Founded in May 2020 and launched in July 2021, Clover Finance is a Substrate-based, DeFi service provider that aims to compete as parachain on the Polkadot Network. In terms of its innovative edge, Clover’s solution targets the current lack of blockchain intercommunication by offering a non-custodial, decentralised cross-chain bridge from Ethereum to Polkadot.
By having been built on Substrate, Polkadot’s foundational layer, Clover operates as a core protocol that leverages Substrate’s extensive functionalities rather than building them from scratch. This combination between pre-existing frameworks on Substrate and its own innovative cross-chain bridge architecture, Clover proposes a rather compelling, dynamic infrastructure.
On top of these cross-chain capabilities, Clover is also building a foundational layer for DeFi applications to operate seamlessly by
- 1) reducing the development threshold through the familiar implementation of Substrate frameworks and developer tools such as identity-based scripting capabilities and multisig to increase overall protocol security.
- 2) facilitating a gasless transaction model to simplify user experience (the team refers to this as their re-invention of “feeconomics”).
What is Clover’s 2-Way Peg (2WP) system?
The explosion in protocols on the market is driving demand for so-called para-chains, or so the thesis goes. Decentralized networks, while internally secure, lack decentralized structures across chains. Wrapping and other such techniques often involve custodians, or third parties, that need to be trusted – something that runs against crypto principles.
Clover’s 2-Way Peg (2WP) system addresses this issue and is arguable the core feature that sets this protocol apart from others. Simply put, A 2WP system allows the transfer of a token from one chain to another blockchain. In reality, there is no transfer. Rather, sent tokens are temporarily locked on the base chain while the equivalent amount of tokens is unlocked on the “receiving” chain.
The concept itself actually dates back to the early days of Bitcoin discussions with Satoshi Nakamoto. The systems still relies on trust and there is some risk of a double-spend occurring. However, to counter this, Clover is looking to implement trustless cross-chain mechanisms. Eventually, Clover aims to become the ultimate ETH-DOT bridge protocol.
Some would say that the full implementation of cross-chain bridges represents one of the missing pieces in the DeFi ecosystem. This is where Clover comes in.
What is the CLV Token?
Much like Ethereum’s ETH, CLV is used as gas on Clover’s platform to pay for transactions. CLV also plays an important role in its own gasless transaction model. Clover’s near-zero transaction fees have the ability to take ERC-20 assets, use them to pay gas fees, and subsequently liquidate the ERC assets into CLV on the market.
Users can also use CLV to:
- Stake CLV to run nodes on Clover
- Contribute to consensus-building to earn rewards
- Trade across exchanges
- Take part and shape governance of the platform
DeFi is a great experiment that may change the landscape of finance for good. For now, however, DeFi platforms are not yet user-friendly, especially in mainstream terms. Going from DEX to DEX, and getting bogged down by sudden spiked in transaction fees, users can easily get discouraged from really adopting DeFi for the long term.
This issue also plays to fact that many DeFi-based projects choose to remain coiled up within their own ecosystems. Whether or not Clover will be the platform to successfully tackle this issues and usher in a new age of trustless cross-chain operability is for each and every investor to decide on for themselves.
Trade CLV on AAX
Favored by a million users in over 100 countries, AAX is the world’s first crypto exchange powered by LSEG Technology, and the first to make the switch to the Satoshi Standard (SATS) to drive the adoption of Bitcoin.
The exchange charges $0 fees across all 80+ spot markets, offers high-yield savings packages, deeply liquid futures markets, regular discounts on major tokens, and a range of on-ramps that make cashing in and out of crypto easy.
Connecting traders, innovators, NFT-artists, high-net-worth investors as well as the unbanked, AAX’s mission is to help ground digital assets in the real world and bring the benefits of sound money to everyone.