Founded in May 2020 and officially launched in July 2021, Clover Finance is a Substrate-based DeFi service provider that aims to compete as the Parachain of the Polkadot network. In terms of its innovative strengths, Clover’s solution addresses the current lack of blockchain interoperability by providing a non-custodial, decentralized cross-chain bridge from Ethereum to Polkadot.
Built on Polkadot’s base layer, Substrate, Clover is a core protocol that operates using Substrate’s extensive capabilities, simplifying the entire build process without having to rebuild from scratch. Clover combines existing frameworks on Substrate with its own innovative cross-chain bridge architecture to come up with a rather compelling dynamic infrastructure.
Building on these cross-chain capabilities, Clover has also built a base layer for DeFi applications to operate seamlessly through:
1) Lower the development threshold through the implementation of the familiar Substrate framework and developer tools, such as identity-based code functions and multi-signature (multisig) functions, to improve the security of the overall protocol.
2) Facilitate a fee-free transaction model to simplify the user experience (the team calls this their reinvention of “feeconomics”).
What is Clover’s Dual Peg (2WP) system?
The explosive growth of protocols in the market has fueled demand for so-called Para-chains, and discourses like this. Although the decentralized network is internally secure, it lacks a cross-chain decentralized structure. Packages and other such technologies often involve the services of a trusted custodian or a cooperating third party, which goes against the decentralization principle of cryptocurrencies.
Clover’s Dual Peg (2WP) system solves this problem and is arguably what differentiates the protocol from the core features of other protocols. Simply put, the 2WP system allows users to transfer tokens from one blockchain to another. In reality, there is no transfer. Instead, sent tokens are temporarily locked on the base chain, while an equal amount of tokens are unlocked on the “receiving” chain.
The concept itself actually dates back to discussions with Satoshi Nakamoto during the early launch of Bitcoin. The system still relies on trust mechanisms and there is some risk of double spending. However, to deal with this situation, Clover is looking to implement a trustless cross-chain mechanism. The ultimate goal of Clover is to be the ultimate ETH-DOT bridge protocol.
Some would argue that the full implementation of the cross-chain bridge represents one of the missing pieces in the DeFi ecosystem, which is the main reason why Clover was developed.