Introduction
Yellow Clearing Network is a Layer-3 decentralized protocol that addresses liquidity fragmentation through state channel technology. Its innovative approach mirrors the role of traditional financial clearing houses while leveraging decentralized smart contracts. The protocol introduces advanced off-chain trading and settlement mechanisms, aiming to optimize cross-chain liquidity and enhance transaction efficiency.
Innovation
Yellow Clearing Network showcases significant innovation by applying state channel technology to decentralized finance (DeFi). Key features include:
- State Channels enable real-time cross-chain trading by reducing reliance on brokers for asset bridging. Off-chain transaction aggregation minimizes on-chain congestion while maintaining high throughput.
- Aggregated Orderbooks: The protocol’s orderbook aggregation mechanism connects multiple exchanges to share liquidity instantly, addressing the persistent issue of fragmented liquidity in decentralized exchanges (DEXs).
- Non-Custodial Infrastructure: By securing assets through multi-sig smart contracts, Yellow ensures users retain control over their funds.
Architecture
The network’s architecture is robust and forward-thinking, integrating key components to facilitate efficient cross-chain trading:
- Cross-Chain Compatibility: Supports multiple blockchains (e.g., Ethereum, Polygon, Binance Smart Chain) and plans future integration with Solana, Bitcoin, and Polkadot.
- Electronic Communication Network (ECN): Automates order matching for geographically dispersed participants, enhancing market efficiency without intermediaries.
- Smart Clearing Protocol: Functions as a decentralized clearing house, periodically settling off-chain liabilities on-chain for enhanced scalability.
Code Quality
The development team’s active engagement ensures high code quality:
- Regular updates and commits indicate an iterative, agile development process.
- Emphasis on security, particularly in multi-sig smart contracts and integration with custody providers like Gnosis Safe and Fireblocks.
Product Roadmap
Key milestones include:
- Mainnet Launch: Scheduled for Q2 2025.
- Expansion of Supported Networks: Plans to integrate additional blockchains (e.g., Solana, Bitcoin, Polkadot).
- Custody Solutions Integration: Upcoming support for Qredo and Cobo.
The roadmap’s focus aligns with the protocol’s long-term goals but lacks interim deliverables for early user engagement.
Usability
While the protocol introduces advanced mechanisms, usability challenges exist:
- Complex Broker Integration: Brokers must adapt to new workflows, which could hinder adoption.
- End-User Familiarity: Non-custodial models and state channel technology may pose a learning curve for retail users.
Team
The core team includes:
- Five developers, including one senior developer.
- Proven expertise in DeFi and blockchain development.
Conclusion
Yellow Clearing Network is an ambitious Layer-3 protocol that redefines decentralized trading by addressing liquidity fragmentation and scaling challenges. Combining state channels, aggregated order books and cross-chain compatibility offers a decentralized clearing infrastructure with significant potential for DeFi evolution. However, the protocol’s complexity and usability barriers must be addressed to ensure widespread adoption.
| Initial Screening | |||
| Keep researching | |||
| Does this project need to use blockchain technology? | Yes | ||
| Can this project be realized? | Yes | ||
| Is there a viable use case for this project? | Yes | ||
| Is the project protected from commonly known attacks? | Yes | ||
| Are there no careless errors in the whitepaper? | Yes | ||
| Project Technology Score | |||
| Description | Scorecard | ||
| Innovation (Out Of 11) | 9 | ||
| How have similar projects performed? | Good | 2 | |
| Are there too many innovations? | Regular | 2 | |
| Percentage of crypto users that will use the project? | 6%-10% | 3 | |
| Is the project unique? | Yes | 2 | |
| Architecture (Out of 12) | 10 | ||
| Overall feeling after reading whitepaper? | Good | 2 | |
| Resistance to possible attacks? | Good | 2 | |
| Complexity of the architecture? | Not too Complex | 2 | |
| Time taken to understand the architecture? | More than 1 hour | 0 | |
| Overall feeling about the architecture after deeper research? | Good | 4 | |
| Has the project been hacked? | No | 0 | |
| Code Quality (out of 15) | 14 | ||
| Is the project open source? | Yes | 2 | |
| Does the project use good code like C,C++, Rust, Erlang, Ruby, etc? | Yes | 2 | |
| Could the project use better programming languages? | No | 0 | |
| Github number of lines? | More than 10K | 1 | |
| Github commits per month? | More than 10 | 2 | |
| What is the quality of the code? | Good | 2 | |
| How well is the code commented? | Outstanding | 2 | |
| Overall quality of the test coverage? | Outstanding | 2 | |
| Overall quality of the maintainability index? | Good | 1 | |
| When Mainnet (out of 5) | 5 | ||
| When does the mainnet come out? | Mainnet | 5 | |
| Usability for Infrastructure Projects (out of 5) | 3 | ||
| Is it easy to use for the end customer? | Medium | 5 | |
| Team (out of 7) | 6 | ||
| Number of active developers? | 5+ | 2 | |
| Developers average Git Background? | Intermediate | 1 | |
| Developers coding style? | Outstanding | 3 | |
| Total Score (out of 55) | 47 | ||
| Percentage Score | |||
| Innovation | 16.36% | ||
| Architecture | 18.18% | ||
| Code Quality | 25.45% | ||
| Mainnet | 9.09% | ||
| Usability | 5.45% | ||
| Team | 10.91% | ||
| Total | 85.45% |
