Cross-chain swaps are getting a boost with the latest version of Squid, launched today.
Squid 2.0 introduces a new architecture that eliminates chains to simplify even complex multi-hop transaction flows.
The update includes performance and cost improvements and expands the functionality of Squid 2.0 into new areas such as 1:1 stablecoin transfers, real-world asset (RWA) transactions and advanced routing.
This new approach goes far beyond finding the most efficient bridge routes, according to Fig, the co-founder of Squid.
“We are a bridge tool in a sense, but we think we can change the way swaps happen as well,” Fig told Blockworks.
Read more: Squid enables one-click cross-chain swaps on Cosmos
A key innovation in Squid 2.0 is its graph-based architecture, which enables intelligent routing through more than 110 liquidity sources across 77 chains. This ensures that swaps are executed via the most efficient paths, reducing costs and increasing execution speed.
“In Squid v1 it was a very simple routing algorithm: we always exchanged via wETH to USDC, and then bridged and exchanged on the other side. But with Squid v2 we have significantly improved the infrastructure.”
Squid’s new algorithm compares the liquidity of multiple dexes and liquidity pools and automatically chooses the most cost-effective route. This feature enables swaps of less than 20 seconds – a feature called Squid Boost – delivering real-time quotes in less than half a second, the team says.
“There is so much variation in the cross-chain that we needed to build a system that could adapt to all the changes in liquidity and new technology, instantly and without having to do anything manually on our part,” explains Fig. .
Competition in the cross-chain space is increasing. This week, Osmosis debuted its newest product. Polaris, a cross-chain token portal, collects DEXs and uses the Inter-Blockchain Communication (IBC) protocol.
Osmosis co-founder Sunny Aggarwal pitched Polaris as an attempt to address what he calls “the Great Chain Divide.”
“Liquidity is fragmented and sticky in the origin chain, driven by both inertia and incentives (everyone is trying to build their own internal DeFi ecosystems!),” Aggarwal wrote on X.
Squid similarly integrates the liquidity of Osmosis, Astroport and other dex, not only in Cosmos but across multiple Ethereum layer-2s, Bitcoin (via the Chainflip cross-chain dex) and soon Solana.
ZeroDev also demonstrated a Magic Account, which showcased wallet abstraction with a user-centric design, including social login with passkeys and gasless transactions.
Read more: Vitalik mobilizes support for temporary smart wallets on Ethereum
Squid also advocates a token-first approach that allows users to seamlessly interact with their digital assets regardless of which chain they are on. For example, a user can see an aggregated USDC balance across chains and have Squid automatically choose the most cost-efficient way to complete a transaction, such as exchanging a memecoin.
The interface will also address the problem of multiple packaged versions of stablecoins spreading due to cross-chain bridging, according to Fig. This solves a major UX pain point.
“We work directly with stablecoin providers, and then they will use Axelar [Interchain Token Service]or even if they don’t use it, we can exchange the stablecoin on the other side,” he said.
This level of chain abstraction is an important milestone in creating a completely non-protective, multichain environment.
“We can move to a world where you never see the chain,” said Fig. “We can move this ‘Coinbase experience’ – which is really what 99% of the world’s cryptocurrencies use – into a fully self-governed environment that also includes decentralized liquidity.”