How does Entangle, the cross-chain DeFi protocol that continues to write the LSD track and intends to enter the re-staking field, interact?

Entangle envisions a future where DeFi dApps are not limited by a single blockchain.

Written by: Luccy

On January 10, cross-chain DeFi protocol Entangle announced the completion of US$4 million in seed and private placement rounds, with participation from Big Brain Holdings, Launch Code Capital, LBank Labs, Skynet EGLD Capital, Cogient Ventures, Owl Ventures, Faculty Group, Seier Capital and other institutions. cast. The new funding will be used to advance its protocol technology, expand its global reach, and strengthen its role in the advancement of cross-chain and interoperable data.

Previously, Entangle has been hotly discussed for its use of Liquid Vaults to achieve cross-chain liquidity. Nowadays, the staking track is booming, and this agreement, which began to lay out staking projects a year ago, has entered the public eye. In addition, the project investor, Big Brain Holdings, is also one of the reasons why this project deserves attention.

This crypto venture capital institution established in 2021 is not outstanding among its peers in terms of reputation. However, we can see many outstanding projects from his “record”. Among them, in addition to investing in the NFT project Pudgy Penguins in May last year, there is also the modular blockchain Dymension.

Recently, Big Brain Holdings appears frequently in the financing data compiled by BlockBeats. As Big Brain Holdings’ first investment project in 2024, the cross-chain DeFi protocol Entangle, which also comes with its own pledge narrative, is worth mentioning.

Big Brain Holdings: From Solana to Cosmos

Big Brain Holdings is a crypto fund that invests in pre-seed, seed and early-stage projects. According to rootdata, Big Brain Holdings has invested in a total of 163 projects since October 2021, with DeFi projects accounting for the majority of its investments.

As you can see from the investment list of Big Brain Holdings, Big Brain Holdings led the investment in Dymension as early as February last year. At that time, the Dymension team had only 9 employees. Now it is well-known in the community with its 70 million DYM genesis airdrop. However, Big Brain Holdings has not gained more exposure as a result.

From an ecological perspective, Big Brain Holdings’ early investment directions are mostly based on Solana ecological projects, such as the real-time streaming payment protocol Zebec Pay based on the Solana platform, Solana infrastructure Helius, privacy protocol Elusiv, Solana fund management platform MeanFi, and DeFi super application Hawksight , DarleyGo, an online horse racing game based on Solana, and more.

In the second half of 2023, as the Solana ecosystem became popular again, Big Brain Holdings also continued to invest in Solana, such as the lightweight wallet TipLink, the digital gift NFT project Drip, and the social platform Sleek. During this period, there was little attention paid to projects based on polygon, Avalanche, Aptos or other Layer 1 ecosystems. Apart from the “fixed investment” Solana, there was almost no investment ideas for other ecosystems.

On this basis, there has been no Cosmos project since Big Brain Holdings led the investment in Dymension in February 2023, but two recent consecutive investments have been related to Cosmos, including modular token issuance and liquidity solution Eclipse Fi and Entangle, the cross-chain DeFi protocol that this article will introduce in detail.

How does Entangle realize cross-chain liquidity?

Entangle is a DeFi protocol that uses synthetic derivatives to synergize liquidity and assign value to liquidity in the universal Layer1 and Layer2 ecosystem. It consists of three core components: Entangle blockchain, Entangle Oracle, and Entangle DEX.

Entangle DEX allows users to exchange between USDC and LSD, as well as create, trade and manage their LSD. Entangle DEX also supports cross-chain exchange through Entangle Oracle. Entangle Oracle is a decentralized oracle solution that allows cross-chain communication and data transfer between different blockchains and protocols, powered by a network of trusted validators and oracles. Use NGL as security deposit.

Two LSD Applications

Entangle envisions a future where DeFi dApps are not limited by a single blockchain, building an interoperable cross-chain liquidity sub-layer that seamlessly connects different chains and allows users to access any chain with just one click. Liquid position assets.

Simply put, Entangle allows users to seamlessly interact with liquidity pools across chains.

This process uses synthetic derivatives to synergize liquidity, and for this purpose, Entangle provides two applications that utilize LSD, Liquid Vaults and Synthetic Vaults.

Synthetic Vaults is a protocol that allows users to create synthetic assets, LSD. Users can deposit USDC into Synthetic Vault and receive LSD that tracks the price of any asset, such as stocks, commodities, or cryptocurrencies. Users can then use their LSD to gain exposure to different markets, hedge risks or exchange on Entangle DEX.

Synthetic Vaults allow optimal utilization of Liquidity Position Assets (xLSD) across multiple chains. For example, Pete provides liquidity in CurveFinance and obtains the corresponding LP tokens and mortgages them on Entangle. Entangle will then automatically compound LP tokens onto ConvexFinance to gain additional income.

Liquid Vaults is a protocol that allows users to create LSD, a yield asset. Users can deposit their liquidity tokens (such as LP tokens or staking tokens) into Liquid Vault and receive LSD in return. Users can then stake LSD to secure the infrastructure, or exchange it on Entangle DEX.

Entangle’s Liquid Vaults unlock over $14 billion in idle LP tokens by converting them into composable LSD.

Liquid Vaults optimizes liquidity by enabling a wider range of yield asset utility through 1:1 asset-backed LSD powered by Entangle’s universal data source. For example, lending and derivatives protocols, users can deposit into Liquid Vault as collateral to borrow assets or increase yields.

Entangle Infrastructure

To ensure seamless cross-chain communication and interoperability, Entangle has developed a custom oracle infrastructure. The infrastructure is validated on an Oracle-centric blockchain utilizing DPoS Cosmos-SDK EVM Compatible and Tendermint consensus algorithms.

Powered by Entangle infrastructure, Liquid Vaults also serve as an interoperability medium for compositing RWA while maintaining composability and portability across multiple ecosystems.

At the core of Entangle’s infrastructure is customizability, providing builders and protocols with complete customization options for secure, verifiable and interoperable data. This includes modular blockchain hubs for launching and executing smart contract operations, and now builders are able to design custom systems with enhanced control over processing and executing cross-chain operations.

Additionally, the Entangle infrastructure provides the flexibility to customize consensus mechanisms and customize off-chain entities for on-chain or off-chain data collection and verification. This design allows the integration of customized administrator data aggregation and validation processes.

As mentioned before, Entangle consists of three core components: Entangle blockchain, Entangle Oracle and Entangle DEX.

Entangle Blockchain is a custom blockchain built on the Cosmos SDK and hosts the Entangle Oracle solution and Entangle DEX. It is protected by the DPoS Tendermint consensus algorithm and uses NGL as its native token, which is divided into application layer, module layer and core layer. Oracle solutions act as bridges, enabling different chains to communicate and share information efficiently.

Image source: Entangle documentation

Builders implement EVM compatibility through the Ethermint library and deploy observer contracts written in Solidity on the Entangle blockchain. The contract acts as a decision-making entity responsible for generating specific actions based on input data or the overall state of its protocol.

The Entangle blockchain acts as a central communications hub where data is stored, verified, and processed, and its low gas fees and sub-3-second block confirmation time help complete Entangle operations quickly and cost-effectively. It uses a complex messaging layer to replicate state across different chains. This messaging layer ensures that information and assets can be transferred seamlessly, enhancing interoperability and enabling cross-chain liquidity provision.

Interacting with Entangle

According to the official documentation, Liquid Vaults is currently deployed on 11 networks, and the integrated Dex includes Curve, PancakeSwap, Wombat Exchange, TraderJoe, Stargate, SpookySwap, Velodrome, FusionX, and AshSwap.

Users can deposit into Liquid Vault as collateral and borrow assets against the original LP position while continuing to earn income on the underlying assets. This utility further extends to rehypothecation of derivatives protocols.

1. Open the Entangle official website, click “Verifi” to enter the test network, and connect to the wallet. Select the Entangle network in the wallet drop-down list and click the Approve button to approve the new network being added to your wallet. On the next page, click to get faucet tokens and verify your Discord account.

2. Enter the #faucets subchannel and click Verify. Then you will see the DM pop-up window in the upper left corner. Click DM, paste the wallet address into the Faucet Token bot, and send the message. If you have added the Entangle Testnet network and received faucet tokens, you can participate in the Entangle Testnet.

As of the time of writing, Faucet BOT is undergoing maintenance, and faucet tokens are temporarily unavailable. The following steps and tutorials are derived from the Entangle documentation.

3. Return to the official website page, after ensuring the wallet is linked, select the Stake option from the Liquid Vaults drop-down list, and select the Mantle testnet network. Select a pool and select the number of LP tokens you want to stake. Approve and confirm the transaction and in return you will receive Liquid Vaults.

4. Open Vendor Finance, connect the wallet and select the Mantle Testnet network. Select the FMDUC pool and enter the required amount of Liquid Vault as collateral, approve the transaction and confirm, thus successfully borrowing USDC using Liquid Vaults as collateral.

You can go to “My Fund Pool” and select the loan under “Borrowed” to repay the USDC loan. Enter the required USDC amount to repay and receive Liquid Vaults in return.