Magic Labs and Polygon Labs announced a crosschain smart wallet as protocols move to address liquidity fragmentation in the blockchain space.
According to a Nov. 7 announcement, the companies launched the Newton testnet, a wallet solution for the crosschain settlement layer AggLayer. The solution promises to enable liquidity sharing across multiple blockchains, “like how HTML or HTTP introduced standards to create a seamless internet experience.”
Newton is built with Polygon CDK — or cloud development kit — and plans to offer chain-abstracted smart wallets, free tooling, access to global liquidity and cross-chain launches from “a single command line.”
Liquidity fragmentation occurs when assets and trading volumes are spread across multiple platforms or blockchain networks, creating inefficiencies in the decentralized finance (DeFi) ecosystem. This dispersion leads to higher trading costs and slower transaction speeds, complicating cross-chain interactions and increasing costs for users.
Tackling this issue is essential for improving DeFi’s efficiency and reliability. It’s no surprise that this problem has caught the attention of several protocols and venture firms in 2024.
Other firms working on liquidity integration include Orderly Network. The startup recently raised $5 million from investors, such as OKX Ventures and Manifold Trading, to consolidate onchain transactions into a unified order book across multiple blockchains.
Axelar has also devoted its core business to multichain solutions; the company announced in October an interoperability stack combining onchain and offchain systems across various networks.
“Chain unification is inevitable — like ACH or SWIFT for crypto,” said in a statement Sean Li, co-founder and CEO of Magic Labs. In 2018, the startup was one of the first to introduce wallet abstraction. Among its clients are Polymarket, Immutable and Helium.
Magic Labs is backed by PayPal, Placeholder and Lightspeed, along with angel investors such as Balaji Srinivasan. The company claims to have onboarded over 35 million users and 200,000 developers through decentralized applications.
Related: 5 DeFi predictions for 2025: Rise of AI, Omnichain and BTC derivatives
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