Catalyst Wants To Be the Last Bridge Ever Needed

Cata Labs, the company behind universal liquidity protocol Catalyst, said it has secured $4.2 million in its latest fundraise to bring liquidity to layer-1 blockchains.

Investors that participated in the round include Spartan Group, Maven 11, Robot Ventures, Alchemy Ventures, Circle Ventures, Polygon Ventures and Hashkey.

Catalyst has been in stealth mode for the past six months, Cata Labs founder Jim Chang told Blockworks.

“We’re seeing all this chatter around new chains launching using rollups as a service…but no one’s actually thinking about how do you connect these rollups together…how do you maintain the composability and the connectivity that makes a shared blockchain super powerful,” Chang said.

Catalyst is designed to combat the problem of fragmented liquidity between different rollups and app chains by using “unit of liquidity” value abstraction. 

The protocol has teamed up with Polymer Labs, an inter-blockchain communication (IBC) transport hub to enable cross-chain communications, though these plans could change as it expands beyond Cosmos.

“Catalyst is a bridge, you’re moving tokens, you’re moving value, and you’re communicating how to move that value using [a] general message,” Chang said. “So in Cosmos, [we are] essentially passing IBC messages between these Cosmos app chains, and when we expand beyond Cosmos, we are flexible enough to use something like Axelar or Layer Zero.”

At a high level, Chang explains that Catalyst can facilitate cross-chain swaps in the following way:

1. A user deposits assets into Catalyst on an origin chain.
2. Catalyst calculates “units of liquidity” from the deposited assets.
3. A message that identifies “units of liquidity” is sent from the origin chain to a destination chain through an interoperability protocol (in this case Polymer Labs) and its relayer ecosystem (IBC).
4. Catalyst on the destination chain identifies how many assets to withdraw from a vault and sends funds to the user based on the message received from the origin chain.
5. The user receives assets in their wallet.
6. Liquidity providers who contributed to the pool used in the transaction are rewarded with fees. 

Catalyst is still very much in its early days and plans to launch its mainnet at the end of this year, Chang notes.

“It’s not going to be safe enough for anyone to launch, so we’ll have to have parameters, but the vision is in the next two years, the protocol will be safe enough so that no one can really abuse it if they launch it in some weird way,” he said.

Catalyst intends to funnel its latest funding towards auditing the protocol’s code and expanding its team.

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