The latest Squid version, released today, gives a big boost to cross-chain exchanges.
Squid v2.0 introduces an architecture that abstracts out chains, simplifying even complicated transaction flows with several hops.
This update contains performance and cost improvements and extends Squid 2.0 functionality to new areas like 1:1 stablecoin transfers and real-world asset transactions (RWA).
According to Fig Squid co-founder, this new approach is far more than just finding the best bridge routes.
“We are a bridging tool in a certain way, but we think that we can change the way that swaps are also done,” Fig Blockworks.
Squid 2.0 features a graph-based design that allows for intelligent routing of over 110 sources of liquidity across 77 chains. The swaps will be executed in the fastest and most cost-effective way, with reduced costs.
“In Squid v1, it was a very simple routing algorithm — we would just always swap via wETH into USDC, and then we bridge and swap out on the other side. But with Squid v2, we’ve upped the infrastructure a lot.”
Squid’s algorithm now compares the liquidity of multiple dexes or liquidity pools to automatically choose the route that is most cost effective. The team claims that this focus on speed is built on Squid Boost, a feature in the previous version which allowed for swaps to be completed within 20 seconds across multiple chains. Real-time quotes are now delivered under half a sec.
“There’s so much variation happening in cross-chain that we had to build a system which was able to adapt to all of the change in liquidity, of new technology, instantly and without us having to do anything manually on our side,” Fig explained.
The competition in the space of cross-chain is escalating. Osmosis’ latest product was launched just last week. Polaris aggregates DEXs, and uses the Inter-Blockchain Communication Protocol (IBC).
Sunny Aggarwal is the co-founder of Osmosis and he pitched Polaris in an attempt to combat what he called, “the Great Chain Divide.”
“Liquidity is fragmented and sticky on its native chain, driven by both inertia and incentives (everyone’s trying to build their own internal DeFi ecosystems!),” Aggarwal wrote X.
Squid also integrates liquidity via Osmosis (via Astroport), Bitcoin (via Chainflip dex), and Solana.
ZeroDev has also demonstrated its Magic Account. It is a wallet abstraction that features a design centered on the user, and includes social logins with passkeys as well as gasless transaction.
Squid also supports a “token-first” Users can interact easily with digital assets regardless of the chain on which they’re located. For example, a user can see an aggregated USDC balance across chains, and have Squid automatically choose the most cost-efficient way to complete a transaction — say, swapping into a memecoin.
Fig stated that this interface also addresses the multiple versions of wrapped stablecoins which proliferate due to cross-chain bridging. This is a solution to a UX issue.
“We work with stablecoin providers directly, and then they will use Axelar [Interchain Token Service], or even if they don’t use it, we can swap the stablecoin on the other side,” He said.
This abstraction level is the first step in a non-custodial multi-chain environment.
“We can start to move to the world where you don’t see the chain ever,” Fig. “We can move this ‘Coinbase experience’ — which is really what 99% of crypto in the world use — into a fully self-custodial environment with decentralized liquidity as well.”
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