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Wrapped Token and sToken

Introduction

A wrapped token is a representation of one token through another. The original asset is locked in a special smart contract on the blockchain where this asset exists, and
  1. 1.
    The wrapped version is issued (minted) on the same blockchain OR
  2. 2.
    The wrapped version is issued (mined) on another blockchain.
Wrapped tokens are widely used to exchange
  • One asset for another within one blockchain;
  • An asset existing on one blockchain into an asset existing on another blockchain.
The Symbiosis protocol uses both types of wrapped tokens:
  1. 1.
    A wrapped token minted on the same blockchain is used to handle operations with a native cryptocurrency. We do not use any special name for this type of wrapped tokens.
  2. 2.
    A wrapped token mined on another blockchain is used to handle cross-chain swaps. To distinguish this type of wrapped tokens, we call it sToken: sUSDT, sUSDC, sBUSD etc.. sToken stands for Synthetic Token.
By design, the Symbiosis protocol ensures that each wrapped token and sToken is backed 1:1 ratio by the original asset locked in a smart contract.
For example, each sUSDC is backed by the original USDC on Ethereum, and that USDC is locked in a special Symbiosis' smart contract (Scheme 1).
Scheme 1. sUSDC on Binance Smart Chain (the representation of USDC).
Technically, any asset of one blockchain can have its representation on another blockchain.
In fact,
  1. 1.
    We chose a stablecoin on each blockchain supported by the Symbiosis protocol,
  2. 2.
    For each blockchain' pair sTokens are processed on the blockchain with the minimal gas fee.
For example, in the case Ethereum - Binance Smart Chain:
  1. 1.
    We chose USDC on Ethereum and BUSD on Binance Smart Chain,
  2. 2.
    sUSDCs are minted on Binance Smart Chain,
  3. 3.
    There is no sBUSD on Ethereum.

Supported blockchains

Schemes 1, below, contains a graph of the blockchains supported by the Symbiosis protocol on Mainnet and Testnet, where
  • A node on the graphs is a supported blockchain, and
  • A link between two nodes means that direct cross-chain swaps are supported for this pair.
In the case of Testnet we use test networks.
Scheme 1. Blockchains supported by the Symbiosis protocol on Mainnet.

Liquidity pools with sTokens

We may consider concentrating all liquidity pools with sTokens on one blockchain in future releases of the Symbiosis protocol.
The Symbiosis protocol works with a particular stablecoin on each supported blockchain. For example, it is USDC on Ethereum and BUSD on Binance Smart Chain.
If a user wants to do a cross-chain swap and the original asset differs from the stablecoin chosen for this blockchain, the asset is swapped to the stablecoin first.
The Symbiosis protocol has one liquidity pool (a stablecoin <> sToken) for every blockchain’s pair that supports direct cross-chain swaps. Such a liquidity pool is located on the blockchain with the lowest gas fee of the pair and contains:
Scheme 3. A liquidity pool with a stablecoin and sToken.
  1. 1.
    The stablecoin chosen for this blockchain,
  2. 2.
    The wrapped representation of the stablecoin of another blockchain (sToken).
For example, for the pair Ethereum — Binance Smart Chain:
  • The liquidity pool is located on Binance Smart Chain,
  • The liquidity pool contains BUSD <> sUSDC,
  • There is no liquidity pool USDC <> sBUSD on Ethereum.
Why is there just one liquidity pool with sToken for each blockchain pair? There are two reasons:
  1. 1.
    One liquidity pool with total liquidity is better than two pools with half liquidity each,
  2. 2.
    A pool on the blockchain with lower gas fees reduces operating costs.

Wrapped tokens and end users

sTokens are used for technical purposes. The end users cannot trade them, though they can:
  • Exchange sTokens for stablecoins on Symbiosis DEXes or
  • Become liquidity providers and add sTokens to Symbiosis DEXes.

More information