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Swop.fi: An Automated Market Maker on Waves Blockchain

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Swop.fi: An Automated Market Maker on Waves Blockchain
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Swop.fi is a new automated market maker (AMM) that combines several types of pools with different price calculation formulas that are most suitable for each specific token pair.

The project is open to liquidity providers, and any user can add coins to a pool and collect revenue from swap fees. In addition, liquidity providers will be separately rewarded through the distribution of the governance token SWOP.

Swop.fi has been implemented on the Waves blockchain, benefiting from its high speed and low fees. A transaction is written to the chain within a few seconds and the fee for calling the smart contract is fixed at 0.005 WAVES (less than $0.02).

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Two Pool Types

Swop.fi offers two price calculation formulas:

  1. Constant Product Market Maker (CPMM): the classic formula used by Uniswap and many other AMM projects.
  2. Flat: the original formula inspired by Curve and designed to reduce slippage for pairs of tokens with a very similar price — like, for instance, stablecoins pegged to the same fiat currency.

For each newly created pool, the most suitable formula will be chosen.

At the project launch, the following pools will be available:

  • WAVES-USDN — CPMM
  • BTC-USDN — CPMM
  • WAVES-BTC — CPMM
  • USDN-USDT — flat

Liquidity Providers’ Revenue

A user can provide liquidity to any pool and collect revenue from swap fees. The exchange fee is 0.3% of the swap amount (0.05% for USDN/USDT).

From all accumulated fees, 60% goes to a specific pool’s liquidity providers and the remaining 40% is spent on increasing the capitalization of the governance token SWOP. SWOP capitalization increases thanks to adding liquidity to the SWOP-USDN pool. All the above parameters can be changed by governance.

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SWOP Governance Token

Swop.fi is managed through the SWOP governance token. SWOP will be distributed between swap pool liquidity providers.

SWOP holders will be able to govern the following system parameters:

  • Fee size
  • The proportion of accumulated fees sent to the SWOP-USDN pool
  • Choice of pools whose liquidity providers will be additionally rewarded with SWOP tokens.

The initial SWOP token distribution will be done at the project’s stage 3. Liquidity providers in 4 basic pools will be rewarded per their liquidity share starting from the project launch.

Simultaneously with the initial SWOP distribution, the SWOP-USDN pool will be launched.

How to Obtain SWOP Tokens

  1. Become an early liquidity provider for basic pools before governance launch
  2. Be a liquidity provider to reward-bearing pools after governance launch.

For early liquidity providers, 1 million SWOP tokens will be reserved, accumulated daily over the first year of operation. After governance launch, users will be able to vote for reward-bearing pools whose liquidity providers will be entitled to a share of daily distributed SWOP tokens.

Liquidity provider rewards:

  • 1 million SWOP tokens in the first and second years of operation
  • s of the third year, the previous year’s amount minus 25%.

Inter-chain (cross-chain) Liquidity

Swop.fi will offer a transparent way of depositing and withdrawing pool liquidity directly from accounts on other blockchains. Liquidity depositing from other blockchains will be done over gateways based on the Gravity interchain communication protocol.

Roadmap

Stage 1:

  • System launch
  • Support of two formulas for pools
  • Basic pools: Waves-USDN, BTC-USDN, Waves-BTC, USDT-USDN

Stage 2:

  • Opportunity to launch your own pools

Stage 3:

  • Initial distribution of SWOP tokens
  • Regular rewards to liquidity providers
  • SWOP-USDN pool

Stage 4:

  • Inter-chain liquidity providing.

An automated market maker (AMM) is a smart contract that enables instant token exchange as an alternative to traditional exchanges based on order books. Swap rates depend only on the number of tokens locked on the smart contract.

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