Netswap Litepaper

Netswap
5 min readDec 5, 2021

The Layer2 Native DEX, Built for Web3 Economy

Introduction

Netswap is a decentralized exchange (DEX) which runs on Metis Andromeda (Layer2).

As the core value exchange place, Netswap uses the same automated market-making (AMM) model as Uniswap. However, unlike Uniswap, Netswap is a native Layer2 DEX, which will utilize the key features of Metis Layer2, including low transaction cost, high transaction speed and high scalability to support various bridged and Layer2 native tokens, and more innovations.

Netswap believes that with the affordable and scalable infrastructure of Layer2, different DApps and even businesses will be able to fully exploit the feature of blockchain, and thus build a vivid and promising Web3 economy. To backbone that, Netswap will support various tokens, either bridged tokens from other chains, or native Layer2 tokens issued by different DApps. Furthermore, Netswap will embrace innovations. Netswap has worked with Wowswap to provide the built-in leverage swap function(up to 5X leverage), aiming to provide users with many more functions and ways to exchange value. More innovative functions will be released in the future. Third, Netswap also aims to be the propeller for projects to start their cold launch, the Launchpad that Netswap will release in the near future will help projects to build their initial community recognition and raise funds for the project development.

Beyond the significant performance upgrades to the technical status quo, Netswap is a community-driven DEX. The native governance token, NETT, enables the community to drive the development of the product in full. Netswap features a 100% community-focused token distribution model, meaning that all tokens are distributed directly to the community, without any allocations to team, advisors, investors, or insiders.

NETT Token Economics

Netswap has a native governance token called NETT that is fully community distributed and is capable of trading all tokens issued on Ethereum and Metis Andromeda.

1. Utility Token: A 100% Community-Driven Governance Token

To reinforce the project’s commitment to being created solely for the benefit of users, Netswap is following a fair launch model with its governance token (NETT). However, while NETT will enable all the governance activities of Netswap, and therefore its future development, governance proposals will not start until three months after the launch of Netswap. This waiting period of three months is to ensure that enough NETT is distributed to the community.

2. Distribution Breakdown

No NETT tokens are allocated to the team, investors, advisors, or any sort of insiders. Therefore, Netswap is entirely community-driven and entirely community-owned. NETT is capped at a supply of 100 million tokens, 100% of which will be distributed to the community according to Chart 1. The first 99% of tokens, or 99 million tokens, will be mined by the liquidity mining program. The remaining 1%, or 1 million tokens, are dedicated to a community airdrop.

Chart 1. NETT distribution. 99% of the tokens are given to liquidity miners and 1% to airdrop recipients.

3. Community — Airdrop Allocation (1% of NETT)

  • Promotion Plan — The first 10% of Airdrop rewards, or 100,000 tokens, will be distributed to the early members who participate in our promotion plan.
  • Scoring Plan — The remaining 90% of Airdrop rewards, or 900,000 tokens, will be distributed to the early traders and liquidity providers through our scoring system within the first 30 days after the launch of Scoring Plan. 180,000 NETT tokens are allocated to Swap Scores, and 720,000 NETT tokens are allocated to Liquidity Provider Scores.

Notes:

Swap Score = ∑(Swap Fees * Pair Rate)

Liquidity Score Pool List = ∑(USD value of LP Token when minted * Pool Rate * Duration)
*Impermanent loss is not considered

4. Community — Liquidity Mining Allocation (99% of NETT)

The vesting schedule is algorithmically specified as follows: starting from 29.7 M tokens(30%) for the first year, the number of tokens distributed will be reduced by 5% each year, until the distribution is complete. For reference, during the first year, roughly 81369 NETT will be distributed per day to liquidity miners. The full schedule of distribution of NETT in the liquidity mining allocation is shown below:

The liquidity mining program will start soon after our scoring plan ends. Part of the LP pool is planned as follows (will update in the future):

  • Metis Pools

○ Metis/USDT

○ Metis/USDC

○ Metis/NETT

  • NETT Pools

○ NETT/USDT

○ NETT/USDC

In order to incentivize early participants and NETT holders, the allocation ratio will be tilted towards the NETT-related pool. The proportion coefficients of the remaining pools are set according to the size of the liquidity.

At the same time, an additional 10% of each output reward will be issued to the dev team for technical incentives and project maintenance.

About Swap Fees

For every transaction made on Netswap, 0.3% transaction fee will be charged, in which 0.25% will be rewarded to LPs, and 0.05% will be collected by the platform.

NETT Governance

A big part of the value proposition of NETT’s governance is that it is highly community-driven. Because there are no insiders, such as investors, team members, or other such stakeholders, the development of Netswap remains entirely up to the wider community. Netswap governance will be live three months after launch and will enable several key actions, including but not limited to:

  • Modifications to the liquidity pools

Initially, the distribution of tokens will be entirely through the liquidity mining pools listed in the previous section. The liquidity mining period will remain active until the pools are altered or another community initiative is accepted as a formal governance proposal. Proposals may add and subtract liquidity mining pools or may allocate NETT directly to a user or a smart contract such as a community treasury.

  • Activating the swap mining program

Initially, the 99% of tokens, or 99 million tokens, can only be mined by the liquidity mining program. But we still keep a swap mining switch in our router contract. A proposal of activating swap mining is decided by the community.

  • Stake to participate in the launchpad

We will launch the functionality of a launchpad in the near future. NETT and Metis Token holders have the right of participation. More details of launchpad and more supported tokens will be announced in the future.

  • Proposals for more use cases

As a native asset on the Metis layer2, we believe that the NETT token still has a lot of potential to be used. Therefore, the community is encouraged to make proposals for using NETT tokens in the future.

Product Release Plan

Dec 6, 2021

  • Netswap launch on Metis Andromeda.

Dec 8, 2021

  • Netswap Scoring Plan release.

1–2 weeks after Netswap launch

  • Leverage swap(with WOWswap) release.

17 days after Netswap launch

  • First airdrop campaign.(500K NETT token)
  • Stake function release.(Stake NETT to gain Metis token rewards)
  • Adding NETT liquidity pools.

1 month after Netswap launch

  • Second airdrop campaign.(500K NETT token)
  • Farm(liquidity mining) function release.

End of Jan, 2022

  • Launchpad release.

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Netswap

Netswap, the first native DEX built on Metis Andromeda Layer 2 network.