Innovations in the Polkadot Ecosystem: How Gigadot is Changing the Decentralized Finance Landscape

Cross-chain liquidity and asset efficiency in the Polkadot ecosystem 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 built on the Polkadot SDK has created a comprehensive DeFi infrastructure covering modules for exchange, lending, stablecoins, and more, integrating it into a scalable Appchain architecture.

Recently, these two projects have joined forces to launch an innovative DeFi product called Gigadot. Through one-click operations and a multi-revenue mechanism, it provides DOT users with a more efficient way to utilize funds, while also initiating a new exploration of cross-chain DeFi on Polkadot. After the product went live, the market response was enthusiastic, with the TVL exceeding $35 million at one point, making it one of the most watched experimental projects within the ecosystem.

During an online event, representatives from two projects deeply analyzed the product logic, technical implementation, and ecological significance of Gigadot, allowing us to gain a comprehensive understanding of this new composite Decentralized Finance product on Polkadot.

The Philosophy and Original Intention of Gigadot

The core concept of Gigadot is "one deployment, multiple earnings". Traditionally, users have to separately stake DOT, lend, or provide liquidity, which is cumbersome and results in low asset utilization. The emergence of Gigadot streamlines these complex operational paths, allowing users to achieve multiple sources of income with simple operations.

In the Polkadot ecosystem, DOT is the primary staking asset. In the past, once DOT was staked, it could not be used for other purposes such as lending or providing liquidity. The introduction of vDOT solves this problem and builds a dedicated application chain to provide liquidity support.

To enhance liquidity, the project team designed a new mechanism similar to stablecoin pools, but without requiring a 1:1 fixed peg. Instead, it allows for the free exchange of DOT and vDOT at real-time exchange rates, while also enabling vDOT to be used as collateral for lending.

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

How does Gigadot solve the cross-chain liquidity problem?

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

The project team aims to avoid reinventing the wheel by directly integrating the mature vDOT, leveraging XCM cross-chain communication and Polkadot's shared security mechanism to save on development and incentive costs, showcasing the advantages of Polkadot's modular collaboration.

In the future, the platform will support "one-click staking", allowing users to complete operations directly on their platform. The system will automatically communicate with related projects through XCM and return vDOT, significantly enhancing the user experience.

It is worth noting that the on-chain price anchoring of vDOT does not rely on traditional oracles, but instead synchronizes data in real-time through XCM, making it more secure and resistant to manipulation. The recent surge in XCM message volume among related projects also indicates that this cross-chain mechanism is 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 long processes and numerous steps. It has now been simplified to allow users to "obtain Gigadot with one click" simply by holding DOT or USDT.

Gigadot consists of two types of assets: one type is DOT derivatives (such as vDOT) from other chains, and the other type is ERC-20 format DOT derivative assets from a proprietary lending market on a certain platform. These assets are collectively added to the stable pool as collateral to participate in the lending market.

Gigadot is an ERC-20 token based on the Rebase mechanism, and its value automatically adjusts with the underlying asset's yield. Typically, cross-chain assets need to be wrapped, but Gigadot has streamlined this complex process with a one-click design. As the Polkadot Asset Hub advances, future optimizations for cross-chain support will further maintain a simple user experience.

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

How to Maximize Gigadot Returns?

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

• Lending Interest: aDOT invested in the lending market earns interest;
• Staking Rewards: vDOT continuously generates staking rewards;
• Transaction Fee: 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 appreciation of underlying assets and fee income drive the increase in Gigadot prices.

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

Due to the high price correlation among vDOT, aDOT, Gigadot, and DOT, they tend to fluctuate synchronously during market volatility, so the risk of liquidation is relatively low.

In addition, the project has established a transparent asset monitoring dashboard, allowing users to view information such as the reserve rate and staking status of vDOT at any time, ensuring that every asset has 100% on-chain reserve support.

The Impact of Polkadot Mechanism Evolution on Gigadot

The development team behind Gigadot will closely monitor each SDK upgrade and assess its impact on the existing system. Although certain upgrades may bring significant changes, there are currently no updates that have a destructive impact on Gigadot, and the overall architecture has good resilience.

Currently, the entire Polkadot DeFi ecosystem is still relatively early, with most users only satisfied with staking DOT to earn basic returns. However, over the past year, more and more people have begun to participate in LP and DeFi products. Gigadot is a typical example, as it provides new use cases for DOT and brings richer ways to engage in the ecosystem.

Some projects are currently cooperating with Parity to advance the migration of the staking system from Relay Chain to Asset Hub. In addition, Polkadot is also promoting some major upgrades recently, such as async backing, shortening the block time to 6 seconds, and adjustments to the staking mechanism.

Despite frequent technological updates, the staking mechanism of related projects remains stable and actively adapts to new systems, thus maintaining confidence in the future development of Gigadot.

The Future and Product Planning of Gigadot

In the future, more GIGA series products will be launched. Currently planned is the introduction of a certain project's vBNC into the stable pool, using 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 that sets a fixed annual interest rate, making it more suitable for users' cost estimation compared to floating rate assets like USDT/USDC. This mechanism is also expected 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?

A certain platform is built on Substrate, but it also integrates an 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.

In terms of funding, a certain platform's treasury also employs the OpenGov mechanism, which is consistent with other projects. It is strongly recommended that developers initiate discussions on Discord or forums before formal development to see if token holders are interested in this idea, avoiding the situation where a significant amount of time is spent only to find 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 reward and support pathways within the ecosystem.

Conclusion

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

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