What is Multichain (Anyswap)?
Why did the crypto cross the blockchain? To get to the other side...or should I say, to get to the Multichain bridge! You heard that right, Multichain is the one and only blockchain bridge you need to navigate the cryptoverse. This bad boy can get you from chain A to chain B better than a British taxi driver.
Multichain knows all the paths and shortcuts to route your crypto assets. And the best part? You don't have to worry about getting stuck in traffic. So saddle up, folks, and let's take a ride on the wild crypto west with the Multichain bridge!
Bridges are notorious for their security concerns. Whenever you bridge an asset from one blockchain to another, the native asset gets locked on the bridge and a synthetic equivalent is issued on the other chain. This makes bridges multi-billion dollar honeypots for hackers.
As long as crypto assets are locked together on a single smart contract, there will always be a fear that funds will be stolen due to an unnoticed bug. For this reason, bridges in their current state are regraded as risky to some degree.
The Multichain team has dedicated a generous amount of its resources to build a security mechanism so the unthinkable doesn't happen. To explain Multichain's security mechanism, it's important to mention that most bridges rely on multisig. Essentially, an attacker would have to get a hold of the majority of private keys in order to access the funds. These private keys are being held by core team members and other reputable figures in the crypto industry. However, Multichain goes a step further with its security measures.
Multichain's security mechanism is called Threshold distributed signature algorithm. This algorithm enables the generation of a set of private keys on independently run nodes. In such setting, it’s impossible to access or reveal private keys as no complete private keys have been shown during the whole process. In addition, during distributed computation, each node will not pass private keys that they hold between each other. Multi party computation makes sure that the intermediate results generated during distributed computation can’t be used to derive corresponding private keys.
Multichain is also offering bounties up to $2M to anyone who discovers a flaw in the smart contracts. Even discovering a small vulnerability pays $1000. Since the code is open-source, Multichain encourages developers to review their code and contribute to its security.
Despite taking multiple precautionary measures, Multichain has been hacked for $8M in 2021. According to the team, the attacker was able to calculate the private key for one of their routers, which enabled him to access the funds on the bridge.
https://twitter.com/MultichainOrg/status/1663941611380965376
Multichain call themselves a “trustless protocol”, but perhaps that label has been damaged permanently after the CEO of the company was allegedly arrested in China. Due to the fact he held the upgrade keys to the Multichain bridge, developers weren't able to upgrade the protocol, leading to users' funds being stuck on the bridge.
Multichain also has a native token called MULTI. It is a governance token that grants voting rights to the MultiDAO members. Using the bridge or being part of the DAO requires no KYC.
You may be wondering "what's the point of having a native token for a bridge?" The MULTI token adds a layer of decentralization to the protocol and it also serves as the financing mechanism for Multichain. According to Multichain, token holders can vote to introduce new utility to the MULTI token.
How does Multichain (Anyswap) work?
Multichain (formerly known as Anyswap) is a decentralized cross-chain swap protocol that allows users to swap tokens between different blockchains. It was built on top of the Ethereum network and utilizes a combination of Automated Market Maker (AMM) and Cross-Chain Bridge technologies to facilitate secure and fast token swaps.
Before we explain how Multichain works, let's recap the basic mechanics of blockchain bridges. Each bridge is a link between two blockchains. On the asset origin chain, the asset to be bridged is sent to a smart contract and held securely there. On the destination chain, a smart contract mints tokens 1:1 with those held in the smart contract and sends them to the user's wallet. The opposite also happens when tokens are sent to the smart contract – they are burned and then the smart contract release them on the origin chain.
Users who want to use Multichain deposit their funds into a liquidity pool on the Multichain platform. Swappers choose the token pair they wish to trade and the amount they want to swap. Multichain's AMM algorithm calculates the price of the token based on the current supply and demand of the tokens in the pool. The platform charges a small fee for each trade, which is added to the liquidity pool.
The tokens are swapped between the two blockchains via a cross-chain bridge. The swapper receives the new tokens in their wallet, and the liquidity pool is rebalanced to reflect the new token amounts and prices. Liquidity providers earn a share of the trading fees generated by the platform in proportion to their contribution to the pool.
Although Multichain was deployed on Ethereum, it is a blockchain agnostic bridge. With more than 25 blockchains supported and over $100M in TVL, Multichain is one of the biggest bridges in the DeFi space.
How to make money on Multichain (Anyswap)?
Making money on Multichain is straightforward. There are a couple ways you can do it. One of them is to become a liquidity provider on the Multichain liquidity pools. As an LP, you are entitled to a share of the transaction fees for the pool you provide to.
On the good side, they support all the popular blockchains, which means you can make a buck out of any crypto asset in your wallet. On the down side, there is not much you can do outside of becoming an LP (and of course, bridging assets). C'mon, it's mainly intended to work as a bridge, not a native DEX.
To add liquidity on Multichain, follow these steps:
1. Open the Multichain app
2. Click on the "Pool" tab
3. Insert the number of tokens you want to add
4. Click "Add Liquidity"
5. Approve the transaction
6. Profit!
Another way is to hold MULTI tokens and get involved in the governance process. By joining the Multi DAO you get to stake your MULTI to mint veMULTI NFT and make your voice heard in Multichain community. veMULTI NFT is the first tradable NFT with which there are juicy rewards to be distributed on a weekly basis in addition to the NFT value.
To stake MULTI, follow these steps:
1. Go to the Multichain app
2. Click on the "veMULTI" tab
3. Click on "Create Lock"
4. Enter MULTI amount and confirm contract approval
5. Select locking duration and lock MULTI and hit "Lock"
With veMULTI, you will be able to participate in Multichain governance and receive Multichain bridge fees. According to the veMULTI proposal, 45% of the quarterly bridge fees will be distributed as rewards and dispersed every quarter. The bridge collected $3.9M in fees in Q1 2022. The rewards are paid in USDC.
Price Prediction for Multichain (Anyswap) — Can it hit $1000?
Buying and hodling MULTI — the native token of Multichain — is one way of potentially making money on Multichain.
By looking at its current price, it’s natural to think about the chance of MULTI hitting $1000 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 MULTI token by analyzing its tokenomics. MULTI’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} MULTI tokens being in circulation today, that means a price of {PRICE} per MULTI.
How did we come to that calculation? It’s quite easy, the price of a MULTI 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 MULTI 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 MULTI 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 MULTI to hit that price.
At a price of $1000 per token, that means the current market cap of MULTI would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
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. MULTI’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} MULTI 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 MULTI? Taking into account the current price of a MULTI token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. MULTI 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 MULTI token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the MULTI protocol fully diluted market cap.
These are all crucial details to know when calculating if MULTI can reach the price of $1000 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 MULTI depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some MULTI to your portfolio, the most trusted places to get some are Binance and Coinbase.