A Beginner's Guide on Biconomy
Learn about Biconomy, the game-changing blockchain protocol that simplifies Web3 transactions, lowers gas fees, and boosts dApp usability. Discover now.
Biconomy is a blockchain that seeks to empower the decentralized applications (dApps) ecosystem. It was created to solve common issues plaguing the Web3 space, such as high gas fees, complex user experiences, complicated user onboarding, and lack of interoperability.
The Biconomy blockchain protocol has its own native token that trades with the ticker BICO. Similar to other cryptocurrencies, you can store and swap your BICO tokens using Trust Wallet. Trust Wallet is the simple-to-use, self-custody crypto wallet and gateway to Web3 for people who want to fully leverage the power of their digital assets while retaining complete control over their assets.
In this comprehensive beginner’s guide, we discuss what Biconomy is, how it works, its key features, and its real-world applications.
What is Biconomy?
Biconomy is a multi-chain relayer protocol designed to provide a plug-and-play solution for handling gas payments, transactions, and bridging functionalities for Web3 dApps.
Simply put, Biconomy is a blockchain project that seeks to simplify blockchain transactions and improve user experience while making decentralization accessible to everyone.
Using Biconomy, people can create customized transaction journeys and leverage smart contract wallets within a unified platform. On the other hand, developers are able to leverage Biconomy’s easy-to-use and powerful APIs/SDKs that allow them to build dApps that have a customized transaction journey.
Developers are able to build, and people are able to easily interact with dApps. In addition, Biconomy also seeks to grow the adoption of Web3 by making all its elements more interoperable, composable, and usable. By focusing on gas optimization and transaction management, the protocol is able to bring down gas fees by up to 40%.
Thus, the protocol helps to solve the common issues in the Web3 and blockchain sector, making it a much-needed solution. Besides, Biconomy also has the backing of well-established blockchain giants such as Binance and others.
Why Is Biconomy Needed?
Web3’s user experience isn’t at all the smoothest, which becomes a barrier to entry for newcomers looking to interact with blockchain and dApps.
Beginners want a plug-and-play solution that they can start using immediately. However, the current Web3 setup requires multiple steps before one can get started. Let’s assume you are a newcomer to the blockchain space and want to purchase a non-fungible token of your favorite celebrity. You’ll first need to create an account on a centralized exchange (CEX) such as Binance or others.
Next, you’ll need to verify your identity by completing a know-your-customer (KYC) process that can take anywhere between a few minutes to a few hours. Once the CEX verifies your identity, you will need to buy a crypto token such as ETH and set up a crypto wallet like the Trust Wallet Chrome extension, write down your recovery phrase, transfer your ETH to Trust Wallet, choose a Web3 dApp to sign up on, link your wallet, and proceed to interact with the dApp.
Given the complex process, the majority of people tend to drop off somewhere in that process. And that’s not all. Newbies are also expected to figure out gas fees, which vary according to the blockchain they use.
Interoperability is also another issue. While blockchain scaling solutions exist, they each have their own use cases. Ergo, without a practical interoperable solution, the Web3 ecosystem will have isolated ecosystems that will gravely reduce network composability and effects. Today, moving between different layers and side chains is not only complex, but it’s also expensive and slow.
These issues make it hard for newcomers to effortlessly interact with dApps, hindering mass adoption.
Biconomy aims to reduce the above barriers by enabling people to connect via gasless transactions. This means connecting to dApps without paying gas fees. In addition, people can also opt to buy gas using their preferred dApp or ERC-20 token. This entire process eliminates further blockchain intricacies like network switching, giving room for quick transfers.
But how exactly does Biconomy achieve this? By utilizing its three key features, which we’ll discuss next.
Key Features of Biconomy
Biconomy’s architecture is made up of three main products; meta transactions, gasless transactions, and transaction fee abstraction - that work together to help it solve the issues currently plaguing blockchain and Web3 dApps.
Biconomy achieves this via a technique known as meta-transactions (meta-txs). Here, the Biconomy relayer pays the required gas fees, which are then repaid to the dApp developer at month's end. Meta transactions, therefore, help to solve the gas fee issue.
The Biconomy relayer network consists of two elements - executors and validators. Executors operate the relayer nodes and are accountable for completing the different meta transactions on the relevant blockchain. Validators are responsible for securing the network by corroborating the transactions carried out by the executors.
Hyphen transactions, also known as cross-chain transfers, is a feature that helps Biconomy to allow for fast and inexpensive token transfers across different blockchains. This solution helps Biconomy solve the interoperability issue facing blockchain and Web3 dApps. It does this by leveraging Biconomy’s pool of executors and validators.
Biconomy uses Hyphen to get rid of fund transfers between Layer 2 and Layer 1 blockchains. Each chain has its own liquidity pool that earns a certain amount of the transfer fee for providing liquidity for cross-chain transactions. Moreover, the protocol carries out regular rebalancing whenever there’s less liquidity on a specific chain as a way of boosting capital efficiency. As a result, token transfers end up becoming more affordable and instant while still maintaining the tokens’ liquidity on both ends of the chains.
Additionally, the use of Hyphen allows apps to read and write to each other within the chains (composability) and to exchange data across different chains (cross-chain interoperability). Based on its utilization, Hyphen can result in improved user experience as it allows for faster onboarding. It can also lead to a flourishing multi-chain ecosystem that is presumed to be the future of blockchains.
Transaction Fee Abstraction
Transaction fee abstraction is a feature (also referred to as Forward) that solves the issue of gas fee payment using only the specific dApp network’s native token. Leveraging Forward, people are able to pay for their transaction fees using any ERC-20 tokens. By doing this, Biconomy helps to solve the poor user experience that people face of having to pay for gas using only the native token.
Decentralized finance (DeFi) applications can benefit from this as not every person has the funds to pay for their gas fees in ETH.
How exactly does Forward work? Biconomy relayers take care of the gas fees in ETH in the backend by paying optimal gas fees for every transaction and ensuring that the transactions don’t get stuck.
In case of network congestion, relayers are able to automatically detect the same and slowly bump up the gas costs so that people don't suffer through stuck transactions thus eliminating a poor user experience.
How Does Biconomy Work?
Biconomy’s solutions are designed to help developers leverage ready-to-use APIs and SDKs to develop decentralized applications in a hassle-free manner.
Using meta transactions, developers are able to sponsor gas fees for their dApp users on the backend, allowing them to enjoy a ‘gasless’ front-end experience. This means that people can use their dApps effortlessly without worrying about bridging or gas fees. As a result, developers can expect increased adoption of their dApps.
Biconomy’s cross-chain capabilities also work to ensure the interoperability across chains. While developers have been focused on creating scaling solutions for Ethereum, in hindsight, the solutions created are fragmented. There isn’t a single platform that can provide a seamless token transfer experience.
Using Hyphen, developers are able to build dApps that allow users to pay for gas fees using any ERC-20 token without switching networks. This serves to bridge the gap that requires people to use only the network's native token.
Thus, in a typical blockchain transaction, Biconomy ensures people can carry out gasless transactions across multiple chains without the need to change networks and pay, depending on the transaction, gas fees using any ERC-20 token instead of the native token.
Moreover, Biconomy’s native token, BICO, is also a utility and governance token. BICO serves various purposes such as incentivizing all Biconomy stakeholders, decentralizing the Biconomy network, and taking part in the network’s governance. BICO holders, as part of governance, can vote on various decisions associated with the protocol standards as well as treasury fund allotment.
Real-world Applications and Use Cases
There are blockchain projects that have incorporated Biconomy to help improve the user experience.
For instance, Mexa - Biconomy’s SDK, easily integrates into dApps. One such dApp that has integrated Mexa is CurveFi. CurveFi is a decentralized exchange (DEX) similar to Uniswap that utilizes Biconomy to carry out Meta transactions to process gasless Bitcoin (BTC) deposits.
Another example is Decentral Games, a play-to-earn (P2E) metaverse game. The game utilizes the Biconomy protocol on the Polygon network to offer gamers a smooth gaming experience by providing gasless transactions. In addition, the game also allows players to pay for gas fees using DAI or Matic Mana instead of the Matic tokens.
dApps that are using Biconomy are better positioning themselves to people as the go-to apps as they eliminate the barriers to entry for newcomers into the blockchain and Web3 space.
As an emerging blockchain venture, Biconomy’s features help to make it a much-needed solution to the challenges faced by Web3 dApps. Besides helping to eradicate user churn rate, its utilization also helps to enhance user engagement. For one, it’s a plug-and-play solution that developers can use in a matter of minutes for their dApps.
The three key features, Meta transactions, Hyphen, and Forward products also work hand in hand to ensure the end-user enjoys a seamless and fast onboarding process that doesn’t require switching networks. By eliminating the barrier to entry for most newbies, developers can enjoy increased adoption of the decentralized applications and eliminate friction for both parties.
Moreover, Biconomy is backed by top-notch investors such as Bain Capital, Binance, Coinbase Ventures, and Mechanism Capital, among others. It also has a sound founding team, which adds credibility. Given how gas-efficient it is, Biconomy is becoming a go-to protocol for most developers.
Should you choose to interact with BICO tokens, remember that you can store and swap them and 10+ million other digital assets using Trust Wallet. Besides storing and managing your BICO tokens, Trust Wallet allows you to explore and experience Web3 dApps in a secure manner thanks to the Trust Wallet Security Scanner. And while at it, always remember to do your own research (DYOR) in case you choose to buy BICO tokens.
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Note: Any cited numbers, figures, or illustrations are reported at the time of writing, and are subject to change.