Airswap Analysis — Decentralized Exchange for Market Makers

KR Research
Jan 22, 2018 · 9 min read


  • Problem Area
  • Airswap’s Solution
  • Competitors
  • Project Concerns & Recent News
  • Conclusion


Currently for most cryptocurrency traders, the only way to trade is through the use of a centralized exchange. If you’re a casual investor, you probably have used exchanges such as Coinbase, Bittrex, or Binance. Or if you’re a professional investor, you may have used platforms such as GDAX or Coinigy. The recent crypto craze has brought a mass influx of new investors, causing several exchanges having to close new user account registrations. They have been forced to stop additional revenue from coming their way; a problem some exchanges never thought they’d ever have.

Although they serve well for the most part, centralized exchanges have a multitude of problems and are inefficient services. Some problems that come with using a centralized exchange include:

  • The exchange itself can be attacked. This may result in assets being stolen (Mt. Gox) and personal information.
  • Transaction, deposit, and withdrawal fees.
  • Slow times for depositing and withdrawing assets.
  • Potential inability to access assets due to exchange technical issues.
  • Limited trading pairs (i.e. BTC/REQ, ETH/AST, LTC/XRP).

It is clear that you must have complete trust with the exchange and full understanding that your assets are under control by the exchange. You trust the exchange when it comes to depositing/withdrawing money, getting a reasonable price for trades, and that your assets on the exchange are safe. These problems show that centralized exchanges are not ideal for investors. This is the problem Airswap looks to solve.

Image for post
Image for post
Airswap Logo

Using their SWAP protocol for peer-to-peer transactions, Airswap looks to build a decentralized exchange for ERC-20 tokens. By building a decentralized exchange, Airswap hopes to offer these three solutions:

  • Security: Eliminate the middleman of the centralized exchange. Airswap wants transactions to happen directly from wallet to wallet. This kind of transfer ensures that no third parties are in control of your assets.
  • Privacy: In a decentralized exchange, two parties interact with each other with no middleman. Negotiations happen privately off-chain.
  • Fair: Transactions are only between the two parties in negotiation. This eliminates front running and ensures that no third party has knowledge of the ongoing negotiation and cannot take advantage. Therefore, prices are comparable or even better than what one would expect on a normal exchange.

A decentralized exchange solves many of the aforementioned problems. A decentralized exchange:

  • Eliminates need for personal information or other KYC processes.
  • Eliminates deposit and withdrawal fees.
  • Gives investors full control of his/her assets.
  • Gives option for ERC-20 trading pairs (i.e. POWR/QSP, REQ/ZRX, DRGN/SALT, etc.)

Decentralized exchanges offer greater benefits to traders and are surely better than centralized exchanges in almost every way. It is definitely clear that Airswap is on the right track in developing this much needed platform. As of this publication, the top three exchanges in the world do a combined total of approximately $15 billion USD in transactions per day. The exchange market is incredibly hot right now, and we believe that this number is only going to rise.

How Airswap Works

There are four parties involved when it comes to trading using Airswap. They are the: Maker, Taker, Indexer, and Airswap’s smart contract.

Image for post
Image for post
Visualization of SWAP protocol

On a high level, makers and takers post which token pairs they would like to trade and the Indexer essentially connects the two parties together. Once both parties agree upon a price, the taker submits an order to Airswap’s smart contract which executes the trade on-chain.


Airswap wants to be a platform for market makers. So when it comes to their token (AST), Airswap wants market makers to be the primary user of their token. Technically, any person can be a market maker, but Airswap’s goal is to target institutional investors and have these investors serve as market makers.

In comparison, traditional exchanges and other upcoming decentralized exchanges have their token serve as an exchange fee. Holding the token either cuts down on transaction fees or must be used when completing transactions. AST takes a different approach and serves two purposes.

  1. Holding AST allows for holders to express their intent to trade. In order to trade, one must hold AST, which then gets locked up for a certain period of time. It essentially serves as a membership fee.
  2. The second aspect of AST is to serve as a voting mechanism. Holding more AST means more voting power. An example of voting in the AST ecosystem is using AST to vote for which tokens should be whitelisted for trading within the Airswap platform.

AST’s utility definitely favors institutional investors. For example, for large scale trading operations, investors are able to avoid exchange fees. In regards to the second aspect of AST, voting has become a central aspect of many tokens, and gives investors a greater sense of ownership and pride as a holder of the token.


Airswap is led by Michael Oved, a former algo trader at Virtu, and Dom Moistes, a former Google and Zynga UX engineer. Michael and Dom are both graduates from Carnegie Mellon University. The rest of the team includes former Palantir and Spotify engineers. Aside from their team, Airswap boasts a top of the line team of advisors which includes Ethereum co-founder and CEO of Consensys Joe Lubin and billionaire Michael Novogratz, a prominent former hedge fund manager and now current CEO of Galaxy Investment Partners, a cryptocurrency investment firm. Novogratz has agreed to provide initial liquidity for Airswap.

Image for post
Image for post
Airswap co-founders Michael Oved & Don Mosites

It is apparent that Airswap boasts a star studded team with employees from prestigious universities and companies. However, the biggest asset that Airswap has is its team of advisors. Joe Lubin and Michael Novogratz are two of the biggest names in the crypto space. Lubin operates Consensys, one of the largest and fastest growing crypto companies in the world. Connecting Airswap with a company like Consensys gives Airswap massive potential in the field of decentralized exchanges, especially when dealing with institutional investors. It is essential to note that Michael Novogratz has stated he will provide initial liquidity for Airswap. With Novogratz spearheading liquidity, investors can utilize all the aspects of an established centralized exchange with Airswap right from the get go.


Airswap conducted their token sale late last year on October 10th and raised approximately $35M. Before their token sale this was their roadmap:

Image for post
Image for post
Airswap Roadmap

Token Trader, which is Airswap’s implementation of their Peer and Oracle protocols was completed and is currently in beta. On January 12th, Airswap announced the release of their token trading mobile app, which is also now in beta.

Thus far, Airswap has kept up with its roadmap. We have not yet gotten a chance to test Airswap’s token trading mobile app, and although a mobile app wasn’t clearly stated in their roadmap, expanding into the mobile realm would be a big move. Very few centralized exchanges offer mobile app trading. If Airswap keeps with its roadmap, we should be seeing beta testing of their full fledge decentralized exchange by mid 2018.


The Airswap team seems to be quite active on all of their social media platforms, consistently informing the community with all things Airswap. Every two weeks or so, Airswap’s Medium blog is updated with development and team updates.

Overall, we believe Airswap does a terrific job in staying completely transparent with the community. We find it incredibly useful that they have an official reddit account they use to answer questions from the community. Through Twitter and their blog, investors are always kept in the loop regarding development progress.


Airswap does face a couple of competitors who are also building products around decentralized exchanges. We believe that the two main competitors are: Kyber Network and 0x.

Kyber Network: Kyber is similar to Airswap that it too hopes to serve as a decentralized exchange. However, all transactions are done through a smart contract. The entire process is on-chain because all order placements are done through their smart contract.


  • Decentralized
  • Offers Liquidity


  • Fees for placing or canceling order
  • Transaction fees
  • Parties interact through a smart contract
  • Market Makers have to be registered through Kyber
  • Everything is on-chain, whereas only order filling is on-chain in Airswap

0x: Serves as a protocol for decentralized exchanges. Implementations of the 0x protocol (called relayers) act as a decentralized exchange.


  • Decentralized
  • Off-chain orders, on-chain filling


  • Fee for canceling orders
  • Transaction fees
  • An order does not specify a specific taker in 0x where it does in Airswap
  • 0x has more of a traditional order book design whereas Airswap seeks to offer a more P2P design

Although we see these two projects as Airswap’s main competitors, as mentioned earlier, Airswap looks to target market makers and large institutional investors. This group of investors would:

  • Avoid exchange fees when conducting large scale trading operations.
  • Be offered high liquidity.
  • Be able to negotiate off-chain (dark pool trading).

With the benefits that decentralized exchanges offer in general, we see all three projects thriving.

Project Concerns

As with any project there are always concerns. We’ve identified a few concerns for this project that could affect Airswap’s success.

  1. Competition: As mentioned earlier, there is decent amount of competition in building decentralized exchanges. Although different, some are starting in beta (Radar Relay, Paradex, DDex, etc.) These have the first-mover advantage and if proven to be successful, it may be difficult for Airswap, especially initially, to gain users. If these DEX’s are successful, institutional investors may feel more comfortable using these platforms instead.
  2. Revenue: As of now, AST is primarily used to grant access to trade. Other than the potential increase in value of AST, there is no current revenue structure. The Airswap team has stated that potential premium features may be offered to users and that they will be looking at the potential of this.

While we do believe that these are valid concerns for Airswap, we believe in the value of decentralized exchanges. We see that by the end of 2018, most transactions will be done through a DEX.


Airswap was recently announced as one of ten semi-finalists in CES 2018 Extreme Tech Challenge, a high profile startup competition. Although they did not place in the top three, Airswap was still invited to Necker Island for a one-on-one dinner with Richard Branson. In addition to this, Airswap was recently selected by Goldman Sachs to represent cryptocurrency and decentralized exchanges at the Goldman Sachs Investor Conference.

These are two big events for Airswap. In December, Goldman Sachs announced that they will be setting up a cryptocurrency trading desk. With Goldman Sachs setting up a trading desk, and with Airswap’s target of market makers, is a potential partnership in the works?


  • Centralized exchanges have several problems that are associated with them.
  • Airswap is building a decentralized exchange for market makers.
  • Team is led by Carnegie Mellon graduates Michael Oved & Dom Mostes. Advisors include Joe Lubin (Co-founder of Ethereum along with CEO of Consensys) and Michael Novogratz (crypto billionaire).
  • Competitors include: Kyber Network & 0x. However, Airswap looks to target a different market.
  • Airswap was a semi-finalist for CES 2018 Extreme Tech Challenge, and will be presenting at the upcoming Goldman Sachs Investor Conference.


Overall, due to the need for decentralized exchanges, we see on that goal alone, Airswap will be successful. Although there is competition in the space, we believe that Airswap has differentiated itself by targeting large, institutional investors. By targeting this market, which is sure to grow in 2018, we think that there is massive potential for success. The future is very bright for Airswap, and we certainly would not be surprised if more partnerships are announced, especially with the upcoming Goldman Sachs conference. We believe Airswap is a strong investment, and are bullish for 2018 and beyond.

If you enjoyed reading this, follow us on Twitter at @krresearch.

Disclaimer: We are not a financial advisor and this is not investment advice. Do not take this opinion as financial advice. We are a group of university students who are cryptocurrency enthusiasts. Our group focuses on blockchain technology and crypto economics.


Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch

Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore

Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store