While DEX newbies were frantically copying the Uniswap model, SushiSwap quickly became popular with its new model for “tokens for agricultural platforms by pledging Uniswap LP tokens”. When the leading developer of SushiSwap, Chief Nomi, paid out 2.6 million SUSHI tokens for 18,000 ETHs on September 5, the global community believed they had been betrayed.
There is no doubt that SushiSwap’s LP Token Pledge Farming + Platform Governance Token Farming model is desirable, but there are still many loopholes and inappropriate rules that need to be changed. To solve these problems and evolve the model, a sophisticated player needs to have SwapX (www.swapx.org) has innovated a new model for DEX.
Liquidity providers on Uniswap, Balancer and Curve can earn token SWP by pledging LP tokens (from other DEXs) on SwapX. At the same time, they can also earn pair tokens of individual liquidity pools. Users have performed three consecutive farming operations, first on Uniswap, Balancer and Curve, and then on SwapX SWP and Pair Token.
SwapX will start on 9/10/2020 12:00 PM (EST) when LP Token Pledge Farming and Pair Token Farming become available. It’s worth noting that the SwapX team took a decentralized approach with no fore-farming or reserves. The platform governance token SWP is distributed 100% to community participants. Currently wallets like imToken, TokenPocket, MEET.ONE, BitKeep, BitPie and HyperPay have integrated SwapX. Users can deposit assets into these wallets on phones to start farming on SwapX.
Pair Token Innovation to continue Liquidity Pool Yield Farming
The key to ‘LP Token Pledge Farming’ is to attract liquidity providers to other DEXs. SwapX doesn’t mean competing with Uniswap. Instead, SwapX aggregates the liquidity of key DEXs like Curve and Balancer to become a DeFi liquidity center.
While SwapX continues to adopt Uniswap’s AMM (Automatic Market Maker) design, it is also implementing SushiSwap’s farming model to aid in staking Uniswap Pool Token (Uniswap’s LP Token). SwapX not only supports farming through Uniswap’s LP Token Farming, but also farming with other LP Token DEXs such as Curve and Balancer.
SwapX also made a big breakthrough on today’s DEX, suggesting: ‘Pair token ‘. Anyone can apply to SwapX to create an independent liquidity pool and a pool-specific pair token. Pair Token represents the governance right to the liquidity pool and determines the distribution of SWP, SwapX’s platform governance token. Within SwapX, liquidity providers not only receive a portion of the transaction fees from the platform, they also earn Pair of tokens and SWP at the same time. Liquidity providers would now earn fees from Uniswap / Balancer as well as additional farming rewards from SwapX for the same wealth.
“Pair Token Farming”: opens the door to liquid pool governance.
Pair Token is the unique highlight for SwapX. Each certified liquidity pool on SwapX has its own pair token that is not only freely tradable, but also allows users to receive revenue shares from trading transaction fees and receive SWP. As I said, once users provide liquidity, they can receive triple rewards for trading fees, pair tokens and SWP.
As we all know, liquidity providers can only use Uniswap to earn a portion of the transaction fees when they provide liquidity. Once they pull liquidity out of the pool, they no longer earn this fee. This oversimplified model has Three problems in the long run:
1) The incentive is not good enough and the profit from early stage liquidity providers is significantly diluted.
2) Loss of instability cannot be compensated.
3) No community contribution outside of liquidity providers.
Uniswap’s liquidity providers share transaction fees based on their liquidity contributions. However, there are also users who make important decisions about such questions as “How does each liquidity pool select trading pairs?”, “What is the fee rate?” And “How can more dealers be attracted?” Must meet. At Uniswap, management and operating staff take responsibility without compensation.
To effectively improve this mechanism, each SwapX certified liquidity pool has a standard pair token. These pair tokens can be freely traded. The earlier the liquidity providers join, the more pair tokens they can earn.
SwapX is aimed at liquidity providers under the top swap protocol
Liquidity is the driving force behind DeFi. As a place where DEX liquidity is concentrated, SwapX is initially aimed at liquidity providers from top DEXs such as Uniswap, Balancer, Curve and offers them the opportunity to manage SWP. After these liquidity providers have earned transaction fees by providing liquidity for Uniswap, Balancer, Curve, etc., they can now place LP tokens on SwapX to manage SWP, as well as other transaction fees. There are four sources of income: transaction fee, two-time SWP, one-time pair token with one-time use, which gives more benefits to liquidity providers.
According to SwapX developers, DEX liquidity providers can use their LP token to manage pair tokens and SWP in two ways:
- Use LP tokens for agriculture
Liquidity providers from Uniswap, Balancer and Curve can pawn their LP tokens (“Pool-Token” at Uniswap, “BPT” at Balancer and “Ytoken” at Curve etc.) in order to earn SWP. Farming takes 15 days and will provide a total of 2.88 million SWP, producing 30 SWP per block and approximately 192,000 SWP per day. SWP is distributed to all pledges according to the LP token contribution.
- Holding Pair Token as Agriculture
Liquidity providers on SwapX would receive pair tokens and can earn SWP through pair tokens.
Farming takes 30 days and brings a total of 2.88 million SWP. Every 64 blocks take a snapshot that generates 1,000 SWPs. A total of 96,000 SWPs are bred and distributed to Pair Token Holders per day.
In short, when income farming ends, users will be able to trade the above tokens on SwapX. During this process, the pledgee can automatically receive transaction fees and SWP without any additional steps.
Three consecutive farming rounds to capture the value of SGP
Per ‘2020 Global DeFi User Report’75% of global users and 74% of Chinese users said they would only be interested in DeFi projects if the APR is above 15%. SwapX aims to maximize the profit of the liquidity providers while ensuring capital security within the scope of the verification mechanism. SwapX charges traders a 0.3% transaction fee, of which 0.25% is allocated directly to the liquidity providers and 0.05% is allocated to the community for SWP buybacks. The community will vote to determine the use of SWP and make it friendlier for liquidity providers.
In addition to the income from the transaction fee, the liquidity provider can also manage pair tokens and SWP on SwapX. The larger the liquidity pool, the more pair tokens can be earned and the more SWPs are available. Multi-source rewards attract more investors to join, improve the liquidity of the pool and provide favorable growth in “liquidity and earnings”.
SwapX risk assessment
According to information released by SwapX, SwapX has undergone a community security clearance but has not yet completed a formal review as to what the potential risk is. Even after an audit is complete, there is still a risk of being vulnerable to smart contracts as every high-yield farming project presents the same problem. Hence, in yield farming, users need to assess their risk tolerance and manage their risk.
Today we are in the hypergrowth phase of DeFi. Profitable farming as a key way to get traffic for DeFi projects has already made its debut and has helped many users make fortunes overnight. The competition is getting more intense, but the future is unlimited. There are more and more players joining this game, but only those who have the courage to innovate can finally survive and get noticed.
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