Magic Labs and Polygon Labs Announce Newton Testnet, a Cross-Chain Smart Wallet Solution to Address Liquidity Fragmentation in the Blockchain Space

Magic Labs and Polygon Labs announced a crosschain smart wallet as protocols move to address liquidity fragmentation in the blockchain space.

Decentralized finance (DeFi) protocols are stepping up efforts to address liquidity fragmentation in the blockchain space, with the latest development being the announcement of a crosschain smart wallet by Magic Labs and Polygon Labs.

According to a Nov. 7 announcement, the companies have launched the Newton testnet, a wallet solution for the crosschain settlement layer AggLayer. The solution aims to enable liquidity sharing across multiple blockchains, “like how HTML or HTTP introduced standards to create a seamless internet experience.”

Built with Polygon CDK — or cloud development kit — Newton plans to offer chain-abstracted smart wallets, free tooling, access to global liquidity and cross-chain launches from “a single command line.”

The issue of liquidity fragmentation arises when assets and trading volumes are spread across multiple platforms or blockchain networks, leading to inefficiencies in the DeFi ecosystem. This dispersion results in higher trading costs and slower transaction speeds, making cross-chain interactions difficult and costly for users.

Highlighting the importance of crosschain liquidity, Sean Li, co-founder and CEO of Magic Labs, said in a statement, “Chain unification is inevitable — like ACH or SWIFT for crypto.” In 2018, the startup was among the first to introduce wallet abstraction, and its clients include 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.

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