a full external audit will be published along with the source code before launching the protocol on mainnet. We also have relatively simple smart contracts which support the network on smart-contract compatible blockchains.
Chainflip is specifically targeting the use case of decentralised spot trading. There are many other interoperability protocols, but few offer a native swapping capability, making them less suitable for the task of efficiently swapping from asset to asset on their respective blockchains. Spot trading is the biggest market opportunity in the cross-chain space, and Chainflip offers a secure, efficient, and simple avenue to win users over from centralised exchanges.
Using the purpose-designed Chainflip JIT AMM, users of the protocol can benefit from better pricing, a simple deposit system, and integration with other DEX offerings such as Uniswap, Trader Joe, Osmosis and others to quickly and easily transfer value between blockchains.
Liquidity Providers will find it very straightforward to offer quotes on-chain using traditional market-making systems, connecting via WebSocket directly to our LP API. The on-chain activities are abstracted away to offer similar functionality to that of centralised order book exchange APIs.
Web3 developers will also find Chainflip to be the simplest possible cross-chain solution for any aggregator, marketplace, or Web3 product looking to onboard users from other blockchain ecosystems. Using a very simple JSON RPC or websocket interface, developers can add cross-chain functionality to any front-end, wallet, or aggregator with minimal effort.
Moreover, Chainflip also supports cross-chain messaging and list many blockchains that existing messaging solutions don't offer. This maximises compatibility for developers and for traders using these systems.
With the most efficient market structure, and most liquid assets, Chainflip is looking to offer users the best prices on the highest volume pairs in the on-chain trading space.
You can read more about Chainflip's strategy here.
The current architecture design makes Chainflip excellent at providing swapping at great prices on the industry's most traded blockchain assets, but each new blockchain added introduces additional overhead for Validators.
That's why Chainflip is partnering with a range of cross-chain aggregators and other decentralised protocols to offer users access to additional markets through mutual integration. This way, users will still have access to thousands of on-chain trading pairs through collaboration, and aggregators will be able to offer their users excellent pricing on the major assets through the protocol - making the swapping experience better for all.
No. Users only need the token they want to swap. $FLIP fees, where applicable, are automatically processed by the protocol for users.
No, not yet. We expect the token generation event to take place soon. Join our Discord for the announcement!
The initial token supply will be 90M $FLIP. This accounts for all tokens created at the beginning of the protocol, including locked tokens. Future emissions will go to Validators and limited liquidity programs.
Yes, Chainflip will be an ERC-20 token. Although Chainflip has its own blockchain, the multi-chain nature of the project means we can keep the $FLIP token on Ethereum for ease of use and adoption, and allow advanced users to interact with the protocol using the State Chain Gateway.
The Chainflip developers have no say in who the Validators are. Anyone with the required infrastructure and enough tokens to bid for one of the 150 Validator slots can become a Validator. Auctions for the slots are held every 3 hours on the testnet, but is likely to be less frequent on the mainnet. Learn more about auctions, bonds and rewards here.
Liquidity Providers are any actors who provide their assets to the Chainflip protocol in return for a portion of the fees generated by swap volume. Like any other AMM based protocol, Liquidity Provision in Chainflip is permissionless. Both retail users and professional LPs will have the ability to provide v3 style range orders and maker-only limit orders through the JIT AMM to earn fees. Read more about the JIT AMM here.
Although anyone can be a Liquidity Provider, there are some additional steps not normally seen in traditional AMMs. We strongly encourage market makers to consider connecting their existing systems to Chainflip’s JIT AMM to earn healthy spreads on incoming swaps. If you are interested in executing this new trading strategy, you can learn how Liquidity Provider accounts work in detail in the JIT AMM protocol documentation.
Yes, besides the rewards in the form of fees, an additional reward of $FLIP tokens will be distributed to Liquidity Pools proportional to the fees earned. You should read up on the unique JIT AMM protocol documentation before committing capital to liquidity programs on Chainflip.
In the future, newly listed assets can provide their own liquidity rewards autonomously so that new pools can be given bootstrapping incentives without requiring further $FLIP emission.
On launch, we aim to support Ethereum, Bitcoin and Polkadot assets via the Chainflip protocol and integrate with aggregators to maximise asset coverage via native support for cross-chain messaging. From here, we will prioritise the most relevant assets based on user and protocol value.
Chainflip will be open-source after launch, which means anyone can work on integrating their favourite blockchain without waiting for the team.
Yes. Auditing something like Chainflip is much more intensive than your typical DeFi project. Although we have already completed external audits of our smart contracts and threshold signature cryptography, Chainflip is a whole blockchain technology stack. A comprehensive audit has been conducted recently which is the culmination of over 2 years of development, including 3 previous audits completed.
Chainflip Labs has its own internal audit process to maintain high standards even after external audit processes have been completed and published.
The date for product launch has not been announced yet. Please check our Roadmap page for the latest updates.
During a swap, the transactions into and out of Chainflip are on-chain, so the time depends on the speed of the blockchains involved.
Typically, the new asset should reach the user's wallet within 5 minutes. This is significantly faster than existing bridges and faster than the average centralised exchange. We also aim to speed this up dramatically in future upgrades.
If you want to understand how swaps work in detail, check out the Chainflip Native Swap Flow documentation.
No, Chainflip is a decentralised exchange and therefore, there's no collection of personal data whatsoever. Keep in mind the records of all trades are still publicly visible on the Chainflip State Chain and the blockchains the protocol is connected to.
Below is a breakdown of how Chainflip's fees are structured:
Deposit Gas Fees (Normal User Transfer)
Varies per chain
Network gas fee will vary depending on the incoming chain. Coming from BTC will differ from those coming from ETH for example. These will be paid by the swapper when they deposit from their wallet.
Liquidity Fee Per Pool
Fixed Liquidity Provider Fee
Network Fee for Buy/Burn Mechinism
Fixed Network Fee used by the protocol to buy FLIP tokens from the USDC/FLIP pool on the State Chain, which in turn are burnt.
Destination Chain Transfer Broadcast Fee (Transfer by Protocol)
Varies per chain
Network gas fees will vary depending on the withdrawal chain. Batching, however, will lower the fee that would normally be paid.
Every time there is a transaction with the base asset (USDC), 0.1% is deducted and used to buy FLIP tokens directly from the FLIP:USDC Liquidity Pool within Chainflip. The protocol then automatically burns these purchased FLIP tokens, creating deflationary pressure on the token supply as the product usage increases.
More details on this can be found in the Cryptoeconomics blog post.
The Oxen community previously ran an airdrop program for Oxen Service Node operators. That program was concluded by the Oxen community in early 2022. In addition, the Soundcheck Testnet Program included incentives which will be airdropped to community members on Token Launch.