Elk.Finance Review

What is Elk.Finance?

Elk.Finance is an experimental DeFi project that describes itself as a decentralized network for cross-chain liquidity. It operates as a multi-chain gateway aiming to connect all existing blockchains and layer-two solutions, in order to enable users to swap tokens across a variety of networks in a quick and low-cost way.

Elk.Finance launched its protocol in March 2021 but the development is ongoing. The platform was initially built on Avalanche. Later, the protocol added support for 16 additional networks including Polygon, Fantom, HECO, Gnosis Chain, and BNB. Moreover, Elk.Finance promises to expand on even more chains in the future.

The pseudonymous creators of Elk.Finance promise users free token transfers, impermanent loss protection, and other benefits. However, observers point out the overly sophisticated nature of the platform whose cross-chain bridge has not even been audited yet.

How does Elk.Finance work?

Although it may seem like yet another bridging solution, Elk.Finance has a more complicated architecture than that. It operates via a multi-chain network of DEXes that enables users to swap assets across many blockchains in and out of the platform’s native ELK token using it as an intermediary for value transfer. For liquidity providers and yield farmers, there are ELK-sustained pools and farms on each chain’s ElkDex, offering lucrative APRs.

This network of Elk.Finance’s DEXes is powered and secured by the ElkNet mainnet. The only difference is that all these DEXes are dedicated to the ELK token, where it is trading against selected native assets on each chain. Also, Elk.Finance app users may deposit their tokens to one of the yield farms and pools that offer high APRs.

As the lightpaper of Elk.Finance explained, ElkNet is meant to be secured by validators who hold Elk.Finance's utility Moose NFT and stake a certain amount of its native ELK token. Only Moose holders are able to validate transfers across Elk mainnet receiving small amounts of ELK for this service.

The cross-chain operability is guaranteed by the Elk Multi Bridge module. Unlike other bridges that freeze the funds on one chain in order to release corresponding value on the destination network, Elk.Finance doesn't need to hold lots of liquidity on each connected network. Instead, it uses its native token presented on each chain as a medium of value transfer. 

Another honeypot for Elk.Finance users is the announced Impermanent Loss Protection (ILP) feature, tailored for the platform's liquidity providers. It resembles a solution of Bancor Network, where the ILP coverage size depends on the length of pooling. On Elk, full coverage is achieved over a 42-days span, with each day of providing liquidity bringing 2.5% of impermanent loss coverage.

How to use Elk.Finance?

At the start, Elk.Finance app allows users to connect their Metamask, Wallet Connect or Coinbase Wallet. 

For curious users, there’s a helpful dashboard allowing them to watch the activity across ElkNet 

In order to swap native AVAX for native FTM, for example, users need to sell their AVAX for ELK on Avalanche and use their ELK to buy tokens on the Fantom network. For each such swap, the bridge burns a corresponding amount of ELK on one chain in order to mint the equivalent amount on another.

The ELK token

ELK is a native ERC-20 standard utility token on Elk.Finance. It has a total supply of 42,424,242. Elk founders' passion for magic number 42 reflects further, given that an initial allocation of ELK on each chain is 4,242,242 ELK. In the future, ELK tokens will also be used for governance.

ELK token is meant to be broadly distributed with 20 million tokens allocated in the community fund, yield farming incentives, and insurance fund for impermanent loss protection, each receiving 10 million tokens. The team has 2 million tokens and 424K ELK were used for airdrops.

The platform also features MOOSE NFT which is its native non-fungible utility token. Each token is unique and has some special abilities - each token gains experience over time while its holder is subjected to ELK airdrops. Holding MOOSE NFTs is also required for users wishing to become validators on ElkNet.

Is Elk Finance safe?

All four core Elk Finance team members have chosen to stay anonymous, but some of them are active on Twitter. They describe themselves as a ‘club of geeks’ with a wide-range experience and technical roots, expertise in Javascript, Solidity, and so forth. 

Elk.Finance's founder is a systems architect known as Ba'al. The core team is also onboarded by the lead developer, Howitzer, who is a Javascript and Solidity expert, a DevOps developer named Bob, and the product manager named Elktra.

Elk Finance audits can be found in the protocol dashboard on this webpage.

Partners 

Elk.Finance is expanding its ecosystem with each new chain, partnering with similarly prominent and brand new DeFi projects on each network. The main partner of Elk.Finance on Avalanche is Yield Yak, the largest autocompounder that supports several strategies for Elk farms. There are other partnerships on different networks like Kanaloa Network on BSC or Autofarm Network on Cronos.

What's next?

The project develops in accordance with its roadmap. In Q1 2022, Elk.Finance plans to launch on Ethereum and Arbitrum after upgrading its main network. According to Elk.Finance’s roadmap, the protocol is going to expand on other networks in the near future. Ethereum is named as the next chain to be supported by the protocol.

Another big step for the project is expected to be the launch of its announced stablecoin CHFT that will be mainly used for value transfer across different networks. This cross-chain stablecoin is claimed to be the first of its kind with a gyroscopic design, but no further explanations have been given.

Links

https://docs.elk.finance/litepaper

Author:

Kate Stormina

Last updated: Aug 15, 2023