New Exploration of Cross-Chain DeFi in the Polkadot Ecosystem: Gigadot Product Analysis

The cross-chain liquidity and asset efficiency within the Polkadot ecosystem have always been core challenges faced by DeFi applications. As a cross-chain staking protocol focused on liquidity release, a certain project is committed to providing users with more flexible ways to utilize staking assets. On the other hand, a certain project has built a comprehensive chain-wide DeFi infrastructure covering modules such as exchange, lending, and stablecoins based on the Polkadot SDK, and has integrated it into a scalable Appchain architecture.

Recently, these two projects have teamed up to launch an innovative DeFi product, Gigadot. With one-click operations and multiple yield mechanisms, Gigadot offers DOT users a more efficient way to utilize their funds, while also embarking on a new exploration of Polkadot cross-chain DeFi. After the product was launched, the market response was enthusiastic, with the total locked value once exceeding $35 million, making it one of the most notable experimental projects within the ecosystem.

In a recent online event, two project representatives delved into the product logic, technical implementation, and ecological significance of Gigadot, giving us a comprehensive understanding of this new composite DeFi product on Polkadot.

The Philosophy and Original Intention of Gigadot

The core concept of Gigadot is "one deployment, multiple returns". Traditionally, users had to invest DOT separately into staking, lending, or liquidity pools, a cumbersome process with low asset utilization. The emergence of Gigadot streamlines these complex operational paths, allowing users to achieve multiple sources of income while performing simple operations.

In the Polkadot ecosystem, DOT is the primary staking asset. In the past, once DOT was staked, it could not be used for other purposes, such as lending or providing liquidity. A project launched vDOT to solve this problem and built a dedicated application chain to provide liquidity support. Another project attempted to encourage users to provide liquidity for DOT/vDOT through incentive mechanisms, but the high incentive costs limited the effectiveness. To address this, they designed a new mechanism similar to stablecoin pools, but without requiring a 1:1 fixed peg, instead allowing DOT and vDOT to be exchanged freely at real-time rates, enhancing liquidity and enabling vDOT to be used as collateral for lending.

Gigadot has further integrated the liquidity pool with the lending module. Users can stake DOT as vDOT, combine it with aDOT to form an LP, and then use the LP as collateral to borrow funds, achieving circular use and obtaining dual returns from staking and lending.

How does Gigadot solve the cross-chain liquidity problem?

One of the goals of Gigadot's design is to integrate and amplify the yield pathways. Looking back at the early days of the Polkadot ecosystem, many teams developed their own LSTs, built liquidity pools, and distributed incentives, forming a series of fragmented product lines.

A certain project aims to avoid reinventing the wheel by directly integrating the mature vDOT, leveraging XCM cross-chain communication and Polkadot's shared security mechanism to save on development and incentive costs, showcasing the advantages of Polkadot's modular collaboration.

In the future, a certain platform will support "one-click staking," allowing users to complete operations directly on its platform, with the system automatically communicating with other projects through XCM and returning vDOT, thus significantly enhancing the user experience.

The on-chain price of vDOT is not dependent on traditional oracles, but instead synchronizes data in real-time through XCM, making it more secure and resistant to manipulation. The recent surge in XCM message volume among related projects also indicates that this cross-chain mechanism has been operating stably.

Technical Architecture and Security Assurance

Gigadot is a very complex product that includes multiple functional layers. The early user interface was criticized for having a long process and numerous steps. It has now been simplified so that users only need to hold DOT or USDT to "obtain Gigadot with one click."

Gigadot consists of two types of assets: one type is DOT derivatives (such as vDOT) from other chains, and the other type is DOT derivative assets in ERC-20 format from a certain platform's own lending market. These assets are collectively added to the stabilization pool as collateral to participate in the lending market.

Gigadot is an ERC-20 token based on the Rebase mechanism, whose value automatically adjusts with the underlying asset's yield. Typically, cross-chain assets need to be wrapped, but Gigadot has streamlined this complex process with a one-click design. With the advancement of the Polkadot Asset Hub, future optimizations for cross-chain support will further maintain a simple user experience.

In terms of security, Gigadot benefits from the shared security mechanism of the Polkadot main chain, eliminating concerns about the safety of underlying assets.

How to Maximize Gigadot Returns?

Gigadot has achieved the aggregation of multiple sources of income, currently including:

• Lending interest: aDOT invested in the lending market to earn interest;
• Staking rewards: vDOT continuously generates staking rewards;
• Transaction fees: aDOT and vDOT added to the stable pool generate fee income;
• Incentive Tokens: Users holding Gigadot can receive three types of incentives - Gigadot, the native token HDX of Hydration, and the native token BNC of Bifrost;
• Asset appreciation: The appreciation of underlying assets and fee income drive the increase in Gigadot price.

Users can also amplify their returns through the "Looping" strategy: using Gigadot as collateral, lending out DOT, and then exchanging it for more Gigadot, repeating the process multiple times to stack returns. As long as the yield on Gigadot is higher than the lending rate, this method can continuously amplify returns.

Due to the high price correlation among vDOT, aDOT, Gigadot, and DOT, they tend to fluctuate in sync during market volatility, which reduces the risk of liquidation.

In addition, a certain project has established a transparent asset monitoring dashboard, allowing users to check the reserve rate, staking status, and other information of vDOT at any time, ensuring that every asset has 100% on-chain reserve support.

The Impact of Polkadot Mechanism Evolution on Gigadot

The relevant projects all have very active development teams behind them. They closely monitor each SDK upgrade and assess the impact on existing systems. Although certain upgrades may bring significant changes, there are currently no updates that pose a destructive impact on Gigadot, and the overall architecture has good resilience.

Currently, the entire Polkadot DeFi ecosystem is still relatively early, and most users are only satisfied with staking DOT for basic returns. However, over the past year, more and more people have started participating in LP and DeFi products. Gigadot is a typical example, as it provides new uses for DOT and brings richer ways to engage with the ecosystem.

Currently, a certain project is working with Parity to promote the migration of the staking system from the Relay Chain to the Asset Hub. In addition, Polkadot is also advancing some significant upgrades recently, such as async backing, shortening the block time to 6 seconds, and adjustments to the staking mechanism.

Despite frequent technical updates, the staking mechanism of related projects remains stable and actively adapts to new systems, thus maintaining confidence in the future development of Gigadot.

Future and Product Planning of Gigadot

The cooperation between related projects is very close, and more GIGA series products will be launched in the future. Currently in planning is to introduce the vBNC of a certain project into the stable pool and use a mechanism similar to Gigadot to enhance its liquidity.

In addition, Gigadot can also serve as one of the important collateral assets for the Hollar stablecoin. There are many ways to implement this, and it is not limited to looping; users can also use it to lend out other assets.

Hollar is an over-collateralized stablecoin that sets a fixed annual interest rate, making it more suitable for users' cost estimation compared to assets with floating interest rates like USDT/USDC. This mechanism is also expected to drive the emergence of more new use cases, such as using Hollar as a transaction fee or stable settlement asset for integration, with the specific implementation depending on the system design of each chain.

What funding mechanisms are available for developers?

The project itself is built on Substrate, but it also integrates the EVM environment. However, deploying smart contracts on the chain requires approval through a whitelist mechanism, which is to protect the resources on the chain from being abused.

In terms of funding, the treasury of a certain project also adopts the OpenGov mechanism. It is strongly recommended that developers initiate discussions on Discord or forums before formal development to see if HDX holders are interested in this idea, to avoid investing a lot of time only to find out that the community is not willing to support it.

In short, if you have ideas, you can definitely start from here, as there are clear rewards and support pathways within the ecosystem.

Conclusion

Gigadot is not just an attempt at a functional integration, but a deep exploration and productization practice of Polkadot's cross-chain collaboration potential. Through one-click combinations, cross-chain integration, and multiple benefits, it brings true DeFi composability to Polkadot.

In the future, Polkadot will showcase its unique value of modularity and composability, continuously injecting new momentum into the development of multi-chain DeFi, and driving the entire ecosystem towards a more open and efficient financial future.