Overview of Magpie Protocol, the cross-chain trading aggregator invested by Jump Crypto

Original Title: "Early Experience of Cross-Chain Trading Aggregator Magpie Protocol"

Author: Babywhale, Foresight News

In September, Magpie Protocol announced the completion of a 3 million USD funding led by Jump Crypto, Parafi Capital, Big Brain Holdings, Sandeep Nailwal, and Republic Capital, and recently opened the Alpha testing of its mainnet. Users who applied on the official website can check their email for testing invitations.

Before experiencing the product intuitively, let's briefly understand the mechanism of Magpie.

How Magpie Achieves Cross-Chain Trading

According to the Magpie project documentation, the cross-chain trading path of Magpie is: converting non-stablecoin assets on the original chain into stablecoins through DEX (if it is a stablecoin, this step is not needed), and then conducting cross-chain trading of stablecoins through the LayerZero-based cross-chain bridge Stargate. Meanwhile, if users wish to acquire assets on the target chain that are also non-stablecoins, Magpie will relay relevant information through the cross-chain interoperability protocol Wormhole, allowing the stablecoins crossing to the target chain to be traded again through DEX for the target assets.

According to Magpie's roadmap, it plans to establish its own cross-chain stablecoin pool in the first and second quarters of 2023, but will not abandon the use of Stargate; instead, it will aggregate more cross-chain infrastructure to find lower-cost paths. Overall, Magpie itself has not innovated in cross-chain solutions but has chosen to integrate as many cross-chain solutions and DEXs on various chains as possible through routing algorithms to find the lowest-cost cross-chain trading paths.

In addition to the implementation mechanism, Magpie also demonstrated plans to aggregate more chains and layer-2 networks, including non-EVM compatible chains such as Cardano and Cosmos ecosystems. Regarding tokens, Magpie has only revealed that the token name is FLY and provided information about governance voting, obtaining a portion of protocol revenue, and conducting public sales, while other details have not yet been disclosed.

User Experience

In the Deck disclosed by Magpie, there is a comparison chart with the cross-chain trading aggregator LI.FI, which previously raised 5.5 million USD.

When I used both solutions to trade 0.05 BNB from the BNB Chain to MATIC on Polygon simultaneously, LI.FI also provided the trading path using Stargate, and Hyphen had lower transaction fees while the amount of MATIC received was quite similar.

At this point, we compared the speed of LI.FI's recommended solution with Magpie's solution. The results showed that using LI.FI, the arrival speed of MATIC was 5 seconds faster. Although the final amount of MATIC received through Magpie's solution was about 0.025 more, considering various fees, the actual cost difference was almost negligible.

Of course, a single transaction cannot represent everything, but it at least indicates that the advantages in trading and API aspects may not be very obvious. Additionally, LI.FI's provision of multiple paths also considers potential user needs; for urgent needs, users may choose a high-fee, high-speed path, while for non-urgent needs, they can opt for a low-fee but longer-duration path.

Given that Magpie is still in its early stages, many aspects cannot be definitively concluded. While looking forward to Magpie's brighter performance in the future, I also noticed that cross-chain aggregators integrating trading aggregators and cross-chain bridges are beginning to emerge and gain capital attention. In the future, as more projects and public chains go live, cross-chain will become a huge market. Currently, it is an important period to build a moat for these infrastructure blocks, including security, routing algorithms, costs, user habits, and more.