Evaluation of the Composable Finance project: An experts perspective?

• Why is Composable a potential project?
• How Composable solves the disadvantages of liquidity bridges
• Epilogue

Composable is a rather complex project, so many people do not understand what it is for and even more difficult to understand how it creates value and brings profits to investors. This article will explain why Composable will be able to bring value and profit.

First of all, you should know that any project has many kinds of risks, typically even if you have a good idea, you can fail to implement the product, you can also make an investor in it. failure. Therefore, this article only analyzes the attractiveness in terms of solution ideas, not other factors.

Why is Composable a potential project ?

First, we should know that Composable is a bridge for many platforms, many layers… That is, it allows transferring digital assets from one platform to another from layer to layer. However, unlike other types of bridges, in the form of creating tokens on one side, locking the other side and releasing this side burns the other. This difference comes from the nature of the Substrate frameworkon which Composable is built. It is the Substrate that allows the creation of additional solutions called Pallets that give the blockchain additional features when upgrading. This feature allows the community to write additional features for the native code of Composable's blockchain making it not only in the form of generating tokens on one side, locking the other, and releasing one to burn the other. can be in the hybrid form of that type and the liquidity bridge type.

The liquidity bridge works like an international money transfer. In Vietnam, the government controls and does not allow people to freely use their assets by not allowing money to be transferred abroad except in some cases, so if we want to transfer money abroad, we have to use the service. black market like in Hanoi's Ha Trung street. This type of money transfer in a way that at the top Vietnam has to maintain liquidity packages and so does the foreign end. That is, if you want to transfer some money to Canada, for example, you bring money to Ha Trung, the service there will send your money to someone who is receiving money from abroad. The head abroad will transfer money from the sender to a friend who receives money from someone who wants to send money from Vietnam. Thus, dollars in Vietnam are sent to people in Vietnam, while dollars in Canada are only sent to people in Canada, so there's no need for expensive international transfers. So does the liquidity bridge, it takes the liquidity to transfer within each platform itself.

How Composable solves the disadvantages of liquidity bridges

The downside of the liquidity bridge is quite complicated, and it takes a lot of people to trade continuously to get enough liquidity and reduce latency.

But since Substrate allows adding any logic in the form of plug-in Pallets, the community can write Pallets that help combine smart contracts in platforms that wait when there are suitable funds to transfer internally within the platform instead of must use the mechanism of creating tokens on one side, then lock the other side and release this side, then burn the other side. Since it is a native code, it can allow users to set a threshold for waiting for liquidity. And when the new time threshold is exceeded, using the token generation mechanism on this side, lock the other side and release this side, then burn the other side. So with expensive platforms like Ethereum, thanks to the support of Pallets, the cost of bridging will be reduced.

To reduce the time to wait for liquidity, Composable bridges many platforms. For example, connect Ethereum to Polkadot, Cosmos, Avalanche , Solana, NEAR Protocol, Moonbeam , Moonriver… and vice versa. Therefore, if someone sends ETH from Ethereum to Polkadot and someone sends ETH from Cosmos to Ethereum, it will take the sender's ETH to Polkadot to transfer to the sender from Cosmos to Ethereum. With other bridges, to do this, the team developing those projects must work on many platforms, so it will be difficult and expensive. But if using Substrate will have the advantage that the community can support making Pallets, or the project team of digital assets if they want their assets to move at low cost, they can write Pallets. In addition, due to the operation on Kusama and Polkadot, these platforms have also smoothed the parachains and parathreads with each other, so Composable will go faster and go further than other types of bridges.

By saving costs for users, saving development costs, quickly deploying on many platforms, taking advantage of many liquidity from many platforms… Composable can absolutely earn a pretty good value. for its investors.

Epilogue

Above is the information as well as views and perspectives on the potential of the Composable project shared by Mr. Kien Bui - Founder & CEO of SynerWork Inc. He was also a co-founder of Lamchame.com. 

The TraderH4 team sincerely thanks Mr. Kien Bui for creating a useful article for readers, as well as granting TraderH4 permission to post the article on his website.

You may be interested : Instructions to join Crowdloan Composable Finance with Stablecoins .

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