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As of writing this, the total value locked (TVL) in DeFi has surged to $80.2 billion, nearly doubling from last year’s $39 billion. While this signals growing adoption and a flood of projects moving on-chain, it also brings increased complexity. Users are finding it harder to transfer assets between chains, while projects struggle to attract users beyond their native ecosystems. Liquidity is scattered, and managing assets across chains and applications has become a serious challenge.
In this blog, we’ll dive into the key issues of fragmented liquidity, complicated asset transfers, and integration challenges for developers — and how LI.FI makes the DeFi experience better.
Solving DeFi Fragmentation
As DeFi continues to evolve, the ecosystem faces several key challenges, from fragmented liquidity to complex user experiences and developer integration headaches. Let’s understand each challenge and how LI.FI helps overcome it:
1. Fragmented Liquidity Across Chains
The increase in the number of chains has spread liquidity across different apps and chains. This makes it harder for users and developers to find the best rates or access the most efficient liquidity. With liquidity scattered, there’s often higher slippage, suboptimal trading conditions, and more manual work to connect to each liquidity source.
Via Defillama
To solve this, LI.FI aggregates liquidity from over 30+ chains, 18+ bridges, and 38+ DEXs and DEX aggregators into a single platform. Instead of manually navigating fragmented liquidity, users and developers can access everything they need from one place. This means better prices, lower slippage, and smoother transactions without having to deal with the complexity of multiple integrations.
2. Complex User Experience in Multi-Chain Transactions
Interacting across chains can be a frustrating experience for users. Swapping, bridging, or moving assets typically requires multiple steps and different tools, which makes the process slow and confusing. This complexity discourages users from engaging fully with DeFi.
Zaps, a feature in our stack, streamlines the process by bundling multi-step transactions into one action, whether it’s swapping, bridging, or staking. By handling the complicated processes behind the scenes, multi-chain actions are simplified. Through a single API call, users can perform cross-chain swaps, transfers and directly interact with your app, without worrying about the underlying steps to get there.
This drastically improves the overall experience by reducing the effort and knowledge required to interact with DeFi.
3. Developer Complexity in Integrating Multi-Chain Features
For developers, adding multi-chain functionality is a challenge. They need to integrate multiple bridges, liquidity sources, and protocols, which increases both development time and maintenance costs. This slows down the ability to launch new features or support different chains.
With access to a single integration point, developers no longer have to deal with the headache of piecing together different systems.
LI.FI offers a range of tools that are available depending on how much control and customization you require:
• APIs and SDKs offer deeper customization, allowing developers to build cross-chain swaps, bridges, and liquidity features in a way that best fits their specific application. These tools provide full control, enabling developers to integrate features with precision while managing gas fees, optimizing routes, and minimizing slippage.
• For developers looking for a quick solution, Widgets provide a plug-and-play option. With just a few lines of code, developers can integrate multi-chain functionality instantly. This approach is perfect for those who need rapid deployment without the need for extensive customization.
This flexible approach allows developers to choose the integration that best fits their needs, whether they are seeking full control with APIs and SDKs or a faster, simplified solution through widgets.
4. Lack of Gas Tokens on Destination Chains
One of the common issues users face when transacting across chains is the lack of gas tokens on the destination chain, which can cause assets to be stuck on a chain without any gas. Having to manually acquire gas tokens for each chain adds another layer of complexity.
To solve this, LI.FI provides gas refuel, which ensures that users have the necessary gas to complete their transactions seamlessly. This feature eliminates the need for users to manually acquire gas tokens, simplifying the process and reducing transaction failures across different chains.
Conclusion
In the rapidly expanding DeFi space, fragmentation and complexity can slow down both user adoption and development progress. LI.FI opens up the possibility for more intuitive financial applications, where users don’t need to worry about the multi-chain interactions of swapping, bridging, or gas refuels. By simplifying user interactions, we can create a more streamlined and accessible DeFi experience.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice
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