At 2:00 PM UTC on February 19, 2021, VBC hosted the AMA show with Swop.Fi, whose representative for this AMA is Mr.Sten Laureyssens, the strategic advisor of Waves association.
Host: Hello. Nice to e-meet you again at Vietnam Blockchain Community. How are you today?
Sten: I can’t complain, BTC above 50k, the sun is shining, waves above 10$, Swop.Fi is growing quickly, my mom sends me a nice cat-gif this morning, so life is good.
Host: First of all, I know many of our community have heard about you from AMA Waves last year. For those who don’t know yet, can you have a brief introduction about yourself as well as Swop.Fi to all of our audience in this community?
Sten: Of course! My name is Sten Laureyssens, I’m the strategic advisor to the Waves association, which is the foundation behind the entire ecosystem.The waves association takes care of things like funding research, grants, and technological future development. Waves ecosystem is quite large, I remember trying to explain the many aspects of the different projects last time, but this time I think most people in the community wanted to focus on Swop.Fi. To summarize, Swop.Fi is an AMM that combines 2 types of pricing formulas. 1 like Uniswap, for assets that have fluctuating prices, and 1 like curve.fi, for stable assets, like USDN or USDT, etc. I’m sure I’ll get more questions about it later, but that’s the short story. What’s maybe important to note, before we start the community questions is that, Swop.Fi recently launched its own token, SWOP. This was what we call a ‘fair launch’, so it is only possible to get the token by adding liquidity to the Swop.Fi pools and no tokens were held back for the team, etc. But SWOP has been doing pretty well, so it’s worth finding out what’s happening with it.
Question: Auditing plays an important intermediate role in the development of DeFi applications. What audit methods has SWOP applied in project development? Can you talk more about it?
Sten: The usual question! is my money safu? DeFi is still like a Wild West. Swop’s contract is currently being audited, we have an external audit going on right now. However, swop being built on our own smart contract language RIDE, gives us quite some experience. However, for development, we use auto-tests for our smart contracts. Which helps us to scan for issues ahead of schedule. There is not that much more to say about it, unfortunately, but I think we are in a good position, with a team that has a lot of experience with the smart contract language, so big issues shouldn’t arise and funds are safu.
Question: What are the Solutions to Improve AMMs? Does SwopFi support On-Chain order book ? How will SwopFi deal with the Current Limitations of AMMs: Leverage, Shorts, and Impermanent Loss (IL)?
Sten: I mentioned in the intro that swop is essentially Curve + Uniswap. The reason why the swop team decided to combine 2 different pricing formulas, is to counter IL (impermanent loss) where possible. Which is one of the main issues with an AMM. However, in terms of order books, that’s not how an AMM functions. So, AMM’s don’t have on-chain order books, but they solve that problem differently. You don’t have the capacity to choose your buy or sell price. You can’t say, I want to sell my $WAVES at this price and then put it in the order books. However, an AMM solves a bigger problem, liquidity and slippage. So you interact with an AMM (like Uniswap) by just selling your $WAVES at the current market price, but you get great liquidity in return. No order book, but bigger liquidity. It’s a different focus, different target audience, but as you can see with all of DeFi, the audience is big. And it allows for unique things to be created on top of it, like stablecoin pools, etc. But also very unique incentive models, to incentive people to put liquidity to the pool and get very big returns / APY for doing that. So its a win-win, which i think swop.fi demonstrated greatly, some APY’s were 400% at the launch.
So in short to answer the question: the chosen path to improve AMM’s is by making 2 pricing formulas, to reduce IL, and the big extra unique factor is that, contrary to Ethereum, waves has a lot of native, staking rewards and mechanisms built in. You can stake Waves, you can stake USDN, and they all return a nice base yield between 6 and 15% usually. These staking rewards just add on top of the Swop.fi POOL rewards, so just give you more %, which is something any project or protocol on Ethereum cannot offer in a similar way. And then, of course, the fees are close to 0 😀 which is very different from Ethereum. Not sure if all of the details make sense! It’s quite complex. Let me know afterward if I still need to explain a few things.
Question: What is the listing process and strategy of Swop.fi to attract more liquidity? How many criteria for a project to be listed on Swop.fi, and how does Swop.fi choose projects to be listed to compete with other AMM DEX?
Sten: Sorry, long explanation, but I think it’s important to explain why precisely people are so excited about it because you can make pretty big yields.
WAVES-EURN right now has 162.89 % APY
WAVES-USDN has 101.65%.
That’s crazy! So I guess that’s how the strategy is going.
Host: Wow, I am pretty sure that after this informative answer, more and more members from our community will be convinced to join Swop.fi! Crazy APY!
Sten: Yeah, SWOP-USDN even has 277%, even crazier
Question: How does SwopFi deal with other DEXs currently obstacles to accessing DeFi services : high gas cost with on-chain transactions, liquidity being fragmented to various protocols and services, trade fee, subpar UI/UX, and lack of efficient market-making mechanisms?
High gas cost: well, Swop.Fi is built on waves protocol.
Waves protocol has immensely low fees. It would cost a few $cents to go in and out of pools, rather than multiple dollars. The same goes for trade fees etc. subpar UI/UX.
Well I think in general, every decentralized product, Waves exchange, Waves keeper, USDN, Swop.Fi.
All of those products have had the tendency to be extremely easy to use, a bit different than what you are used to in terms of UI, but overall, once you get used to it, probably one of the easiest things in the industry. So Swop.fi also has a great interface, and it does what it needs to, quite straightforward.
Now when it comes to the last, the fragmentation of liquidity. It’s the problem of our industry.
How is Swop.Fi planning to solve interoperability? I’d say, Waves’ ecosystem is doing a pretty good job at solving that problem with Gravity, but I think it’s worth noting that the neutrino team has focused heavily on porting $WAVES and $USDN into Ethereum’s ecosystem/chain and also Binance’s smart chain. You can hold waves and USDN on your eth wallet and automatically get the staking rewards. So by doing that, it’s making a bridge to Ethereum, all of ETH’s liquidity, and fighting the fragmentation in a way. So, I guess it’s doing a lot already to solve that problem.
Question: Partnership is always an important factor for every project. So who is Swop’s partner? What are the benefits you get from those relationships?
Sten: Swop actually has the benefit of being integrated into the waves ecosystem, which has seen multiple partnerships over the last few months. So many of the partners of Waves, or Neutrino especially, and gravity.tech, most of them have an interest in being integrated in swop.fi. Some of those integrations were already discussed before the launch of swop.fi, but are due to take place in the coming weeks. In that regard, I think Swop.Fi can leverage the partnerships in that list, and the list is quite long.
Tron, 1inch, ontology, fetch.ai, band protocol, swingby, suterusu, fusion, curve, ankr, fantom, solana, matic, iost, union, BSC, etc
Question: SWOP is a governance token: users will be able to vote with it on major settings of the entire swop.fi system. Can you explain more about this?
Sten: Sure, this is a good question.
So SWOP is the central token in the swop.fi ecosystem and product. You can earn swop by staking share tokens. (= LP tokens). so if you provide liquidity to one of the pools, you get share tokens back from the smart contract. these can be staked and you can earn/Farm SWOP that way. It means that you can only earn SWOP, by participating in the ecosystem.
Meaning = SWOP holders will have been taking part in the community, and they should naturally be given the right to decide what is next for swop.fi. You will be able to vote for new listings, changes in liquidity gauges, or future tech developments of swop.fi, with your swop tokens.
Essentially, most major decisions in swop.fi will be decided through governance voting, which will happen with your swop tokens.
Question: The current BSC as you know is a big trend so does swop.fi plan to integrate BSC into the system?
Sten: Binance smart chain and pancake swap have really been capturing the ecosystem of DeFi in the last weeks. Of course this has happened because of Binance’s big ecosystem, but mainly because of its fast, cheap transactions. Waves already has a bridge to Binance smart chain, so assets can be swapped back and forth, but we think our own ecosystem is large enough to grow quickly.
We have even faster tx/s and lower fees. And there is this native APY of USDN and waves that is unique to this ecosystem. So we think we have a good chance to copy and improve that trend.
Question: 40% of proceeds from swap fees in swop.fi pools is used for buying SWOP tokens from the SWOP-USDN pool. Can you explain more about this?
Sten: When you swap tokens in a swop pool
so.. when you swap them, you pay fees, same as you do on curve or Uniswap. 40% of these fees, go to buying SWOP tokens. Which means that if a pool generates fees, a part of those fees (40%) are used to automatically market buy swop tokens. Those swop tokens then are part of the pool. but it means that when swop.fi pools are growing, there is always more buy pressure for swop token
Question: I have been farming SWOP since January, how long can SWOP be farmed? How is SWOP vesting schedule?
Sten: There will be 6 million SWOP in total. 1M swop was for early farmers, ‘early birds’. Now we will have 1M swop for the next year. You can find more information here: https://medium.com/swop-fi/what-will-be-the-swop-tokens-price-55921fbe6456