Introduction to CryptoSwap
CryptoSwap is a scalable decentralized exchange built on zkSync. Introduced innovative technology for liquidity options.
Liquidity Options, a scalable solution for liquidity pooling. CryptoSwap introduces the concept of balancing liquidity and time-locked liquidity, which provides an efficient and scalable solution for decentralized exchanges. When tied liquidity and time-locked liquidity are paired, they are able to replicate the function of stock options, which we refer to as liquidity options. This article briefly covers some of the design decisions behind the CryptoSwap protocol, how balanced and time-locked liquidity works, and finally liquidity options.
Building a decentralized exchange is a lot like creating an ecosystem. A thriving ecosystem is one that is sustainable and scalable — that is, it has the ability to maintain its structure (security and efficiency) and improve (expand) over time in the face of external pressures (reliability) .
Decentralized Finance (DeFi) will be the future of global finance. However, the systems we currently have are not scalable nor build upon each other. The current system is built on the past system, but in the DeFi industry, the past system (the previous version) must be completely abolished to bring the new version. Not only is this approach unsuitable for scalability, but it also hinders innovation because it conveys the idea that innovation is about building an entirely new system, not improving on a preexisting system.
What the CryptoSwap protocol has to do is build an innovative approach that builds on the next, enabling innovative ideas to build on each other. CryptoSwap has several decisive features that set it apart from other decentralized exchanges.
Decentralized exchanges all have the same problem: scalability.
In order to change the AMM, developers need to move all liquidity out of the protocol (like from Uniswap V2 -> V3). However, in the future, when liquidity pools have trillions of dollars in TVL, we cannot afford to move from something like Uniswap V3 to V4. Especially on Ethereum, there are huge gas fees for moving something like this. Not to mention, as the TVL of these protocols increases over time, developers will become increasingly reluctant to actually make these innovations or version updates due to the impact of forcing the entire protocol to move trillions of dollars worth of cryptocurrencies.
How do we solve this problem? Modular Architecture.
Modular architectures are not new, eg: Layer 2 blockchains. Like zkSync: The security and data availability layer (L1) is handled by Ethereum, while the execution-specific layer (L2) is handled by zkSync. Ethereum can handle execution on its own, but adding L2 like zkSync makes the process more efficient.
Monolithic architectures have to sacrifice liquidity security for capital efficiency for versioning, but modular architectures do not. The innovation of the CryptoSwap protocol is to improve capital efficiency over time without the need to move liquidity.
The CryptoSwap protocol will have two layers.
Market making layer (L1)
Optimization layer (L2)
The market maker layer consists of “constant product market makers” (xy=k), which have been tried and tested many years ago, so it’s a solid base layer for market making.
The optimization layer will consist of “liquid derivatives” (such as liquid options) that help correct prices in the market maker layer. This introduces a dynamic variable to automated market making by allowing liquidity providers to arbitrage.
This AMM approach will allow DEXs to scale more than a thousandfold
It’s still in the early stages of construction, so get involved as soon as possible！
The community is currently under construction, how to get roles:
1.lad: active in the community
2.chadlite: Contribute to the community — get new people to join or come up with good ideas
3.chad: Become a community manager and get lots of people to join the community and contribute their ideas!
4.gigachad: Great contribution to the community!
CryptoSwap White Paper：https://cryptoswap.org/whitepaper.pdf