What is Elk Finance?
Ahoy there, crypto enthusiasts! Are you tired of feeling like a lonely island in the vast sea of blockchain networks? Do you yearn for the freedom to navigate across different crypto ecosystems without getting stranded? Well, fear not! The solution to your cross-chain woes is here, and it's not just any solution – it's Elk Finance!
As more L1 blockchains scramble to capture market share from existing networks, each of them created its native bridge based on the same underlying asset. This in turn has resulted in widespread liquidity fragmentation, since two different wrapped tokens based on identical assets become incompatible once they arrive at their destination.
Elk Finance started in 2021 by a pseudo-anonymous team of developers. The project was thought out as a multi-chain bridge, and has since incorporated DeFi features that prove out the concept. Today, Elk Finance routes millions of dollars in value across 16 networks.
Right off the bat, Elk Finance wanted to distinguish itself from other bridges by creating its own infrastructure, called ElkNet. Using its own infrastructure, Elk Finance is capable of bridging crypto assets faster and safer than traditional bridges.
Unlike regular bridges, ElkNet does not require an equal quantity of tokens to be locked on either side in order to function, so scaling or insufficient exit liquidity are no longer problems.
The ELK token serves as the bridging asset between multiple networks. Let's say a user wants to bridge ETH from Ethereum to Avalanche. Instead of locking up ETH in the bridge contract and minting the equivalent on the Avalanche network, the ETH is moved between chains via ELK liquidity pools. This is just a small example – we will explain how ElkNet works in the next section.
It is important to mention that Elk Finance isn't fully decentralized. It is permissionless in the sense that users don't have to undergo KYC or any checks. Furthermore, the ELK token is is currently pausable, which is initially necessary for the security of the mainnet. There is a plan to keep this ability for a time and then relinquish it to a governing council of 7 people for approximately 6 months before it is left up to governance.
To this day, Elk Finance hasn't been hacked. The protocol plans to eventually go fully decentralized and have its own governance structure. As of 2023, the team made no mention about the governance structure.
How does Elk Finance work?
Elk Finance is made out of a collection of smart contracts to facilitate cross-chain transfers in a trustless manner. In common terms, this is referred to as a bridge. It moves tokens from one blockchain to the other. The Elk Finance developers made the case that Elk Finance is more than a bridge project – it is a multi-functional DeFi gateway.
The purpose of Elk Finance is to blur the line between asset bridging and a regular swap.
ELKNet Bridge
ELKNet is the native cross-chain bridge built by the Elk Finance team. Bridging is deemed one of the most tedious tasks when interacting with multiple blockchains. Bridges are expensive, slow, and involve a degree of risk. Furthermore, each network has its own native bridge, which results in more gas being spent. For this reason, many users prefer to stick to one blockchain, or keep their funds separate on each corresponding network. This isn't how Web3 is supposed to work. Users should be able to transfer their funds in a seamless way regardless of the token standard.
Elk Finance heed the call of the community and decided to make the cross-chain experience enjoyable for the first time. Their solution: one cross-chain bridge to rule them all.
To explain how ElkNet works, let's take a look at how the traditional cross-chain bridge works.
The process starts with the sender locking their tokens on Chain A. Once the token is locked on Chain A the minting process on the other side is triggered, then the equivalent tokens are minted on the Chain B. This is done through a smart contract on each blockchain that is connected to the bridge. As a result, tokens can migrate between blockchains in a trustless manner.
ElkNet is designed to use ELK as the underlying bridging asset. This isn't some gimmick, the crypto token of your choice still gets bridged; it just uses a clever mechanism. Unlike your average cross-chain bridge, ELKNet uses a proprietary technique that makes use of ELK liquidity pools. According to the team, this method can help increase bridge throughput and lower the fees.
Using the previous example, the asset on Chain A is swapped for ELK. The ELK tokens then travel through a smart router, which finds the most cost efficient path before exiting through Chain B. The ELK tokens are then swapped for the desired asset using the ELK pool.
Essentially, ElkNet Bridge performs one simple task: moving ELK between blockchains. Upon the arrival on the other chain, ELK can be swapped for the desired asset using ElkDEX. This guarantees the tokens won't get stuck or lost, and greatly increases the speed and efficiency of transactions.
One of the key features of ElkNet is its security. The protocol uses a multi-sig mechanism to ensure the safety of assets transferred between networks. Additionally, ElkNet utilizes a "security module" to monitor the activity on the bridge and detect any potential threats.
Elk Finance CHFT
In order to facilitate cross-chain value transfers and payments with minimal risk, Elk Finance has released a stablecoin called CHFT. Elk.Finance has opted to peg its stablecoin to the Swiss Franc (CHF), the world's most stable and safest currency. Currently, 1 CHF is worth approximately 1.03 USD which is not much of a difference in value. CHFT stands for CHF-Tethered.
As an ERC20 standard, CHFT will be officially released in 2023. The Elk Finance team mentioned that CHFT will be "the first cross-chain stablecoin with a gyroscopic design." What it means? We don't know either. We will update this section as soon as CHFT is officially launched.
How to make money on Elk Finance?
Although Elk Finance is mainly used for bridging assets, there are a few methods of making money on the protocol. They involve using the ElkDex app to farm and provide liquidity for several assets.
Farming and liquidity provision are some of the easiest methods to make money in DeFi. The reason is that once the assets are deposited, the LP token will accumulate transaction fees for the respective pool.
ELKNet Bridge
While bridging assets between chains isn't a direct method of making money, it may come in handy if you spot a trading opportunity on a different chain than where your crypto assets currently sit. It could be an arbitrage opportunity, or there could be a brand new token being launched exclusively on a specific chain. What is important is that you have instant access to all blockchains using this single cross-chain bridge.
To use bridge via ElkNet, follow these steps:
1. Open the Elk Finance app
2. Click on the "Swap" tab
3. Input the amount of ELK you would like to send
4. Select the destination chain from the drop-down menu
5. Approve the ELK, and click "Transfer"
Keep in mind that ELKNet uses its ELK token to facilitate cross-chain swaps. Therefore, what comes out on the other side is the ELK token. Switching to the asset of your choice requires you to swap the ELK token using the existing liquidity pools on the respective chain.
Elk Finance Farming
DeFi wouldn't be DeFi if it weren't for farming. This method is the cherry on top when it comes to making money on Elk Finance.
To farm on Elk Finance, follow these steps:
1. Head to the Pool Page ElkDEX
2. Select which tokens you would like to farm along with $ELK
3. Click "Approve" for both tokens, confirm these transactions in your wallet
4. Hit "Supply" and confirm the transaction in your wallet
5. You're finished! Happy farming! 👨🌾
When farming, it is important to have equal amounts of each token. Finding out the necessary amount is simple: just type the amount of tokens you would like to farm and the interface will calculate the amount of ELK needed.
Price Prediction for Elk Finance — Can it hit $1000?
Buying and hodling ELK — the native token of Elk Finance— is one way of potentially making money on Elk.
The main utility for ELK is governance and cross-chain value transfer. Its value is therefore tied to the number of users and the TVL amassed by the protocol.
By looking at its current price, it’s natural to think about the chance of ELK hitting $100 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the ELK token by analyzing its tokenomics. ELK’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} ELK tokens being in circulation today, that means a price of {PRICE} per ELK.
How did we come to that calculation? It’s quite easy, the price of a ELK token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each ELK coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of ELK at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for ELK to hit that price.
At a price of $100 per token, that means the current market cap of ELK would equal ${{CIRCULATING_SUPPLY} * 100}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $100.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. ELK’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} ELK which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of ELK? Taking into account the current price of a ELK token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. ELK coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a ELK token. Doing the same calculation but with a price of $100 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 100} for the ELK protocol fully diluted market cap.
These are all crucial details to know when calculating if ELK can reach the price of $100 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of ELK depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some ELK to your portfolio, the most trusted places to get some are Binance and Coinbase.
