Squid Protocol, an interoperability protocol for DeFi applications, has raised $3.5 million in a seed funding round led by North Island Ventures, with participation from Distributed Global, Fabric Ventures, Galileo, Chapter One, and Noble Capital.
The protocol is described as a bridge between the dapps and a multitude of blockchains with variable use cases, functioning as a layer of interoperability for different cosmological ecosystems, and blockchain compatible evm (virtual machine ethereum). The squid lives on Ethereum at the moment, moonbeam, BINANCE chain, arbitrum, avalanche, polygon, fantom, injective, fetch, ki, regen, umee, terra-2, agoric, secret network, juno, kujira, osmosis, crescent, evmos, and celo, among others. Integration to come includes bitkeep, ledger, quickswap and pangolin. Other integrations are being developed for spookyswap, stellaswap and trisolaris as well.
In Axelar's opinion, the secure web3 email infrastructure on which the squid was constructed, their first investment in squid protocol is a policy decision, especially considering what happened in the case of centralised exchanges like ftx, celsius, and ancillary businesses that crashed in 2022, industry-wide decline. These events, taken together, led to the worst further decline of the bear in the recent history of the crypto and blockchain industry.
These questions are, however, expected to be addressed through experimental features of the calamari protocol development roadmap. There is some disagreement here, however. Native swaps, for instance, are considered easy to access on the protocol. Simultaneously, Native swaps have often been the target of the most significant and up-to-date challenge hacks, the use of attack vectors like forward robots and the use of flash loans, inter alia methods.
The protocol's GitHub documentation reveals that it has been ramping up engineering efforts with the introduction of finely-tuned software development kits and API integration packages set to provide multiple swaps and on-chain function calls to be linked across EVM-compatible and Cosmos-integrated chains.
"[The failure of central trading platforms has demonstrated the need for safe decentralized alternatives. Squid fuels this future by allowing decentralised, secure and easy-to-use exchanges," explains Sergey Gorbunov, co-founder of Axelar.
The challenge sector is increasingly seeking interoperability solutions capable of bridging two challenge protocols that would otherwise be natively incompatible in design. On an individual level, He sees these moves towards interoperability as an opportunity for ecosystems and blockchain tools to further expand accessibility and user-friendliness, especially considering how we could view challenge and web3 as emerging sectors that, 10 years from now, be faster in terms of the maturity of infrastructure and long-term sustainability.
In principle, squid allows users to swap any compatible token between blockchains, acting as a router and a bridge at the same time. Through this process, Squid provides channel-wide liquidity and scale-up opportunities far beyond their initial scope and access. Theoretically, however, Inter-channel liquidity is limited to the extent that it can only provide extra liquidity for deficit operations involving borrowing and lending, a method that virtually level the playing field between trade, taking into account the way in which it takes advantage of the movements of challenges by means of decentralised exchanges, in relation to centralised trade.
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