By
Temitope Olatunji
April 26th, 2024
While the centralized exchanges are the very first point of entry for new users who want to gain exposure to the digital currency space, the Bitfinex Layer-2 bridge will help enhance the usability and growth of DeFi through its simple-to-use platform.
Digital asset trading platform Bitfinex has launched its first Layer-2 bridge in conjunction with DeversiFi as it looks to connect transactions on Centralized Finance (CeFi) and their Decentralized Finance (DeFi) counterparts. As announced by Bitfinex, the Layer-2 bridge will facilitate ERC-20 transfers between these two unique offshoots, beginning with Tether (USDT).
Promoting interoperability amongst various decentralized finance protocols remains a major goal for major blockchain startups operating today. Interoperability features help users get the best value in the digital currency world as they need not be limited in the ease of access to various product offerings that abound in the space. Through interoperability, product offerings or features that are lacking on one platform are easily accessible through other platforms respectively.
Over the past years, Layer-2 protocols have proliferated across the board, as many seek to help rewrite the flaws inherent in their layer-1 substrates. While the Lightning Network is one of the most prominent Layer-2 protocols built atop the Bitcoin blockchain, emerging protocols like DeversiFi are beginning to proliferate on the Ethereum blockchain. The Bitfinex backed Layer-2 bridge amongst many things will help reduce the challenge of the high gas cost that is associated with the Ethereum blockchain.
“Layer-2 is the future of blockchain. Whether it’s the Lightning Network for Bitcoin or roll-ups such as DeversiFi for Ethereum, cryptocurrencies, and DeFi are finally on the verge of becoming accessible to everyone,” said Will Harborne, CEO, and Co-Founder of DeversiFi.
Resident on the Ethereum blockchain, DeversiFi is a trading platform built upon StarkWare’s scalable technology. The startup is renowned for its Layer-2 bridge solutions, and amongst the main pioneers include a link between the Ethereum and Polygon Network floated about 2 months ago. The Bitfinex bridge will also benefit from this Ethereum-Polygon link-up.
“I feel confident that there will be a ready uptake of this low-cost transfer mechanism among our customer base as interest in DeFi continues to grow,” said Paolo Ardoino, Bitfinex’s CTO.
Bitfinex Layer-2 Bridge: Making CeFi-DeFi Usable
The business proposition of mainstream centralized exchanges bordering on order books is markedly different from that of emerging decentralized exchanges which rely on Automated Market Maker (AMM). Typically, these two trading platforms have no connecting links and over time, users will either have to choose to trade one for the other.
While the centralized exchanges are the very first point of entry for new users who want to gain exposure to the digital currency space, the Bitfinex Layer-2 bridge will help enhance the usability and growth of DeFi through its simple-to-use platform.
“DeversiFi will now not only act as a gas-free L2 DeFi hub for Bitfinex traders to obtain access to some of the best opportunities and yields in DeFi, but will also serve as a highway between the Polygon network and Bitfinex, following the successful launch of its very first L2 bridge earlier this month. This means that traders will be able to seamlessly move funds from the Polygon network to Bitfinex via DeversiFi, without ever paying expensive on-chain gas costs,” Bitfinex said in its announcement.