# CrossDeFi: A Novel Cross-Chain Communication Protocol
## 3 Background
### Seamless Token Representation (STR)  
The CrossDeFi system is designed to provide a seamless asset representation model, enhancing the uniformity of assets across various blockchain architectures used by the DeFi system. This model uses a sophisticated tokenization platform that allows for interaction between different DeFi user groups and intermediaries, such as agents, thereby facilitating beneficial exchanges. This service not only promotes the liquidity of previously illiquid assets but also implements a trust structure based on code, rather than relying solely on intermediaries. Tokenization within CrossDeFi helps bridge the gap between tangible and intangible assets, making both more accessible and manageable within the DeFi ecosystem. By \begin{table}
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**Factors** & **Bridges** & **DEXs** & **Aggregators** & **Wrapped Tokens** & **Oracles** \\ \hline Primary focus & Facilitate cross-chain asset transfers & Enable peer-to-peer digital asset trading & Aggregate liquidity from various sources & Represent assets seamlessly across blockchains & Provide external data for smart contracts \\ \hline Working principle & Transfer assets across blockchains & Match buyers and sellers for trading & Optimize trade actions by pooling liquidity & Lock native tokens and issue equivalents on target chains & Fetch and validate real-world information \\ \hline Centralization & Centralized or decentralized & Decentralized & - & Centralized or decentralized & Centralized or decentralized \\ \hline Interoperability & Support & Support & Support & Support & Support \\ \hline Security dependence & Bridge design & Consensus and smart contracts & Secure data aggregation and trading algorithms & Decentralized & Reputation or collateralization & Reputation or collateralization \\ \hline Tokens & Custom and bridge-specific etc. & ERC-20, BEP-20, SPL, etc. & - & ERC-20, BEP-20, etc. & - \\ \hline Examples & Interledger, Cosmos IBC, Polkadot bridges & Uniswap, PancakeSwap & lunch, Paraswap, Chatka & Wrapped (WETH), Wrapped Bitcoin (WBTC) & Chainlink, Band Protocol, API3 \\ \hline Use cases & Cross-chain asset transfers, interoperable DeFi applications & Decentralized trading, liquidity provision & Optimized trading, best price execution & Asset representation, cross-chain liquidity & Supplying data to smart contracts \\ \hline \hline \end{tabular}
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Table 3: Comparative analysis of various cross-chain components. employing digital tokens as references to physical counterparts, CrossDeFi enhances the liquidity and speculative value of tangible assets. For intangible assets, the model provides unique representation capabilities through smart contracts, which ensure security and verifiability. Verification processes such as Know Your Customer (KYC) and Anti-Money Laundering (AML) are integral to maintaining high standards of trust and compliance in the CrossDeFi system, addressing potential concerns from users and regulatory bodies. The functionality of STR is underpinned by a variety of token types, each serving specific roles within the DeFi ecosystem:  
* Security tokens like 10 SET ERC 20 represent ownership and participation rights but often suffer from high transaction fees and scalability issues. * Utility tokens such as ETH facilitate access to services and products but face regulatory uncertainties. * Non-fungible tokens (NFTs) like CryptoKitties provide unique asset representations but may experience excessive transaction fees and interoperability challenges. * Governance tokens such as BAL enable participation in blockchain governance but are often limited by the scalability of their native platforms. * Payment tokens like BTC are used for transactions but can be volatile and have high fees. * Wrapped tokens such as WETH allow for the use of one blockchain's assets on another platform but involve risks related to centralization.