Exploring Precog Finance’s Latest Partnerships With Polygon, Chainlink, and Fringe
And What This Means for Sentient’s Features and Capabilities
One of the most striking contrasts between Web2 and Web3 applications is the level of interconnectivity that the former has that is yet to be rivaled by its decentralized variant. Whether it’s Google’s dizzying array of services or the number of accounts you can link up with different platforms, the extent to which countless protocols communicate with one another in today’s iteration of the web is one of the various reasons why many are reluctant to routinely use Web3 dApps.
In essence, it’s an effective combination of convenience and possibilities that has managed to hook, draw, and retain billions of users into their ecosystems, and it doesn’t really defy any laws of logic. People will want to use whatever provides a reasonable balance of features and user-friendliness, without having to deviate too far from their focal points of interest.
This isn’t inherently a bad thing, but in order for Web3 protocols to compete on the same level, they need to adopt a similar approach. And indeed, this objective is well-understood by this point, and many projects have cited interoperability as a major objective for themselves and the greater decentralized web alike. This is of such vital importance in fact, that many projects exist for the sole purpose of building the necessary infrastructure to facilitate direct communication and data transfer between various blockchain networks and the protocols found within.
However, to wait several years for such projects to mature into practical solutions would be a poor utilization of time at best, and an overreliance on uncertainties at worst. The best time to plant these seeds in your ecosystem would inarguably be now because they will bloom into results regardless, and in most cases, much sooner than having to wait for third-party services.
That’s why we’ve been exploring collaborative opportunities with various projects for the past several months, and are thrilled to see our efforts bearing fruit!
First off on our list is Polygon, perhaps the most popular and widely-used Layer-2 scaling solution for the Ethereum network. We first announced our integration of the Polygon network all the way back in December of 2021 in this article, where we detailed the advantages of L2s and their vital role in DeFi and adoption.
Until Ethereum introduces a base-layer performance upgrade, it will be rather expensive to interact with on most days. Being the most popular decentralized smart contract blockchain comes with a serious setback in the performance department, and when the network becomes congested, a single ERC-20 transfer can cost upwards of dozens of dollars in gas fees.
For individuals who wish to interact with Ethereum dApps, make minor token swaps, use a couple of smart contracts… etc, these fees can easily amount to hundreds of dollars over the course of a few weeks. Luckily, Layer-2 solutions like Polygon exist to provide off-chain solutions for a tiny fraction of the price, while still maintaining a respectable level of decentralization and security.
Sentient will first release on Ethereum and Polygon, and as a multi-chain protocol, will continue integrating other major chains in the future such as Binance Smart Chain, Avalanche, Solana… and so on. When Sentient releases, it will most likely integrate Polygon’s PoS chain first, and follow up by supporting Polygon Zero when it releases in the future.
Polygon Zero is an L2 that utilizes zero-knowledge proofs, an advanced cryptographic method in which a statement is conveyed without providing any additional information. This is possible thanks to Polygon’s Plonky2, the world’s fastest ZK scaling technology which is also natively compatible with Ethereum. Click here for a more detailed dive into Polygon Zero.
There are various factors and parameters that blockchains need to take into consideration when designing the architecture of their network, and a lot of these factors strongly tie in with the data, and the authenticity of said data, that all nodes need to agree upon. What zero-knowledge proofs do is eliminate some of these barriers that demand comprehensive proofs that back the proposed information without undermining the validity and authenticity of what is being proposed thanks to a very sophisticated cryptographic solution. Read more about ZK proofs in this research paper published all the way back in 1989.
This can supercharge the throughput of a network, substantially increasing transaction speeds while simultaneously lowering transaction costs without having to sacrifice any of its decentralization or security. While some Layer-2s currently utilize zero-knowledge proofs, Polygon’s Plonky2 is said to be 100 times faster than existing alternatives, making it capable of withstanding bull market levels of traffic.
Chainlink is a key player in the blockchain oracle space, providing decentralized oracle networks among other services that vastly improve the functionality, security, and capability of smart contracts, dApps, and blockchain networks. Oracles provide the means for blockchains to seamlessly communicate with the outside world (including other blockchains) using on-chain APIs.
The role of oracles in Web3 cannot be understated, as they enable data such as price feeds to constantly flow to countless dApps and DeFi protocols that rely on them for operation. This is one of the use-cases that both Sentient and Cerebral alike will utilize upon their release, which will undoubtedly be essential for many functionalities including those of smart contracts.
Another Chainlink technology that Precog Finance will leverage is Chainlink Automation (previously Chainlink Keepers). This enables the decentralized automation of key smart contract functions, optimizing resources, time, and costs. In essence, this is done by using a decentralized network to monitor a protocol’s automation logic off-chain, and when the predefined conditions are met, it initiates an on-chain transaction to trigger the intended smart contract function. For a more comprehensive explanation of Automation, click here.
The time, energy, and costs saved by utilizing Chainlink’s automation capabilities will allow Precog Finance to redirect all those resources towards research, development, and other areas that will help drive its dApps and ecosystem forward, introduce new features and improve existing ones.
Fringe Finance is a DeFi lending protocol that realizes some of the overlooked potentials of the landscape by allowing users to utilize a large variety of smaller altcoin assets as collateral for stablecoin loans. This opens up a lot of possibilities for smallcap altcoin holders seeking decentralized protocols through which they could put their assets to work.
It also features its own dollar-backed stablecoin ‘USB’ that can be minted by depositing one’s collateral. The collaterals accepted by the safes consist of a wide range of altcoin assets classified in 4 different tiers and are burned when the minter re-deposits USB against their open position. The Fringe Finance documentation offers a more thorough look into all the platform’s features and nuances and is well worth the read.
The integration with Sentient will enable Fringe to provide self-paying loans; when the customer takes a loan, the Fringe protocol — now integrated with Sentient — will leverage Sentient’s capabilities to utilize monthly profits and automatically pay the loan installments.
This will make the already-attractive DeFi loans much more forgiving, incentivizing many to deposit and make use of their altcoins to receive stablecoin loans to in turn utilize them elsewhere, effectively manifesting as a regenerative and stimulating force in decentralized finance markets.
Sentient’s Role in DeFi
In the near future, Sentient partnership and integration opportunities for DeFi applications will open and be evaluated on a case-by-case basis. Through its effective and sophisticated algorithm, Sentient will become a profit maximization tool and provide inefficient capital utilization infrastructure in the greater DeFi ecosystem.
If you think Sentient can play an integral role in your project, reach out to our team using some of the links below!