Introducing CasperSwap: The most liquid trading and capital-efficient liquidity marketplace on Casper.

CasperSwap
5 min readDec 28, 2022

CasperSwap is the first fully audited, open-source automated market-making decentralized exchange on the Casper Network. With Uniswap v2 as its backbone, CasperSwap intends to be the most liquid trading venue and liquidity marketplace for traders, liquidity providers, and DAO treasuries.

Background

As a fully decentralized, truly scalable blockchain designed for real-world speed and security, Casper Network has built a strong community and continues to provide solutions for web3 protocols to build within its ecosystem.

While Casper has developed a thriving community globally, it needs a system that allows its protocols and users to incentivize liquidity properly. Besides, enabling fast and low slippage trades of any assets built on top of Casper is another problem that Casper users and other DeFi users interact with the Casper network need to solve.

A network is only as strong as its largest and most liquid decentralized exchange. Casper Network needs a trading and liquidity infrastructure to realize its full potential.

Meet CasperSwap: the first liquid trading and incentivized liquidity marketplace on Casper Network

CasperSwap provides an open, transparent, and efficient solution for protocols to incentivize liquidity for their own use case, for liquidity providers to earn fees and competitive rewards, and for traders to swap assets efficiently.

At its core, CasperSwap features a CasperSwap AMM and novel Tokenomics with competitive LP incentives.

CasperSwap AMM

CasperSwap chose the Uniswap v2 AMM design (xy=k) because it allows long tail assets to have liquid functioning markets while permitting LPs to earn yield from trading activity. In the xy=k design, the two tokens in the liquidity pool are priced relative to each other. When the price of token A falls in price relative to token B, the protocol automatically buys more of token A by reducing exposure to token B.

The trader is effectively trading with the liquidity pool rather than other traders as seen in a traditional order book exchange. There is ongoing research that analyzes impermanent loss (IL), or when an LP withdraws a smaller dollar value of the pooled tokens compared to the time of the deposit. When deciding which exchange design we would implement, we considered IL, but we also believe that democratizing liquidity provision is an essential feature to attract capital in search of yield. We are also optimistic that other protocols will build on top of CasperSwap to tackle IL, liquidity management, and much more according to the needs of LPs. Our incentive structure is designed to factor in IL for volatile pairs and target an APY that is competitive with the APYs of existing exchanges. CasperSwap intends to be the base layer infrastructure for future money legos to build on in order to grow opportunities for LPs to efficiently manage and earn yield.

Tokenomics

CasperSwap introduces its novel Tokenomics design, featuring 60% of the total allocation dedicated to its LP Incentive Program. Here is the CasperSwap token (CST) distribution at a glance.

The CST Token

The CST token is designed based on the Curve vote-escrow mechanism to align token holder incentives with the success of the protocol over the long term. To date, the ve-tokenomics design is the most robust tokenomics design in terms of attracting long-term liquidity provision.

CST tokens allow users to vote for CST distributions to certain pools. Anyone can purchase CST, stake it, and vote for CST incentives for their pool in order to create liquidity markets for one token. CasperSwap also takes a small percentage of each swap which accrues to CST holders.

LP Incentive Program

CasperSwap will be the largest liquidity hub on the Casper network, and LPs will be the ultimate beneficiaries. The CasperSwap team has worked closely with the Casper Labs Team to target a competitive incentive for LPs after IL (Impermanent Loss) on volatile pairs. LPs in boosted pools from governance voting stand the opportunity to earn a higher yield on their underlying position.

Casper Labs has granted CasperSwap $1M in Casper Tokens (CSPR), which will be distributed amongst the following pools:

  • CSPR/USDC
  • CSPR/CST
  • CSPR/ETH
  • CSPR/BTC
  • CSPR/USDT
  • USDT/USDC

How Do Users Benefit from CasperSwap?

Liquidity Providers:

LPs enjoy the chance to diversify yield-generating positions on CasperSwap. Besides the trading fees captured from the active users in Casper Network and competitive LP incentive, it provides an infrastructure for the future money lego to build on top of it and, thus, new earning opportunities for LPs.

Traders:

As the largest liquidity hub on Casper, CasperSwap benefits both retail and institutional traders looking to make swaps at scale in two aspects: better prices and low fees (.25% + .01% to .05% treasury fee).

DAO Treasuries / Other Projects:

CasperSwap is the first DEX to support DAO Treasuries on Casper. It provides a solution for token projects and DAO treasuries on Casper Network to efficiently direct and incentivize liquidity through voting and bribing.

Other DeFi Projects:

Other projects also benefit from Casep Swap’s deep liquidity. For example, before a money market can function properly, there must be a decentralized exchange that can facilitate large-scale liquidations without massive price impact. Otherwise, liquidators would not be incentivized to proceed, and the money market will be left with bad debt. CasperSwap truly is the base layer for DeFi on Casper.

Join CasperSwap Community on Twitter, Discord, and Telegram to receive the latest project update!

Road to Decentralization

  • Q4, 2022 Start CasperSwap Commuity on Telegram, Discord, Twitter, and LinkedIn.
  • Q1, 2023 Launch Public Testnet on Casper Network; launch Public Mainnet on Casper Network; secure Casper Token Incentives.
  • Q2, 2023 Launch Casper Token Incentives with the Token Generation Event.

CasperSwap is Supported by :

Coral DeFi, Abyss Company, DevxDAO, and Casper Association.

Join Us:

🤝 CasperSwap Community: Join the discussion on Twitter, Discord, and Telegram.

💻 Technology: Review our technical docs on Gitbook

👾Partnership: Want to be part of the CasperSwap ecosystem? Drop a request on our Discord #🙌partnership channel.

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CasperSwap

The Most Liquid Trading and Capital-Efficient Liquidity Marketplace on Casper Network.