Token

<p>Crypto, as an industry, has had an amazing journey of innovation, discoveries, as well as missteps, scandals, lessons learned, and new innovation.&nbsp; It finds itself seeking strong foundations in decentralization, independence, and chains that are masters of their own fate.&nbsp; At the same time, these chains must work closely together in order to develop an interlinked ecosystem where anyone can jump in and interact with all the different players.&nbsp; Users want a vast system of networks where they can cross through in a borderless way, exploring everything the crypto community has to offer.&nbsp; Some visualize this like a “Ready Player One” universe, where galaxies are independent and yet interconnected.&nbsp; This is a wonderful dream, and perhaps even a lofty goal, but we aren’t there yet.</p>
<p>So what’s the problem?&nbsp; Well, that’s complicated.&nbsp; The crypto ecosystem is very organic, with a variety of different chains launching and growing their own systems over the last ten, and especially five years.&nbsp; After the rise of Bitcoin, other chains saw the limitations of PoW and sought new ways of fast, scalable consensus.&nbsp; This led to an explosion of new platforms, new protocols, and new tokens.&nbsp; With the new tokens came the rise of exchanges, and we are still witnessing the evolution of both centralized and decentralized exchanges.&nbsp; Both have pros and cons, and both will likely continue to have a place in the industry.&nbsp; However, the complications begin to increase considerably when someone on one chain would like to interact with a user on another chain, and especially when they would like to trade tokens.&nbsp; Non-native token trading (trading a token that was not made on the chain you are using) should in theory be straightforward.&nbsp; Through some time of transaction, the tokens trade hands at an agreed upon rate.&nbsp; Sadly, there are a number of big problems that get in the way.&nbsp; Let’s dive into why, even after vast improvements in crypto trading, non-native token trading continues to be especially complicated, some of the key reasons why, and where there might be hope to simplify the process using a method called <a href="https://docs.clone.so/introduction-to-clone/what-are-cloned-assets" rel="noopener noreferrer nofollow">Cloned Assets</a>.</p>
<h2 id="non-native-asset-trading-options">Non-Native Asset Trading Options</h2>
<p>Before we start looking at the options, let’s first discuss why someone would choose to trade non-native assets in the first place.&nbsp; There are a number of very large chains, most notably Ethereum, that have many different token options.&nbsp; However, even these do not have all the lucrative or popular token options, and new platforms are releasing their tokens every day, presenting enormous possibilities across all chains.&nbsp; For most traders, the choice of their home chain shouldn’t matter in what they trade.&nbsp; If it’s crypto, they should be able to have access to it.&nbsp; In the spirit of the crypto community, this is reasonable and the chains and their platforms should automatically “play nice.”&nbsp; However, in practice this is much more difficult.&nbsp; There are issues of compatibility, of liquidity, and of custody.&nbsp; And the method for the transaction can be complicated by issues of security as well.&nbsp; While there are workable solutions, there have been other solutions that have proven very problematic, and people have lost money as a result.&nbsp; This is an important issue, and one that the entire crypto industry must get right if it will ever achieve mass adoption and a permanent place in the global financial market.</p>
<h3 id="non-lp-options-perpetual-contracts-and-cross-chain-swaps">Non-LP Options:&nbsp; Perpetual Contracts and Cross-Chain Swaps</h3>
<p>While the most promising scalable options require LP, there are two options that don’t.&nbsp; The most difficult of these are perpetual contracts, which are meant for advanced traders who are looking for high leverage trading.&nbsp; While a successful method, the UX involved is complex and not useful for the vast majority of traders.</p>
<p>Cross-chain swaps allow a trader on one chain to swap tokens with a trader on another chain.&nbsp; This can be useful for a wide range of users, but with a downside that it takes a direct P2P interaction with two wallets for the trade, and what can be significant fees for what should be a simple trade.&nbsp; As there are no LPs, it requires a strong UX that can connect the right traders who want to make a swap.</p>
<h3 id="bridged-assets">Bridged Assets</h3>
<p>A more scalable method that has seen some success is the bridged asset.&nbsp; However, they also have a large share of risks and disadvantages.&nbsp; For platforms working to create liquidity for non-native tokens, the liquidity has to either focus on a single bridge, or be distributed to reach bridges to various chains, which dilutes the ability to facilitate trades.&nbsp; Other risks of using bridges involve the bridges themselves.&nbsp; The industry has seen a troubling share of bridges collapse, which could ruin the value of the non-native token if the connection is severed.&nbsp; Bridges have also been a weak spot for hacking, and this problem has not been solved completely.&nbsp; The fragmentation of liquidity and risk of trading via bridges, not to mention at least moderate fees for doing so, have prevented bridged assets from taking over the non-native token trade.</p>
<h3 id="cloned-assets">Cloned Assets</h3>
<p>The latest evolution toward scalable, non-native token trading is likely the cloned asset.&nbsp; Developed by <a href="https://clone.so/" rel="noopener noreferrer nofollow">Clone Protocol</a>, the aim of this process is to prevent the risks and fragmentation of liquidity seen on bridging, while creating a structure that users can trade non-native tokens and hold them, long term if desired, in their own wallet.&nbsp; After the trade, the cloned token acts like a native token, reducing risk and increasing utility.&nbsp; Because the process is all performed on the protocol itself, fees are low.&nbsp; Further, with Clone launching on Solana, the speed and scalability are incredibly promising, with a reach to many other chains and a fast speed to new listings.&nbsp;</p>
<h2 id="what-comes-next">What Comes Next?</h2>
<p>Given the evolution of non-native token trading so far, the lessons learned, and new forms of trading such as cloned assets, it’s important to ask where the industry will head next.&nbsp; To be sure, the industry as a whole will be hard pressed to accept high cost, low utility, high complexity, and high risk options.&nbsp; With Clone launching its private mainnet on February 1st, we will have a new expectation for non-native token trading.&nbsp; New evolutions may follow, or we may witness a widespread scaling of this new standard.&nbsp; The good news is, the industry refuses to stand still and when there is a continuous demand for something like non-native token trading, the industry innovators will find a way.</p>
<p>Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.</p>

Why Is Non-Native Token Trading So Difficult?

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