Join the Yellow Network
Uniting the World in Web3 Internet of Finance.
The Yellow Network is a first-of-its-kind Layer-3 peer-to-peer (P2P) financial information exchange network for aggregating the liquidity and cross-chain settlement between brokers. Think Napster of Bittorrent, but for the finance.
Yellow Network combines crypto liquidity of multiple blockchains without directly bridging them to maintain structural security, minimize asset movement, and remove associated risks involving human error and fraud.
Yellow Network features real-time settlement between brokers powered by cutting-edge state channel technology.
The main appeal of Yellow Network is that it enables instant cross-chain trading without the security risks of holding users' assets and bridging the assets between brokers.
The main benefit for you as a broker is that you tap into an unlimited worldwide pool of crypto liquidity to supercharge your crypto exchange business.
Let's build the future of finance together!
Join the Yellow Network
Check out the Yellow Network pitch deck.
Watch a Yellow Network video introduction by Louis Bellet, CEO of Yellow.
Send us a message if you have questions about integrating Yellow Network into your products or platform.
Want to learn more about how the Yellow Network is designed?
The Yellow Network Architecture
The core architecture of the Yellow Network is a mesh or peer-to-peer (P2P) network utilizing state channels to unify blockchains and reach every token locked on isolated networks without the requirement of bridging them.
Yellow Network is not just another blockchain. It is an independent peer-to-peer network (think Torrent or Napster) that utilizes principles similar to Bitcoin Lightning to reach high performance alongside secure consensus.
The Yellow Network is an automated smart clearing house, which allows brokers to settle without requiring additional support from an intermediary, and all brokers that run on Yellow Network are non-custodial participants. This approach makes the business much more resilient to hacks, lowering the cost associated with its maintenance and simplifying the crypto brokerage setup process.
All Yellow Network's order book transactions are open and can be audited for review at any point in time. Whenever a broker opens a trading channel, they agree on the state of the order book and broadcast updates to it.
Yellow Network Participants
Numerous network participants make up the mesh Yellow Network. These are split across retail brokers, market makers, exchanges, and custodians, each with a significant role within the ecosystem.
- Retail Brokers - Retail brokers within the Yellow Network are small exchanges typically located in a specific country or region where they comply with local regulations. However, brokers are seen as non-custodial businesses within the Yellow Network.
- Market Makers - Market makers provide liquidity throughout the broader network. They can create and maintain open orders, allowing users to access the best offers. Market makers also get the fees from the trades.
- Crypto Exchanges - Crypto exchanges are typically the biggest players within the Yellow Network as they target a global audience and are regulated across numerous countries. They are provided with the opportunity to list exclusive tokens within the network and even bring market makers to it. However, exchanges also have the freedom to manage the platform custody themselves, and they can manage all roles of network participants. They do not need to connect to other brokers. However, it is better for their customers if they do so as they can bring more liquidity and, as such, have better offers on markets.
- Custodians - Within the Yellow Network, the custodians are in charge of holding the funds of the customers securely. Alongside this, they allow the broker to easily connect to various blockchain networks, depending on the level of support. The custodians on the Yellow Network include Qredo, Cobo, Fireblocks, and Gnosis Safe.
Yellow Network Components
The Yellow Network also features three main system components: Network Nodes, an Adjudicator, and a Custodian.
- Network Nodes - The network nodes within the Yellow Network are operated by the brokers and have local markets, alongside their connections to blockchains and even custodians. They play a major role in the network, where they are responsible for interconnecting different brokers and bringing liquidity to their markets.
- Adjudicator - An Adjudicator is a smart contract that brokers utilize to validate a settlement, where it verifies that the last state transition is valid and signed by both brokers. Since it is a smart contract, it ensures that the brokers follow the rules and provide a high level of transparency, which means that over time, it will not change without both parties needing to agree to upgrade to a newer version of the protocol.
- Custodian - In the Yellow Network, the custodian plays a key role through which it securely holds the users' funds. It can be an external provider or a smart contract. The custodian will typically utilize a set of rules to release funds, where each technology can provide different sets of features to increase the funds' security. This process ensures that the user requesting a withdrawal is the real initiator of the request and there is no fraud.
The Yellow Protocol
By concept, we built the Yellow Network to allow any brokers to peer their liquidity from one another. A broker peering with another broker on the market will display orders in the order book, which will extend the overall offering and provide an increase to the broader liquidity which is available for the users of that specific broker.
Whenever a user takes an offer from another broker, the brokers exchange liabilities through the state channel protocol, ensuring that both can agree on the accounting charge. Then we have the settlement process, which any broker can use to lower their overall risk and move part or all of the funds owed from one to another.
Here is how all of it is connected.
- Collateral - Both exchanges need to lock collateral to guarantee that they are solvent for the other peer. Any cryptocurrencies can be utilized as collateral – usually a healthy mix of stablecoins and cryptocurrencies. This way, we can keep the collateral value relatively stable even in extreme market swings.
- Broker-to-broker (B2B) Liquidity Channel - Brokers can utilize a state channel protocol to keep track of assets that one broker owes to another. This technology allows the secure tracking of funds without the requirement of an on-chain transaction for each trade. The trading process between two brokers can be extremely fast and secure. For a broker to be able to open a state channel, they will need to agree to some $YELLOW tokens collateral. Once they agree on the amount, they make the deposit, and their state channel is activated to engage in the trading process.
- Remote Order Matching - Whenever an order for a specific user matches an order from the peer broker, the Yellow Finance platform can then utilize the active state channel with the peer to perform the trade while accounting for the liabilities of one broker to another broker.
- Settlement - Brokers will perform a settlement process occasionally to transfer assets to each other. Any broker can trigger a settlement process at any time, where the broker can decide to settle if they need asset liquidity, for example, to process a withdrawal request. A settlement can also be triggered when the value of assets parties hold becomes unbalanced. If the difference in the asset's value between the two brokers reaches the value of the collateral, brokers must start the settlement.
- Multi-chain and Multi-Custody support - The broker can establish a connection to any available custodian solution, and each custody solution will feature a different list of supported blockchains. The broker here will benefit from the supported blockchains of his custodians. Once connected to custody, the user can deposit and withdraw funds across the supported blockchains.
Let's build the future of finance together!
Join the Yellow Network
Check out the Yellow Network pitch deck.
Watch a Yellow Network video introduction by Louis Bellet, CEO of Yellow.
Send us a message if you have questions about integrating Yellow Network into your products or platform.