HurricaneSwap LP Token: Come and Shake Off the Blockchain Restriction!
On June 22, 2021, Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), China Construction Bank (CCB), and Postal Savings Bank of China (PSBC), the four largest state-owned commercial banks of China, collectively announced the ban on institutions and individuals from using their bank services to conduct blockchain transactions. The message is clear: they would crack down on all blockchain transactions, especially speculative trading. Following this announcement, large amounts of altcoins are dumped and users are pulling out fast. As a result, the liquidity of many projects has plummeted. In DeFi, liquidity represents value and is the source of income. Projects that can ensure liquidity in fluctuate markets for faithful users are the ultimate winners. Survival of the fittest, after this event the market will usher in a new age with those winners.
This is not the first but the third large-scale restriction on blockchain transactions in China since 2013.
The first large-scale restriction happened in December 2013. Back then, there was no ETH or Defi, and the panic and lack of liquidity caused by the restriction resulted in a price plummet over 80%. The second large-scale restriction happened on September 4, 2017, the government took regulatory measures and restricted transactions on blockchain exchanges and other trading platforms. Although ETH and exchanges had emerged back then, users still could not capitalize on the blockchain assets without the CEX. Once again, the market collapsed. Then it came to the third large-scale restriction on June 22, 2021, which banned blockchain transactions through bank cards. However, this time, because of the booming DeFi ecosystem, the impact on the blockchain market is limited. Although users are restricted from leaving the market, their blockchain assets can still generate income through various projects. The impact on the market is no different from an ordinary market adjustment.
For now, the difficulty is to transfer liquidity to high-yield projects quickly and freely.
Except for the LP token of HurricaneSwap’s multi-chain transaction, most of existing LP tokens can only support same-chain transactions. However, users who are familiar with Defi projects have discovered that the project algorithm will increase the rate of return as the liquidity decreases, to attract more funds and satisfy liquidity requirements. Many users complain that the new regulation restricts the free flow of assets to high-yield projects through LP tokens. They have to split their assets and complete the transfer in multiple steps. However, the large fluctuations in prices make it impossible to completely capitalize on all assets, and some funds become idle assets. Those idle funds can only be swapped and then combined with other assets to achieve liquidity, which increased both the monetary cost and the users’ time and opportunity cost. If assets from various chains can be directly swapped on the same platform through LP tokens, there will be no such problem.
If the current market is bearish and the LP token adopt a token-US dollar peg, users can swap for more tokens with the same amount of US dollar, and use those tokens to generate new LP tokens. When the market becomes bullish, users can reverse the transaction, but given the higher token price, the LP token can only swap for less tokens. From this perspective, LP token can not only protect the users’ asset income and liquidity, but also gives users the right to choose. In the market downturn, users can choose to swap for more LP tokens, while in the booming market, they can choose to maintain the number of LP tokens and reap more benefits in future. With LP tokens of HurricaneSwap’s multi-chain transaction, users can actively choose their own investment strategy, instead of passively responding to market prices.
The cost of congestions caused by market frenzy or panic is even higher
From 2020 to 2021, there have been multiple congestions caused by market frenzy or panic on Ethereum, EOS, and BSC. Users have to pay high gas fees to complete transactions in time. Any severe market turmoil may cause this situation. Normally, the gas fee is affordable for users rebalancing their asset allocation, but when the heavy traffic causes congestions, the rebalance cost would shoot up to tens of times. The LP token investment strategy can not only reduce your gas fees, but also help you to complete the rebalance one step ahead.
HurricaneSwap is a multi-chain DEX project on Avalanche. The assets on Avalanche are as safe as those on Ethereum, but the transactions are faster — with a short transaction confirmation latency within seconds, cheaper, more user-friendly, and with better chain interoperability. It makes up for the limitations of Ethereum such as lack of liquidity and high gas fees, and will definitely revolutionize the existing CEX and DEX market.
The actual application value of the LP token multi-chain transaction is greater than that of a single token multi-chain transaction. It is like the comparison between the ETC smart contract transaction and BTC single token transaction. The LP token multi-chain transaction is safe, fast, and cheap, and thus its expected development, value, and potential are not second to but beyond UniSwap.