Biconomy: The Stripe of Web3 — A DeepDive
A Complete deep-dive into the problem Biconomy is solving, its various products: Hyphen, Forward, Mexa, use-cases, and much more!
The vision of today’s project, we are going to deep-dive is simple! Become “Stripe for Web3”. But wait, why stripe?
Back in 2010, when the internet and e-commerce started growing, everyone faced the problem of navigating through various payment options, sorting out the payment flow, and then integrating them into their websites. And as always, payments are a critical piece to make any business happen. This all led to high entry barriers to starting a digital business.
Stripe solved that by enabling anyone to start their business and start accepting payments via Stripe, instantly. For the end-users, it solved the big problem of user experience by making payments completely seamless. It is now a $100 Billion company!
Similar to how Stripe’s mission is to “increase the GDP of the internet”, Biconomy’s mission is to expand the global crypto economy.
Web3 payments are very much broken with too complex UX. Every time a user of web3 has to do any transaction, they have to navigate the volatile nature of tokens & gas fees, blockchain networks. All this leads to poor mass adoption in Web3. Biconomy wants to solve that.
We will first explore the problems in detail and then discuss how Biconomy is solving them. Let’s go🚀
Web3: The Complexity Problem
We all know, Web3 is noble but let’s face it, Web3’s user experience is pathetic. Let’s say someone wants to buy an NFT of their favorite celebrity. First of all, a user has to create an account in a Centralised Exchange (like Binance) → complete KYC → transfer USD or INR (fiat) → buy volatile ETH or SOL → set up a Metamask or Phantom wallet → write your seed on a piece of paper → transfer ETH or SOL to wallet → find Web3 DApps to sign up on and link your wallet and so on. Phew😪
Personally, I had given many times in this process early on and didn’t end up buying an NFT. So, expect atleast 90% of potential users to drop in this process. Further, we also expect first-time users to correctly predict and pay gas fees and wait till the transaction is validated. To put things into perspective, imagine you paying Netflix a fee, every time you watch a video🙄 We need a Web2-like experience with the benefits of Web3.
Let’s explore some UX challenges in Web3 in a more detailed manner:-
1. Gas Fees:
The world would be great with no gas fees right? Many projects like Matcha are already doing it via Meta transactions, but building a gasless solution from scratch is difficult. It would require significant time and developer resources to get it done. Further, an early-stage project would rather focus on its core product. Imagine an early-stage Web2 startup needing to set up their physical servers, instead of using AWS — no way, right? Platform-as-a-service is the need of the hour in Web3!
2. Interoperability
Layer 1s, sidechains, and Layer-2 scaling solutions are already experiencing huge growth. While Ethereum may remain the largest ecosystem, different scaling solutions and blockchains will co-exist as each one of them will have its own use cases. However, without a viable interoperable solution, we will have clusters of booming but isolated ecosystems severely reducing network effects and composability. Currently, moving between the Layer-1 base layer & various Layer-2s, sidechains, & other scaling options is slow, expensive & complicated.
With more people accessing Web3 on several chains on a daily basis, effective cross-chain bridges are becoming increasingly important. The cross-chain bridge is simple, it enables you to transfer tokenized assets from one chain to another. The DApps and users should be able to communicate efficiently and in real-time throughout the entire multi-chain web.
3. User Experience and Onboarding
As explained earlier, a user has to go through multiple steps to load tokens in their wallet, and not just that, they have to pay gas fees for each transaction. Another major issue is, that all Layer-1 blockchains like Ethereum or Solana require them to pay gas fees in their native tokens like ETH or SOL, and not everyone might be having them in their wallet. The expensive and high volatile nature of these tokens further adds to the poor User Experience. Let’s not forget, that stuck transactions can simply scare the shit out of a Web2 user.
All this user experience needs to be solved, but for a developer building, all this can be a daunting task as he would need to build gas optimization techniques, manage lots of tokens, and so on. It’s definitely a costly thing.
Someone needs to solve for all this, but who?
Enter Biconomy: The Stripe of Web3
Biconomy is the multichain transaction infrastructure for next-generation Web 3.0 applications. Biconomy simplifies blockchain transactions for developers to build on and end-users to interact with. They have their own decentralized network of nodes/relayers — Biconomy Network. Biconomy’s architecture allows users to connect without paying gas via gasless transactions, and purchase gas in their preferred ERC20 or DApp token. It also eliminates additional blockchain complexity, such as network switching, and allows consumers to benefit from quick transfers.
Biconomy’s relayer infrastructure is a simple Plug and Play for developers. The SDK is extensively used by a diverse range of DApps across DeFi, gaming, social media, and blockchain wallets to improve the User Experience. Biconomy’s tools allow developers to integrate a wrapper around transactions and use Biconomy’s relayer infrastructure to provide quick and gas-optimized transactions to the end-user.
Don’t worry, if you haven’t understood much above🙄, let’s dig deeper into each product below👇
There are three main products of Biconomy — Mexa, Forward, Hyphen, each one of them solving challenges like onboarding/UX, gas fees, and interoperability respectively.
1. Mexa — Enabling Gasless Transactions
Through Mexa, you can use either EIP 2771 Standard Implementation or Custom Implementation, to allow gasless transactions in your decentralized applications.
Biconomy does this through a technique called meta-transactions (meta-txs). In this case, Biconomy relayers pay the gas fees which then are paid back by the Dapp developer at the end of the month. Two important components of the Biconomy relayer network are Executors and Validators.
- Executors run the relayer nodes and they will be responsible for executing the meta transactions on the respective blockchain
- Validators help secure the network by verifying the executor’s transactions.
Biconomy’s SDK (Mexa) is a javascript-based implementation that can be easily integrated into a DApp. Here are a few of the DApps integrated:
- Curve Fi: A Decentralised Exchange like Uniswap, is using Biconomy to do Meta transactions to do gasless BTC deposits.
- Decentral Games: A play-to-earn game in the metaverse, is using Biconomy on Matic Network to provide a seamless gaming experience to its users by providing gas-less transactions on Matic Network.
2. Hyphen — Interoperability (Cross-Chain Transfers)
Hyphen allows for faster and less expensive token transfers between different blockchains. It particularly eliminates the problem of transferring funds from Layer 2 to Layer 1 blockchains. The Hyphen product of Biconomy makes the transfers instant and cheaper (gas-efficient) while also maintaining the liquidity of the tokens on both ends of the chains. With this product, it gives:
- Cross-chain interoperability: A way to exchange data across chains.
- Composability: Allowing apps within the chains to read and write state to each other.
The Hyphen will also lead to superior user experience by allowing for faster onboarding and exit from Ethereum Layer-2s. All of this will eventually lead to a thriving multi-chain ecosystem which, many believe is the future of blockchains.
How does Hyphen make it possible?
Just like any protocol, Hyphen leverages the Biconomy network of validators and executors. Each chain has a liquidity pool that earns a portion of the transfer fee for supplying liquidity to the cross-chain transfer. Biconomy performs periodic rebalancing anytime there is less liquidity on a particular chain in order to improve capital efficiency.
The same transfer can also be performed via Polygon POS bridge, but it’s costly. For instance, if someone had to transfer 200 USDT from the Polygon blockchain to the Ethereum blockchain, the total cost to bridge 200 USDT would be ~$15 on the Hyphen bridge compared to ~$30 on the Polygon.
3. Forward — User Experience
Remember, we had discussed that one of the poor user experiences was the only option to pay gas in their native tokens. Biconomy solves even for that with their product — Forward. Forward allows users to pay transaction fees with any ERC-20 tokens, a feature not available on the Ethereum blockchain. For DApps like DeFi, this is a huge problem as not all users may have the funds to cover the gas in ETH and with a huge volume of transactions, maintaining is a huge challenge. Forward supports Dai, USDC & USDT with plans to incorporate other tokens in the future.
How exactly does Forward solve this?
Biconomy relayers handle the ETH gas fees in the backend. They pay optimal gas fees for each transaction and make sure that they are never stuck. Let’s say, if there is a moment of congestion, relayers automatically detect this and gradually bump up the gas fees. By doing this, they make sure that a user doesn’t have to suffer through a poor user experience of stuck transactions.
Some of the use-cases it solves are:
- DeFi protocols can improve their user experience by allowing their end-users to do everything without having to own ETH and pay using stablecoins like DAI, USDT, USDC, etc
- DApps like gaming applications can onboard new users in seconds by giving a sign-up bonus of their own tokens. Users can start interacting by paying gas using these tokens.
For instance, Decentral Games is using Forward to let end-users pay gas fees in coins like Matic Mana or DAI to play games and not the Matic tokens.
Another interesting feature, I personally liked was of Gas Tank: It basically enables DApps to monitor how much gas fee their users are consuming and can fill in their gas tanks accordingly.
The Biconomy Token: $BICO
The native token, BICO serves as governance as well as a Utility token. It plays a significant role in decentralizing the network by acting as the network fees, incentivizing all stakeholders to protect and maintain the network, and participating in the network’s governance.
Token holders can vote on decisions related to protocol standards and treasury fund allocation as part of governance. BICO will be staked by the decentralized relayer nodes to facilitate transactions and receive fees. It is yet to announce staking, so just wait for the announcement.
Network activity will accrue value to the BICO token and vice versa.
The token is listed on major exchanges like Coinbase, Binance, FTX, and others.
Biconomy’s Partnership & Community
They have a strong community — BICO token listed earlier this December and are trading at a solid market cap of $300M. Some stats for their community: Discord channel has 110k+ members, Telegram has 21K+ and 60k+ Twitter followers. The foundations for Biconomy’s DAO have already been led and it’s expected to launch in 2022. DAOs will involve a wide range of new stakeholders including validators, market makers, developers with new cases, and more, which will drive further interaction, engagement, and growth of the protocol itself.
The Biconomy Ecosystem is rapidly growing with 6+ Mainnet integrations and 8+ Testnet integrations. With their range of products, they are already helping 90+ projects with user experience and it’s rapidly expanding. You can check all of their partners here.
The Biconomy has also grown rapidly in 2021 with just 7K wallet addresses to 500K+ wallet addresses currently (Half Million users, FTW🔥) and it’s expected to cross at least 10 M+ in 2022.
Another important factor for their success is, they are backed by stellar investors like Binance, Coinbase Ventures, Bain Capital, Mechanism Capital and many more reputed investors. The founding team is also very solid which makes it a very impressive project to lookout.
Conclusion: Biconomy to the Moon🚀
Overall, Biconomy reduces user churn and significantly enhances engagement. It is a pick-and-shovel business, which enables developers to create user-friendly decentralized applications, just by integrating a few lines of code. This removal of friction on both sides (user and developer) makes DApps accessible to the masses and expands the market manifold as Adoption comes with Simplicity.
It’s just a beginning and we are yet to see a lot of feature releases in all their products, mainnet launch, chain integrations like Solana, Fantom, Arbitrum and the most exciting, the Biconomy DAO would also be officially launched in 2022.
Do you believe, Biconomy will become “Stripe for Web3”?
That’s all folks. Hope you enjoyed learning about this incredible project. DM me on Twitter (@yashhsm), for discussing anything Web3.
References:
- https://blog.woodstockfund.com/2021/12/22/biconomy-investment-thesis/
- https://biconomy.notion.site/biconomy/Biconomy-Litepaper-V-1-2-d6365c50ac454ba6bd4874f36a0ebdca
- https://docs.biconomy.io/
- https://blog.coinlist.co/a-deep-dive-into-biconomy-a-multichain-relayer-protocol-for-a-simple-web-3-0-transaction-experience//
- https://medium.com/biconomy/2021-biconomyrewind-5f1997f794b3
