Read the cross-chain lending infrastructure in one article Soul Protocol | CryptoSeed

Author: Scof, ChainCatcher

Edited by: TB, ChainCatcher

What is Soul Protocol?

Soul Protocol is a cross-chain lending protocol with the goal of breaking through the gap between existing DeFi lending protocols and different public chains, and helping users more flexibly lending assets between multiple chains and protocols. Users can use mainstream lending protocols such as Aave, Compound, Venus, etc. to cross-chain lending operations on multiple chains such as Ethereum, Arbitrum, Optimism, and Avalanche.

The characteristic of Soul is that it does not rely on asset bridging or issuing synthetic assets, but allows users to borrow directly using native assets through cross-chain communication protocols such as LayerZero. This design reduces the risks and costs of users when transferring assets between different chains, while improving asset liquidity and efficiency.

At present, Soul is still in the beta stage and is open to users for functional testing, feedback and experience.

How does Soul break the loan barrier?

There are several common problems in the DeFi lending market:

1. Decentralized lending agreements

Most existing lending agreements only support a single public chain. If users want to lend between protocols on different chains, they often need to manually switch chains and bridge assets, which is a cumbersome process.

2. Cross-chain lending costs are high and slow

Traditional cross-chain lending usually requires bridged assets, which not only adds additional operational steps, but also brings risks in terms of expenses and asset security. The bridging process itself is not efficient enough to meet the needs of arbitrage or flexible lending.

3. Limited lending capacity

Since assets and lending capabilities are scattered in different chains and protocols, users often cannot integrate all their assets for lending, resulting in reduced capital utilization efficiency.

Soul Protocol attempts to solve the above problems through a unified cross-chain lending infrastructure:

• Users can deposit assets on any supported chain and borrow on other chains or protocols without bridging assets.
• It can automatically match interest rates on different protocols and on-chain, helping users find lower lending rates or higher deposit returns.
• During the lending process, users' assets and mortgage capabilities are no longer limited to a single chain and agreement, thereby improving overall funding efficiency.
• Support cross-chain arbitrage, leverage and other strategies, without the need for tedious asset movement.

During the entire process, users only need to operate in the Soul interface, and the underlying layer is cross-chain communication protocols such as LayerZero to achieve asset and data synchronization. To enhance the robustness of the system, Soul also connects Wormhole, Axelar, and Chainlink CCIP as backup channels to prevent communication interruption.

Team background and current progress

Soul Protocol was developed by Soul Labs, and the team founder Ahmed S once developed Hatom. The project has maintained a low-key development in the past year. At this stage, the test network has been launched to support mainstream chains and lending agreements, and to open up testing and feedback to the outside world.

Soul Protocol’s operations adopt a community engagement and testing incentive model. During the test network stage, users can obtain points (Seeds) by using dApp and completing designated tasks. These points will be redeemed as Soul's native token $SO when it is released on the mainnet.

At present, the project has not disclosed external financing information, but is promoting testing and product optimization through community participation. Users can help discover problems, make suggestions, and receive corresponding rewards by participating in the test.

(This article is for reference only and does not constitute investment advice)