A Deep Dive Into Pendulum
Pendulum Chain: Bridging the Gap between DeFi and Fiat 🌉
Pendulum : A blockchain that connects the DeFi world to traditional financial systems
The Decentralized Finance (DeFi) ecosystem has been expanding at an incredible pace and shows no signs of slowing down. According to DeFiLlama, the Total Value Locked is currently over $48 billion and there's a never-ending stream of innovative DeFi products, from yield farming and liquidity pools to decentralized investment protocols, prediction markets, and crypto lending.
📈 Major DeFi protocols have been thriving with double-digit gains in collateral. In just the past month, the DeFi ecosystem has seen an increase of around $8.4 billion since its cycle low on January 1st.
💳 Enter the world of FiatFi (fiat + DeFi), using fiat currencies within DeFi applications. While many blockchains support FiatFi, some are more suitable than others. Pendulum stands out as the ideal blockchain, as it offers a solution for extending on-chain fiat use cases and integrating fiat currencies within the DeFi ecosystem.
TVL in DeFi
What is Pendulum? 🕐️
Pendulum is a blockchain network that connects the DeFi world to traditional financial systems. It addresses the growing need for fiat currency in DeFi by providing trustworthy, compliant tokens that are pegged to major fiat currencies. The Pendulum protocol was created by SatoshiPay, a fintech company with a long history in blockchain dating back to 2014.The anticipated Pendulum launch is expected before the end of February 2023!
Built on Substrate 🔨
Parity Technologies created the blockchain framework known as Substrate. The framework was used to build Polkadot.
The Substrate has many benefits, including native compatibility with the Polkadot chain, cross-coding language support, forkless upgrades with built-in upgrade coordination, deterministic finality (for fast consensus reaching), and a collection of pre-built but adaptable components (referred to as "pallets").
The Bridge to Stellar 🌉
The Pendulum Chain's bridge to the Stellar network is a vital component.
The Stellar ecosystem is a great environment for integrating DeFi with the current financial system: On/off-ramps compatible with traditional finance are currently available for more than 15 different world currencies as fiat tokens on Stellar.
Connecting the fiat banking system to DeFi products and services is possible by bridging Stellar to DeFi via Pendulum.
Pendulum’s Vision - The internet of fiat for everyone 🌍
Pendulum's goal is to create a blockchain with fiat-optimized smart contracts that will serve as the missing piece between fiat and DeFi.
A financial future that is open and inclusive can be established by developing an on-chain utility for many different fiat currencies and fintech services. dApps can fully integrate traditional finance services like forex, trade financing, or savings accounts.
To finally open up DeFi use cases for a wide range of fiat currencies, Pendulum will function as a crucial component of the Web3 infrastructure. The goal is to create an open financial future that crosses boundaries and promotes economic inclusion.
Pendulum aims to become the one-stop hub for the internet of fiat. Innovations that Pendulum brings include:
Cross-chain trust-minimized bridges
A network optimized for a broad basket of fiat-pegged stable tokens
Next-generation smart contract technology
Opt-in compliance layer with privacy features
Seamless on/off ramps standards for integrations into local banking networks
Pendulum Features 📜
Depending on the target network's nature, connecting across various ecosystems calls for multiple solutions: in some cases, network-specific bridges. In others, integrations into multichain bridges, or even the DotSama (Kusama and Polkadot ecosystems) relay chain through the cross-chain messaging protocol.
A Statemine/Statemint integration is planned to ensure that the bridged tokens are distributed as widely as possible within the DotSama ecosystem. A crucial design principle is ensuring the bridge technologies are as reliable and trustworthy as possible.
Spacewalk: Stellar bridge
The Spacewalk bridge will link Pendulum and all Substrate-based networks with a wide range of fiat-stable tokens on the Stellar blockchain.
The Spacewalk bridge roadmap states that Pendulum will eventually be linked to other DeFi ecosystems, including Ethereum, Cosmos, and others.
Fiat currencies and fintech services will hence have access to as many Web3 blockchain opportunities as possible. The Pendulum can use WASM technology and gain from WebAssembly smart contracts' high-performance performance thanks to this Polkadot start.
Use Cases and Opportunities ⏩
Numerous opportunities are made available for users of DeFi products, traditional fiat infrastructures, Stellar, Ethereum, and Polkadot users by integrating the DeFi ecosystem with Stellar's broad range of fiat tokens.
Connecting the foreign exchange market to DeFi
In 2023, the value of the world's foreign exchange market will be $1,934,500,000,000, or $1.93 quadrillion. The average daily turnover in the past three years has increased by 14%, from $6.6 trillion in 2019 to $7.5 trillion today.
The DeFi ecosystem will have access to enormous foreign exchange liquidity thanks to Stellar's 15+ fiat tokens, local integrations into the established banking infrastructure, Pendulum's smart contract capabilities, and bridges to Ethereum and Polkadot.
Automated market makers (AMMs) 🤖
The requirement for automated market makers to introduce scalable liquidity pools for fiat currencies frequently coexists with the high demand for the Fiat-DeFi bridge.
Cross-border money transfers like DTransfer will profit from a quick, transparent, and affordable currency exchange process as AMM smart contracts are implemented on Pendulum with a quick and efficient exchange of fiat tokens.
Yield earning opportunities for fiat token holders
Fiat token owners can use their money on Pendulum by contributing to lending pools or giving AMMs liquidity.
Decentralized Forex - Amber AMM
Once DeFi can use local currencies like the Euro, Mexican Pesos, and Turkish Lira within DeFi, traditional finance can consider the benefits they can provide their clients worldwide.
Pendulum's mainnet launch marks the beginning of the ecosystem's dApp development in full swing. Projects, developers, and builders have already begun discussions with the Pendulum Ecosystem Grant program. The Amplitude Grants Program is similar. The Amber AMM will be among the first dApps to live on Pendulum. PMM (Proactive Market Maker) might be a better acronym to describe Amber.
Barriers to Getting Forex Onchain 🤔
On-chain forex still doesn’t play any meaningful role in crypto, despite being a perfect and straightforward use case for DeFi. There are several reasons for this, including:
On/off ramping friction
Legal and compliance questions
Limited stable token availability
High cost of Forex trading via AMMs
The crypto industry is working closely with regulators to address compliance, stable tokens, and on/off ramps. For instance, Pendulum is developing a fiat-optimized blockchain that addresses all three. But technical innovation is required to handle the high cost of forex trading on AMMs.
Off-chain forex trading has very low transaction costs, with trades on popular currency pairs like the USD and EUR typically costing less than those on uncommon pairs like the USD and BRL.
Amber is a brand-new, highly effective PMM (Proactive Market Maker) created to approve forex liquidity on DeFi. The architecture of Amber provides low-risk single-sided liquidity provision along with automated market-making.
With swap liquidity, Amber wants to reduce the costs for a $100k trade to between 0.05% and 0.10%. Due to its ability to operate with significantly lower slippage and fees than other AMM designs, Amber can access new sources of liquidity (such as the forex market).
Pendulum (PEN) Tokenomics 📊
The native token of Pendulum will be PEN. PEN utilities include governance, staking, and powering transactions as the gas token on Pendulum.
Relay Chain: Polkadot
Supply Structure: Inflationary
Total Supply: 200,000,000
Initial Circulating Supply: 15,200,000
Supply at Genesis: 160,000,000
The distribution maintains a balance between Pendulum’s early supporters and the community with an even 50/50 split.
Staking rewards for directly staking PEN (28%) and staking rewards for Staking Spacewalk Bridge (12%) are included in the community distribution. You can now participate in the Polkadot crowd loan waitlist and receive extra benefits for signing up early.
Participants must have a Polkadot account
Participants must hold a minimum of 5 DOT in their accounts
Users must agree to Pendulum’s Terms and Conditions. Note: No KYC is required
What is the Utility of PEN?
Like DOT powers Polkadot and ETH powers Ethereum, the PEN token will power network transactions. When using the protocol, there will be transaction fees that must be paid using PEN. A sustainable business model for the blockchain is defined by the transaction fee going to the treasury.
The opportunity to stake PEN will be available to holders. To earn yields, token holders can stake (delegate) their tokens with collators. Staking to protect the network will encourage external collators to operate high-performing nodes, which will aid in decentralizing the infrastructure.
To direct the project's path, the PEN community can take part in on-chain governance. Holders can influence the network's development by putting forth and voting on governance referenda.
On-chain governance will use a quadratic voting mechanism to ensure that relatively small holders have a greater number of votes and to discourage a single holder from voting more than once on a single proposal.
The New Pendulum Look ✨
Pendulum is entering 2023 with a brand-new look.
December 2022 was a big month for Pendulum; as their branding begins to grow, so will their technology after securing a Polkadot parachain.
Pioneering the Internet of fiat. Amplitude is the sister network of the Pendulum on Kusama. It will act as a testing ground for Pendulum applications and network parameters and be powered by the AMPE token.
The Pendulum portal
The Pendulum portal on Pendulum's new website is in development and will be a one-stop shop for swapping, staking, bridging, and governance voting on Pendulum.
The Pendulum Team 🧑🤝🧑
A project's long-term success ultimately depends on the caliber of its team.
SatoshiPay CEO Alex Wilke has 6 SatoshiPay years and 18 years of operational experience behind him.
CSO Dr. Aaron Linder, Physics Ph.D., leads the project's vision
CTO Dr. Torsten Stüber, Computer Science Ph.D., oversees the technical team
Founder & Chairman Meinhard Benn, a blockchain programmer since 2011, guides the project with his high-level oversight.
Daniel Masters, another early crypto adopter and current chairman of CoinShares, is on the Satoshipay board of directors.
CMO Daniel Kisluk, former VP of Marketing at BeInCrypto, leads the positioning of blockchain connecting DeFi & TradFi ecosystems.
Partners & Collaborators 🤝
The Roadmap 🗺️
Pendulum's roadmap for 2023 is set to bring about many developments.
The launch of Pendulum on the Polkadot ecosystem in February 2023 is the next thing we expect from Pendulum.
There will be a token generation event with this launch. Pendulum will launch several innovative solutions once live on the Polkadot network, including trust-minimized cross-chain bridges (Spacewalk), support for a wider variety of fiat-pegged stablecoins, cutting-edge smart contracts, native-level compliance, and privacy layers, as well as on-ramps and off-ramps integration with local banking channels.
The Spacewalk launch is another exciting development on Pendulum's roadmap alongside the Amber launch.
TradFi fiat services can integrate with DeFi applications thanks to Pendulum. The protocol has been undoubtedly continuously growing, progressing, and innovating in the Polkadot and DeFi ecosystem.
The vision is clear: The internet of fiat for everyone. According to the roadmap, Pendulum is bringing some many developments and solutions this year, so we should keep an eye on them.