KuCoin AMA With Chainflip Labs (FLIP) — A Game-Changing Protocol For Native Cross-Chain Swaps

Dear KuCoin Users,

Time: November 28, 2023, 12:00 PM- 1:10 PM (UTC)

KuCoin hosted an AMA (Ask-Me-Anything) session with the CEO and Founder of Chainflip Labs, Simon in the KuCoin Exchange Group.

Official Website: https://chainflip.io/

Whitepaper: https://chainflip.io/whitepaper.pdf

Follow Chainflip Labs on Twitter, Telegram and Discord.

Q: How did the idea for Chainflip come about?

Simon: Well, since I got involved in the space in 2014, there hasn’t been a good way to swap Bitcoin to ETH or other assets until shapeshift came along. Then that got shut down and no one had a replacement. Years later and the BTC swap markets are still 96% centralized, which is not good. When designing Chainflip, we saw a great need for cross-chain swaps that other designs didn't meet. Now the landscape has more players, but our design makes it suitable for bigger spot markets!

Q: How long has the development been? Why has it taken 3 years?

Simon: Well, I think you answered your own question there! We started developing the concept in May of 2020, before even the DeFi summer, and swapping is going to launch very soon on the mainnet, nearly 3.5 years later. This is not your average project. We've had about 30 full time staff for over 2 years now. They are engineers who are working full tim, and they have to deal with a lot of moving parts and advanced systems.

Thorchain has taken over 6 years of development for context. These type of projects are very special and people who look into the documentation and the code can see how complex they are under the hood. It's like building an oracle, bridge, decentralized custody system, AMM, Pos network, and multichain token all in one!

Q: Are you just another bridge or do you do anything different?

Simon: We are not a bridge. We don't wrap tokens, and we don't hold them in a smart contract that is vulnerable to a centralized multisig. We do native cross-chain swaps such as; Native BTC, Native ETH and Native DOT. All routed through highly efficient USD-denominated pools with cross-chain messaging allowing for an utterly seamless aggregation across dozens of chains and DEXes. We have our own markets, which allows us to offer the best swap rates through the Chainflip JIT AMM. You'll get CEX-like pricing faster than anywhere else. It's a very strong product for BTC swaps in particular

Q: What does a native cross-chain swap look like, and why is it important?

Simon: Unlike typical bridging transactions, you are not wrapping tokens and bridging USD from one chain to another to swap. You just need to send the native asset to the source vault, and, then the native assets appear in the wallet you want on the destination chain. This also dramatically cuts down on gas usage as you aren't paying to mint and burn tokens on multiple chains to get the swap done. Basically, it's what we all expected cross-chain swaps to be, but in fact they almost never are really native swaps. There's always more steps and more gas and more risk involved than necessary — until now!

Q: Can Chainflip be integrated with other protocols?

Simon: Yes, in fact it already is underway, and there are plenty more to come. Wallets, aggregators, dApps, and many more are a perfect fit for Chainflip. Check out some of our partners here. Squid means that Chainflip will be in MetaMask swaps very soon after launch.

Q: Can people interact with the protocol now?

Simon: Yes! The mainnet is live and you can go participate in Validator auctions. For smaller participants, there is also stFLIP and it offers a good APY on FLIP tokens. As for swapping, you can try that out on testnet, but the full product is coming very very soon! Here's the testnet link for anyone who's interested.

Q: Where do you see Chainflip in 5 years time like what is the big difference the chain flips are gonna take?

Simon: In 5 years time, I legitimately think that Chainflip has a good chance of doing about 20% of all spot volume in crypto due to the architecture of the protocol, and how competitive it will be for major pairs and swaps across chains. We have a lot of features to add and new chains to integrate to make that a reality, but I believe in the team and the community. I am really looking forward to competing in the crypto space!

Q: What are the main differences between Chainflip and other cross-chain swapping solutions that have emerged in the market?

Simon: Chainflip has a lot of differences. For starters, we are fully decentralized (not like layer-zero).

We have a very efficient and fast market structure for cross-chain transactions, where other protocols can take ages to bridge and swap, we are done within seconds or minutes. We have future features to announce with that too.

We support all our assets natively. It means that there are no wrapping and bridging fees.

However, we are not claiming to be a perfect solution for everything, in fact we have a very collaborative approach with other protocols like Axelar and Thorchain to maximize the user experience for everyone, and bring the most volume to DEXes as possible.

Q: What are the specific advantages of using Chainflip for Cross-chain swaps compared to other solutions like bridges or messaging protocols? And how does Chainflip plan to compete with Centralized Exchanges like Binance and Coinbase?

Simon: We can have low gas, great pricing, and overall faster than centralized exchanges. There's no custody risk, and it's entirely permissionless. You won't need to do KYC every time you want to move your money! And, you can also swap thousands of assets through aggregation, so I think it will be able to compete with Binance.

Q: Bridges have been hacked and are the most vulnerable due to the amount of liquidity that they have. How is Chainflip looking to mitigate this and how is Chainflip going to address this issue?

Simon: Mostly by being ACTUALLY decentralized and having big audits before launch. The architecture is also much more robust to single points of failures as multiple things have to go wrong for a value to be extracted from an issue compared to simple smart contract bridging. You can read more on the docs about security here.

Q: In the ever-evolving landscape of crypto regulations, how does your project navigate compliance issues? What steps are being taken to ensure that the project remains compliant with the relevant laws and regulations?

Simon: We have made sure that we do not qualify as a custodian because we— Chainflip Labs—don't have control over the protocol or the keys that hold the protocol funds, and therefore that avoids most of the issues. For our frontends, we employ similar strategies to Uniswap to ensure that we are not inadvertently serving sanctioned individuals through the front ends that we offer, though, of course, the protocol itself is permissionless, anyone can create their own access point for swaps, and there's nothing we can really do about that. In short, I would say we have a similar risk profile to projects like Uniswap, who in my opinion have done a nice job of navigating these shifting waters. We do not want to violate any laws and would never knowingly enable black money to flow through the services that we directly offer to users (like the swapping frontend).

🎁 Participate in the Chainflip AMA quiz now for a chance to win $10 in FLIP!

The form will remain open for five days from publishing this AMA recap.

KuCoin and Chainflip Labs have prepared a total of $2,000 in FLIP to give away to AMA participants.

1. Pre-AMA activity: $800 in FLIP

2. Free-ask section: $50 in FLIP

3. Flash mini-game: $400 in FLIP

4. Post-AMA quiz: $750 in FLIP

Sign up for a KuCoin account if you haven’t done so yet, and ensure you complete your KYC verification to be eligible for the rewards.

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