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Zenlink: A cross-chain DEX network based on Polkadot

Zenlink is an emerging cross-chain DEX network based on Polkadot. It can enable parachains to rapidly possess decentralized exchange capabilities and share liquidity with other parachains.

A few of the terms may sound alien to some of you. So before explaining more about Zenlink, let me briefly describe some basic terms. And it will then become easy for you to understand Zenlink.

Basic Terminology

  • Cross-chain is an emerging technology that allows the transmission of information and values between different blockchain networks.
  • DEX is an abbreviation for decentralized exchanges. These are a type of cryptocurrency exchange that allows for secure and direct peer-to-peer crypto transactions online and without any mediator.
  • Blockchain is a continuously increasing list of blocks that are interlinked and secured using cryptography. The validity of each crypto coin is provided by the blockchain.
  • Polkadot is a network protocol that enables seamless interoperability between blockchain networks.
  • Parachain most commonly takes the form of a blockchain. It is a globally coherent application-specific data structure validated by Polkadot Relay Chain validators.

What is Zenlink?

Zenlink is not a DEX on its own but a DEX network. It is a protocol that allows different decentralized exchanges that are planning to build on Polkadot to come together or get interconnected.

Zenlink native token (ZLK) is to be used for trading fees or governance, which uses the Zenlink DEX module. Zenlink has completed the prototype verification of cross-chain assets trading between Polkadot parachains.

So far, Zenlink has completed the technical research of cross-chain DEX, including liquidity establishment, assets issuing, cross-chain trading, and cross-chain channel establishment.

Kusama and Rococo

Looking at Zenlink’s roadmap, they will be testing on Kusama in March 2021. They will first deploy on Kusama as it is the experimental or test network and then Polkadot.

If anyone is telling you that they are going to build on Polkadot without looking into Kusama then that’s a risk not worth taking. This is because they need to check the working of the network on the test network first. They can’t risk people’s money. If you are new to this space, you have to keep this in mind.

Polkadot, Kusama, and Rococo are based on a substrate framework. It helps developers build their own blockchains. Rococo V1 Parachains Testnet is live. It is a public test-net, specifically designed for parachains testing.

Other Networks based on Polkadot

All of the following networks are based on substrate framework and subsequently Polkadot:

  • Acala: It is a stable coin platform and decentralized finance hub powering cross-blockchain liquidity and applications.
  • Darwinia: It is a decentralized cross-chain bridge network building on the substrate.  It provides the safest general bridge solution, connecting Polkadot, TRON, Ethereum, and other heterogeneous chains by cross-chain assets transfer and general remote chain call.
  • Phala: Phala is a substrate-based blockchain network. It is a privacy-preserving protocol for data-protection and blockchain smart contracts.

Why Zenlink?

Zenlink DEX aggregator can link all the decentralized applications (DApps) on Polkadot. Users can complete the exchange easily and quickly but also enjoy a low slippage transaction experience. People will supply liquidity to these DEXes that are going to be incentivized. DApps are also known as Smart Contracts.

DApps allow users to:

  • lend or borrow funds from others,
  • trade coins,
  • earn interest in a savings-like account.

If you are holding ZLK, you can share the transaction fee with all the people trading the assets within Polkadot.

Zenlink has received Web3 Foundation grant for the second time to develop DEX smart contract implementation. Zenlink’s DEX Smart Contract is Open Source. The fact of getting the second Web3 grant tells that how bullish Web3 Foundation is on this project.

Competitors

  • Polkadex: It is a fully decentralized, peer-to-peer, crypto exchange for the decentralized finance (Defi) ecosystem in Substrate. They present a scalable, fully decentralized platform for exchanging tokens in a peer-to-peer and trustless manner. 
  • Sifchain: Sifchain is the omni-chain solution for DEXes. It processes significantly more transactions per second as compared to Ethereum, making it 100 times more efficient than the current leading DEXes. This equals faster trades and lower fees.

Do keep in mind, these all are in developing stages and clarity will emerge once they are rolled out.

Tokenomics

We don’t know the supply chain yet, but they will be releasing ZLK token to the liquidity providers. So, if you supply liquidity to these DEXes then you will get the ZLK token or basically, you’re minting it.

The larger the amount and the longer the duration of the liquidity, there will be additional encouragement: namely the concept of ‘coins per day.’ We will keep you updated as and when there is a new development.

Verdict

ZLK token will be greatly involved in the trading network constructed by the entire protocol. Token listing, liquidity access, access to other DEX slots, protocol upgrades are some of the areas where ZLK token will be involved.

The revenue generated by the network, such as the trading fee will be partially or fully returned to ZLK token holders, and the weight of the return is related to the holding time.

Apart from getting this token for supply and liquidity, you will also be generating income for staking ZLK tokens. Accordingly, Zenlink is a potentially seasoned project one should be looking for.

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