CrossCurve Pools v2
Last updated
Last updated
CrossCurve Pools v2 is an advanced pool system designed to optimize cross-chain liquidity management within the Π‘rossCurve MetaLayer. The system works with three primary asset types: USD-, ETH- and BTC-pegged tokens, which are issued by various projects across different networks. In the hubchain, a set of paired pools is created for each of these asset types. Each pool corresponds to a specific direction (blockchain) and functions as a bridge to that network.
Each paired pool in the hubchain consists of two tokens:
Universal token - an asset from Sonic, common across all pools of the same type (xfrxUSD for USD assets, xfrxETH for ETH, and scBTC for BTC).
Synthetic derivative, backed by the original asset locked in the Consensus Bridge. This can include both single assets and Curve LP tokens.
CrossCurve Pools v2 enables asset transfers between blockchains in four stages:
Bridge from the source network: The original token is locked in the Consensus Bridge in the source network, and the Consensus Bridge then mints a synthetic token (derivative) in the Sonic network.
Exchange for the universal token: The synthetic token is exchanged for the universal token of the hubchain.
Exchange for the destination synthetic token: The universal token is exchanged for a synthetic token corresponding to the target blockchain.
Bridge to the destination network: The synthetic token is burned in the Consensus Bridge on Sonic, and the Consensus Bridge then unlocks the original token in the destination network.
The previous pool system used Curve stable pools with 8 assets, connected via liquidity provider (LP) tokens from one or more pools. CrossCurve MetaLayer introduces a fundamentally new approach β liquidity isolation, where each pool contains liquidity only for a single direction. This design delivers the following benefits:
In the previous system, incentives directed into a pool were distributed across all 8 directions, reducing their effectiveness. In paired pools, blockchains can direct incentives exclusively into their own pool, increasing liquidity in that direction and improving bridge conditions for users.
In Curve stable pools, increasing the number of tokens in a pool leads to higher slippage under imbalance. A 2-token pool shows significantly less slippage compared to an 8-token one under the same imbalance. Additionally, in the old system, a significant imbalance in one token increased slippage for all 8 directions, while in paired pools, slippage growth is confined to an affected direction only.
To minimize slippage in the previous system, equal liquidity was required across all 8 directions, which was inefficient for less active ones. Paired pools allow using smaller amounts of liquidity for lower-demand directions while maintaining the same slippage level, thus optimizing liquidity utilization.
A depeg β where an asset drops in value relative to its underlying β is a common occurrence. In multi-asset pools within a single network, a depeg can have wide-reaching consequences for all connected networks, leading to a liquidity drain across all tokens in the pool. For example, in the previous system, if one asset dropped to zero in value while each had $100,000 in liquidity, the total loss across the remaining directions could reach up to $700,000.
In CrossCurve MetaLayerβs isolated pools, a depeg from one blockchain affects only a single pool. In the same scenario, losses would be capped at $100,000. The system automatically pauses the affected direction when a depeg is detected (based on price deviation), preventing further risks. However, a pool with the synthetic derivative of the depegged token remains in the hubchain until the price stabilizes.
