Polkadot Ecosystem Innovation: Gigadot Opens a New Chapter in Cross-Chain DeFi

In the Polkadot ecosystem, cross-chain liquidity and asset efficiency have always been core challenges faced by DeFi applications. As a cross-chain staking protocol focused on liquidity release, a certain project is dedicated to providing users with more flexible ways to utilize staking assets. Another project has built a comprehensive chain-based DeFi infrastructure covering modules such as exchanges, lending, and stablecoins, based on the Polkadot SDK, and has integrated it into a scalable Appchain architecture.

Recently, these two projects jointly launched the innovative DeFi product Gigadot, providing DOT users with a more efficient way to utilize funds through a one-click operation and multiple收益 mechanism, while also opening up a new exploration of Polkadot cross-chain DeFi. After the product went live, the market response was enthusiastic, with the TVL once exceeding $35 million, making it one of the most talked-about experimental projects in the ecosystem.

During the online event held on May 22, the leaders of two projects jointly delved into the product logic, technical implementation, and ecological significance of Gigadot, providing a comprehensive introduction to this new composite DeFi product on Polkadot.

The Philosophy and Original Intention of Gigadot

The core concept of Gigadot is "one deployment, multiple returns." A project leader stated that traditionally, users have to separately stake, lend, or invest DOT in liquidity pools, a cumbersome process with low asset utilization. The emergence of Gigadot has streamlined these complex operational paths, allowing users to obtain multiple sources of returns while performing simple operations.

Another official added that in the Polkadot ecosystem, DOT is the primary staking asset. In the past, once DOT was staked, it could no longer be used for other purposes, such as lending or providing liquidity.

The vDOT launched by a certain project solves this problem and builds a dedicated application chain to provide liquidity support. The partners once tried to encourage users to provide liquidity for DOT/vDOT through incentive mechanisms, but the high incentive costs limited the effectiveness. To this end, they designed a new mechanism similar to stablecoin pools, but without requiring a 1:1 fixed peg, allowing DOT and vDOT to be freely exchanged at real-time exchange rates, enhancing liquidity and enabling vDOT to be used as collateral for lending.

Gigadot has further integrated the liquidity pool with the lending module. Users can stake DOT as vDOT, form an LP with aDOT, and then use the LP as collateral to borrow funds, achieving circular use and obtaining dual returns from staking and lending.

How does Gigadot solve the cross-chain liquidity problem?

One of the goals of Gigadot's design is to integrate and amplify yield pathways. Looking back to the early days of the Polkadot ecosystem, many teams developed LSTs, built liquidity pools, and distributed incentives independently, resulting in a series of fragmented product lines.

A responsible person stated that they hope to avoid reinventing the wheel by directly integrating the mature vDOT from their partners. By leveraging XCM cross-chain communication and Polkadot's shared security mechanism, they aim to save on development and incentive costs, showcasing the advantages of Polkadot's modular collaboration.

Another person in charge added that currently, if users want to use vDOT on the partner platform, they must first stake DOT on another platform to obtain vDOT, and then transfer it to the partner platform via XCM, making the process somewhat complicated. In the future, the partner platform will support "one-click staking," allowing users to complete the operation directly on their platform, with the system automatically communicating with the other platform via XCM and returning vDOT, thereby significantly enhancing the user experience.

A responsible person further explained that the on-chain price of vDOT does not rely on traditional oracles, but instead synchronizes data in real-time through XCM, making it safer and resistant to manipulation. The recent surge in XCM message volume between the two platforms also indicates that the cross-chain mechanism is now operating stably.

Technical Architecture and Security Assurance

Gigadot is a very complex product that includes multiple functional layers. The early user interface was criticized for its lengthy processes and numerous steps. A responsible person introduced that it has now been simplified so that users only need to hold DOT or USDT to "get Gigadot with one click."

Gigadot consists of two types of assets: one type is DOT derivatives (such as vDOT) from other chains, and the other type is DOT derivative assets in ERC-20 format from its own lending market. These assets collectively contribute to the stability pool as collateral and participate in the lending market.

Gigadot is an ERC-20 token based on the Rebase mechanism, with its value automatically adjusted according to the underlying asset's returns. Typically, cross-chain assets need to be wrapped, but Gigadot simplifies this complex process with a one-click design. With the advancement of the Polkadot Asset Hub, cross-chain support will be further optimized in the future, maintaining a streamlined user experience.

In terms of security, Gigadot benefits from the shared security mechanism of the Polkadot main chain, eliminating concerns about the security of underlying assets.

How to Maximize Gigadot Earnings?

Gigadot has implemented the aggregation of multiple sources of income, currently including:

• Lending interest: aDOT invested in the lending market to earn interest;
• Staking Rewards: vDOT continuously generates staking rewards;
• Transaction Fees: aDOT and vDOT added to the stable pool generate fee income;
• Incentive Tokens: Users holding Gigadot can receive three types of incentives;
• Asset appreciation: The increase in underlying asset value and fee income drive the rise in Gigadot prices.

Users can also amplify their returns through the "Looping" strategy: using Gigadot as collateral, borrowing DOT, and then exchanging it for more Gigadot, repeating multiple rounds to stack returns. As long as the yield on Gigadot is higher than the borrowing interest rate, this method can continuously amplify returns.

A responsible person added that due to the high correlation in prices among vDOT, aDOT, Gigadot, and DOT, they will fluctuate in sync during market volatility, so the risk of liquidation is relatively low.

Additionally, a certain project has established a transparent asset monitoring dashboard, allowing users to check the vDOT reserve rate, staking status, and other information at any time, ensuring that every asset has 100% on-chain reserve support.

The Impact of Polkadot Mechanism Evolution on Gigadot

Both projects have very active development teams behind them. A certain person in charge mentioned that the team would closely monitor each SDK upgrade and assess its impact on the existing system. Although some upgrades may bring significant changes, there are currently no updates that would have a destructive impact on Gigadot, and the overall architecture has good resilience.

Currently, the entire Polkadot DeFi ecosystem is still relatively early, and most users are content with staking DOT for basic returns. However, over the past year, more and more people have started to participate in LP and DeFi products. Gigadot is a typical example, providing new use cases for DOT and bringing more diverse ways to engage in the ecosystem.

A responsible person revealed that they are currently working with Parity to promote the migration of the staking system from Relay Chain to Asset Hub. In addition, Polkadot is also advancing some significant upgrades recently, such as async backing, shortening block time to 6 seconds, and adjustments to the staking mechanism.

The person in charge stated that despite frequent technological updates, the staking mechanism remains stable and actively adapts to new systems, thus maintaining confidence in the future development of Gigadot.

The Future and Product Planning of Gigadot

A certain person in charge stated that the cooperation between the two projects is very close, and there will be more GIGA series products launched in the future. Currently planned is to introduce the vBNC of a certain project into the partner's stable pool and use a mechanism similar to Gigadot to enhance its liquidity.

In addition, Gigadot can also serve as one of the important collateral assets for the Hollar stablecoin. There are many ways to implement this, and it is not limited to looping; users can also use it to lend out other assets.

Hollar is an over-collateralized stablecoin with a fixed annual interest rate, making it more suitable for users' cost estimation compared to floating rate assets like USDT/USDC. This mechanism also holds the potential to drive the emergence of more new use cases, such as integrating Hollar as a transaction fee or stable settlement asset, with the specific implementation depending on the system design of each chain.

What funding mechanisms are available for developers?

The project itself is built on Substrate, but it also integrates the EVM environment. However, deploying smart contracts on the chain requires approval through a whitelist mechanism, which is to protect the resources on the chain from being abused.

A person in charge introduced that in terms of funding, their treasury also adopts the OpenGov mechanism, which is consistent with other projects. The person in charge strongly advised developers to initiate discussions on Discord or forums before formally developing, to see if native token holders are interested in this idea, in order to avoid spending a lot of time only to find out that the community is not willing to support it.

In short, if you have ideas, you can definitely start from here, as there are clear rewards and support pathways within the ecosystem.

Conclusion

Gigadot is not just an attempt at functional integration, but a deep exploration and productization practice of Polkadot's cross-chain collaboration potential. Through one-click combinations, cross-chain integration, and multiple yields, it brings true DeFi composability to Polkadot.

In the future, Polkadot will showcase the unique value of its modularity and composability, continuously injecting new momentum into the development of multi-chain DeFi, and driving the entire ecosystem towards a more open and efficient financial future.