Provable has announced the launch of pTokens to provide liquidity and interoperability for DeFi.
The world of decentralised finance still suffers from two major limitations: lack of liquidity and cross-chain interoperability, for example when trading Bitcoin (BTC) with Ether (ETH).
Instead, the long-term goal is to allow cryptocurrencies to be traded freely and seamlessly between exchanges, dApps and wallets.
To achieve this, it is first necessary to increase the liquidity present in the cryptocurrency and token markets, so as to achieve a fluid and open economy that will offer everyone greater financial freedom, privacy and autonomy.
Secondly, it is necessary to allow interoperability between the different blockchains, making them somehow compatible with each other. In general, the different blockchains offer users something different from each other, and the best scenario would be for them to be able to “communicate” with each other on a technological level.
Provable is trying to open the doors to the Ethereum network, so as to connect all the blockchain assets together creating a universal tool for all DeFi users and developers.
The pTokens are the ERC-20 version of other currencies on the blockchains other than the Ethereum one, so as to solve the problem of liquidity and interoperability.
This maximises both the liquidity for each non-Ethereum based cryptocurrency and the multi-chain interoperability, because the cryptocurrencies will no longer be limited to their native blockchain, but will also be usable on the Ethereum blockchain, used as a core platform for DeFi.
The first pTokens to be issued will be pEOS, which will, therefore, allow EOS token owners to use them easily as ERC-20 tokens on the Ethereum network, and in the future, these will also be created for other blockchains: pBTC, pXRP and pLTC.
The aim is to streamline token movements between dApps. The pTokens are pegged 1:1 to the originals (so for example 1 pEOS = 1 EOS) and can support any blockchain asset.
This will allow liquidity to flow throughout the DeFi economy and the connection of non-interoperable blockchains.
At the base of the pTokens is Provable’s blockchain oracle technology, and just as each blockchain has its own individual encoding language, protocols and consensus algorithms, the new mechanism works like a kind of Google Translate for the code, connecting the Ethereum blockchain to the others, so that they can “understand” each other.
For those who want to learn more, here’s the technical documentation explaining the operation of this new technology.