Economic Model & Liquidity Management
Liquidity Provision
CEX Integration
- Outbound liquidity (
TokenOut) sourced from Centralized Exchanges - Provides stable and competitive market rates
- Eliminates dependency on volatile DeFi liquidity pools
Hedging Mechanism
- Opens hedge position when
USER_HTLC_CHAIN_INis created - Ensures delta-neutral operation
- Maintains price parity with centralized markets
- Prevents slippage and volatility exposure
Fee Structure
Cost Distribution
The Liquidity Node covers most operational costs:-
HTLC Creation Fee
- Covers contract deployment costs
- Initial setup of the swap
-
Liquidity Node Claim Fee
- Transaction costs for claiming
TokenIn - Network fees on
ChainIn
- Transaction costs for claiming
-
User Claim Fee
- Costs for unlocking
TokenOut - Network fees on
ChainOut
- Costs for unlocking
User Responsibility
- Only pays for User_HTLC creation fee
- Transparent pricing based on CEX rates
- Network fees absorbed by Liquidity Node
Protocol Sustainability
- Small protocol commission added
- Supports ecosystem maintenance
- Ensures long-term viability
Market Risk Management
Price Protection
- Exchange rates locked at trade execution
- Hedging prevents unexpected losses
- Competitive pricing maintained
Operational Efficiency
- Automated claim processes
- Minimized user interaction
- Reduced transaction costs
Comparison with Alternatives
vs. Thorchain
| Feature | HTLC Extended | Thorchain |
|---|---|---|
| Trustlessness | Full | Requires Validators |
| Cost Efficiency | High | Expensive Validator Incentives |
| Execution Speed | Depends on ChainIn and ChainOut speed | Depends on ChainIn, ChainOut and Thorchain speed |
| Pricing & Liquidity | Provides CEX prices and liquidity in a decentralized way | Uses native liquidity, which may be limited and more volatile |
vs. Bitcoin Layer 2s
| Feature | HTLC Extended | Layer 2 Solutions (e.g., Rootstock) |
|---|---|---|
| Native BTC Support | Yes | Requires Wrapping BTC |
| Liquidity Risks | Low | High Due to Bridging Complexity |
Future Developments
Planned Enhancements
- Multi-blockchain expansion (Solana, Tron, additional EVM chains)
- Enhanced liquidity mechanisms with Multi-LP support
- Improved SDK & API integration capabilities
Ecosystem Growth
- Integration with more DEXs and wallets
- Enhanced liquidity depth through multiple providers
- Expanded cross-chain compatibility