Singularity Protocol for Cross Chain AMM without Intermediate Tokens or Bridges

TL;DR

This paper introduces a novel cross-chain AMM protocol that eliminates the need for intermediate tokens or bridges, reducing risks and improving efficiency in decentralized cross-chain swaps.

Contribution

It proposes a new class of AMMs with invariant properties that enable direct cross-chain swaps without reliance on wrapped tokens or bridges.

Findings

Reduces gas costs for cross-chain swaps.

Eliminates bridging and wrapped token risks.

Supports swaps across multiple blockchain layers.

Abstract

Automated Market Makers (AMMs) are decentralized exchange protocols that provide continuous access to token liquidity without the need for order books or traditional market makers. However, this innovation has failed to scale when it comes to cross-chain swaps. Modern cross-chain swaps employ double-sided AMMs, which are not only inefficient due to liquidity fragmentation but also require an intermediate token. This introduces inherent volatility risk as well as blockchain and bridging risk, especially in the case of wrapped tokens. This paper describes the inefficiencies of existing AMM invariants, particularly their mixed polynomial nature, and derives a new class of AMMs that do not have bi-state dependency between the assets being swapped. We propose a novel method of value transfer swaps using the described invariant that mitigates the need for bi-state dependency and eliminates the need for intermediate tokens or bridging. Furthermore, we show how this mechanism enables efficient cross-chain swaps with lower gas requirements and no bridging risks. The proposed technology is designed to support cross-chain swaps across any permutation of L1, L2, and L3 blockchains.