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sTokens in Symbiosis
The Symbiosis protocol leverages sTokens, a form of wrapped tokens, for seamless cross-chain operations. Discover more about sUSDT, sUSDC, sBUSD, and sWETH in this comprehensive document.
The Symbiosis protocol uses sTokens: a type of wrapped token or synthetic/synthesized token, hence the name, to enable cross-chain operations.
If you would like to refresh your knowledge about wrapped tokens.
Wrapped tokens play several crucial roles in the DeFi ecosystem. Since different blockchains have different technical specifications, not all tokens can interact with all platforms. Wrapping tokens allows them to be used on platforms where they couldn't be used otherwise.
A wrapped token in decentralized finance (DeFi) is a type of token that represents an asset hosted on the same or different blockchain. It's called "wrapped" because the original asset is put into a wrapper, or a different blockchain layer. The process of wrapping and unwrapping tokens is typically done through certain organizations or smart contracts, depending on the specific wrapped token.
For example, one of the most popular wrapped tokens is Wrapped Bitcoin (WBTC). WBTC is a token on the Ethereum blockchain that represents Bitcoin. Each WBTC is backed 1:1 with a real Bitcoin. This allows Bitcoin to be used directly in Ethereum's ecosystem, enabling it to be utilized in Ethereum's DeFi applications, smart contracts, and DApps.
In order to assure the token's credibility, the equivalent amount of the underlying asset is usually locked in a smart contract or held by a custodian, which can be audited to confirm that each wrapped token is fully backed.
We intentionally do not refer to tokens issued and used within the Symbiosis protocol as "wrapped tokens" to distinguish them from all other wrapped tokens circulating in the DeFi world.
While Symbiosis can take any existing token on any blockchain and mint a synthetic version of it on another blockchain, in fact, the protocol works with a handful of tokens: stablecoins and WETH (wrapped ETH). Why just stablecoins and WETH? The purpose of Symbiosis is to exchange tokens over different blockchains. So the protocol needs types of existing tokens that are widely used and have the same value across all supported blockchains. The token types fulfilled the requirements are stablecoins and ETH:
- Since smart contracts cannot work with ETH, WETH is used.
- If there are a number of different stablecoins on a blockchain, just one is used in the protocol. Usually it's USDC or BUSD, depending on the blockchain.
So how it works?
Let's consider an example: we want to exchange USDC from Ethereum for BUSD on the BNB chain via the Symbiosis protocol.
The simplified algorithm of the bridging stablecoins is shown in Scheme 1 below.
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Scheme 1. Mint-burn routing during a cross-chain operation performed via the Symbiosis protocol.
So sending 1 USDC on Ethereum we would receive 1 BUSD on the BNB chain in an ideal world where there are no transaction fees or different exchange rates. In a real world, the amount received will most likely be slightly less than the amount sent.
If we exchange WETH from Ethereum for WETH on Arbitrum, the bridging procedure will be slightly different: another pool on Boba BNB will be used (Scheme 2).
Scheme 2. Mint-burn routing during a cross-chain operation performed via the Symbiosis protocol.
Symbiosis uses Boba BNB as a service blockchain: the Symbiosis contracts with mint-burn logic and Symbiosis Octopools are located on that blockchain.
sTokens are used for technical purposes only, and end-users cannot trade sTokens, although they can receive sTokens when adding/removing liquidity to/from Symbiosis Octopool.
The Symbiosis protocol supports the following blockchains:
- 1.Ethereum,
- 2.ZkSync Era,
- 3.Linea,
- 4.Base,
- 5.Mantle,
- 6.Arbitrum One,
- 7.Arbitrum Nova,
- 8.Optimism,
- 9.The BNB chain,
- 10.Polygon,
- 11.Polygon zkEVM,
- 12.Avalanche,
- 13.Boba Ethereum,
- 14.Boba Avax,
- 15.Boba BNB (Symbiosis host chain),
- 16.Telos,
- 17.KAVA EVM,
- 18.Scroll (coming soon),
- 19.Tron (coming soon).
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Scheme 2. Blockchains supported by Symbiosis.
All cross-chain operations run through Boba BNB: the Symbiosis service chain (S-Chain).