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The Spoke Model in Cross Chain Borrow Lend Applications

Introduction to the Spoke Model in DeFi

🚀 Ever scratched your head wondering how to get different blockchains to work together like a dream team? 🤔 Say hello to the Spoke model! 🎉 It’s the ultimate connector, linking various blockchains to a central hub like a pro. We’re diving deep into how this model is a game-changer, especially when it comes to borrowing and lending across different blockchains. 🏊‍♂️

🎡 What’s the Deal with the Spoke? 🎡

Picture your city’s public transit system. 🚇 The hub is the Grand Central Station, and the spokes? They’re like the subway lines or bus routes that connect various neighborhoods to this bustling hub. 🚌 In the DeFi universe, the hub is the command center, the place where all the magic happens. 🎩✨ The spokes, on the other hand, could be different apps, smart contracts, or even entire blockchains. 🌐 They have their own tasks but also need to check in with the hub for specific info or actions. 📞

So, in a nutshell, the spokes are like the hub’s BFFs. They do their own thing but also love to gossip with the hub to make sure everything’s running smoothly. 🤝

🛠️ How Does the Spoke Model Actually Work? 🛠️

  1. First Things First: Setting Up the Spoke 🛠️: Before we get the ball rolling, we need to introduce our spokes to the hub. 🤝 Think of it as adding a new friend on social media; you “register” or “add” the spoke contracts to the hub. 📲 This way, the hub knows what’s up whenever there’s activity on a spoke, like when you deposit assets. 🏦 For now, only the hub’s owner has the VIP pass to add new spokes. 🛂 But hey, this could change! We might see more community votes deciding which new spokes to add in the future. 🗳️

  2. Time to Load Up: Depositing Collateral 💰: Got some crypto burning a hole in your digital wallet? 🔥 You can deposit assets like Ethereum into the main hub. 🏦 Why? So you can borrow other cool assets from different blockchains, like Solana! 🌐 The hub is your go-to manager for these transactions, keeping tabs on who’s depositing what. 📊.

  3. Let’s Make a Deal: Borrowing and Repayment 💸: Once your assets are deposited in the hub, you can start borrowing from different blockchains. 🌉 Need to borrow some Solana tokens? Go ahead! 🎉 Just remember, you’ll need to pay back what you borrowed, just like any loan. 🔄 The hub keeps track of all this, making sure everyone plays fair. 🤗

🎯 The Point-to-Point Model: Not as Simple as It Looks 🎯

So, you’ve heard of the point-to-point model, right? 🤔 It sounds straightforward—just connect one blockchain to another, like a direct phone call. 📞 But hold on, it’s not all sunshine and rainbows! 🌦️

  1. 📈 The Rollercoaster of Interest Rates: 📈

    Here’s the thing: interest rates in this model are like the weather—always changing! 🌦️ When people deposit or withdraw assets, interest rates can go up and down like a yo-yo. 🪀 This can get messy, especially when you’re trying to keep everything in sync across different blockchains. 🌐

  2. 📬 The Message Delay Dilemma: 📬 And let’s not forget about messages that need to be processed, like Wormhole’s VAAs (Verifiable Action Assertions). 💌 If these messages don’t get processed ASAP, it’s like missing an important email—it can throw everything off balance! ⚖️

So, while the point-to-point model might seem like the easy route, it’s got its own set of hiccups to watch out for. 🚧

🌟 Why a Centralized System is the Real MVP 🌟

So, we’ve talked about the point-to-point model and its challenges, right? 🤔 Well, there’s another way to do things that’s like a breath of fresh air! 🌬️

Rather than just sending accounting messages between blockchains, it’s often more efficient to use a system where tokens are “wrapped” or “packaged” between the depositing and withdrawing chains. In this setup, all borrowing and lending activities are channeled through one primary hub chain. This hub maintains a record of all transactions, ensuring a streamlined and efficient process for all connected blockchains.

Now that we’ve explored the spoke model in detail, in our next discussion, we’ll implement the spoke model through smart contracts.