OpenSwap AMA Recap
A couple weeks ago we had the pleasure of hosting OpenSwap on our Telegram channel for a quick AMA with their founder, Bruce Chau, in preparation for the exciting new integration brewing between our two platforms.
If you’ve missed it, be sure to catch up with what was asked and answered during the event below:
Please introduce yourself to the community and tell us how you got started in crypto?
Bruce: I’m Bruce, a core team member and founder of OpenSwap. I am a recovering enterprise dev, enlightened by blockchain in 2018, and never looked back.
At the core, our team’s strength is technology, however, we’ve been aiming to build up a community of talent that crosses boundaries of technology, finance, marketing, and more through the many partnerships we have developed and continue to build.
We hope to attract more blockchain developers and contributors to our team through participation events such as hackathons that ultimately build up the #DeFi community!
Please tell us more about OpenSwap. What was one of the main objectives in starting the protocol?
Bruce: As the DeFi universe continues to expand, on-chain liquidity becomes increasingly scattered and less efficient across multiple chains and the situation is poised to get increasingly worse as new chains emerge with individual DEXs on each chain. The main objective of OpenSwap is to solve these challenges.
At OpenSwap, we position ourselves as every crypto project’s BFF by providing a set of core technologies to empower teams to establish sustained token health and attract liquidity from different chains. We hope our technologies can enable token projects to focus on what they do best — #BUIDL 👷🏽
OpenSwap’s core technologies are:
OpenSwap Bridge, an ANY-to-ANY single asset #cross chain bridge that offers more efficient cross chain swapping of chain-native digital assets through the use of our single-asset vaults in a decentralized manner.
Hybrid Smart Router, a set of smart contracts that identify potential swap paths leveraging both AMM pool smart contracts and liquidity queue contracts, helping swappers identify the most cost-efficient routing based on the availability of liquidity queues and AMM pools. (This functions similarly to 1inch’s router)
Liquidity Queue, an alternative method to the traditional AMM mechanism that can provide users the ability to make on-chain swaps at zero slippage 🔥🔥🔥. The Liquidity Queue technology can also be used for a variety of DeFi purposes such as conducting on-chain private sales, offering on-chain guaranteed token buyback (Anti-Rug IDOs and secondary raising), token flash sales, and much much more!
How does OpenSwap differentiate itself from the other bridges currently available?
Bruce: So to better understand this, firstly, we should all know that in the current cross chain environment, the most typical approaches that are being utilized are..
Lock and Mint Synthetics — A method used by the likes of Binance Bridge and Multichain (Anyswap), where native tokens are given to a centralized custodian who in turn mints a synthetic version of the token on a target blockchain. The decentralized version requires usage of decentralized custodians that are properly incentivized to behave appropriately. Majority of cross chain bridges are of the Lock and Mint variety, the difference mostly lies on how true decentralization is actually achieved, and also the bridge operators’ approach on key security.
Crosschain Liquidity Pair Pool — A method experimented and led by the likes of Thorchain, whereby liquidity providers stake pairs consisting of a native token with Thorchain’s RUNE token into pools, and Thorchain routes swaps leveraging the common RUNE token to facilitate cross chain swaps. With this approach, swappers are able to receive native tokens on the target chain instead of synthetics.
So unlike the conventional bridge types listed above, OpenSwap Bridge is introduced as a solution that offers more efficient cross chain swapping of chain-native assets through the usage of single asset vaults and a basket of decentralized mechanisms. With the incorporation of other OpenSwap technologies like liquidity queue and hybrid smart router, Open Interchain Protocol will form a fully transparent and capital-efficient end-to-end cross chain swapping solution!
Could you please expand a bit on your tokenomics and the utility of the OSWAP token?
Bruce: OSWAP token is the governance token of the OpenSwap ecosystem. The core purposes of the $OSWAP token are to:
🚀 Incentivize usage of the OpenSwap platform
🚀 Encourage users to get involved in governance
🚀 Enable a wide variety of platform privileges surrounding our core technologies and offerings
Specific to the OpenSwap Bridge, upon mainnet release, users who wish to utilize OpenSwap Bridge as their cross chain solution will need OSWAP tokens as transaction fees for their cross chain activities. Furthermore, for people who are holding Bridge Troll NFTs, if they wish to become node validators for the OpenSwap bridge, they would need to stake $OSWAP tokens as bond.
Bruce: There are also many reasons to hold OSWAP surrounding other OpenSwap core offerings such as setting up the different types of liquidity queues for different purposes, as well as for users who want to participate in OpenSwap NFT loyalty program, they’d need $OSWAP for staking.
OpenSwap has designed its tokenomics to support a sustainable long-term project ensuring that:
💥 95% of all tokens will be subjected to locking and gradual vesting schedules
💥 Over 70% of all tokens will be subjected to vesting schedules of over 24 months
💥 Core team allocations and related tokens are subjected to a long-term vesting period to ensure community member confidence
What steps have you taken to enhance the security of your protocol?
Bruce: Yes, keeping users funds #SAFU is of utmost importance to our team!
OpenSwap establishes trust with the community through 3rd party audited smart contracts and has protocol parameters transparently managed through our governance portal since our project launched.
So even though OpenSwap is still in beta, we want our contracts to be as solid as possible. This is why our core contracts are audited by the likes of CertiK, Beosin, and Peckshield! These are all leading blockchain security audit firms that combine manual testing, static analysis, and formal verification for the most robust smart contract security in the industry.
Furthermore, OpenSwap has partnered with projects in the insurance niche to cover our users’ funds. In case of payout, the coverage amount will be paid directly to our team, and we will distribute it to affected users. Currently the coverage includes contract vulnerabilities for core technologies deployed on Binance Smart Chain, and as additional core technologies such as the OpenSwap Bridge gets deployed on mainnet, we will continue looking into insurance options so as to safeguard 🛡 our users’ funds.
What are some of the motivations behind integrating with Axial?
Bruce: So.. for Trolls of you who haven’t heard, the OpenSwap cre team have recently kickstarted the testnet phase of OpenSwap Bridge by deploying on Ethereum Kovan, AVAX Fuji C-Chain, and BSC testnet.
And in light of launching our bridge on testnet, OpenSwap had introduced a partnership campaign called — the Bridge Founders Program — where we would identify and invite hand-picked projects that we deem solid to become part of the first cohort in integrating with OpenSwap Bridge upon our launch on mainnet.
We invited Axial to participate in the Bridge Founders program because we see great potential in Axial being able to offer a significantly lower swap fees for high-volume trades that involve value-pegged assets such as USDT.e and USDC.e, at the same time, just like OpenSwap’s Single Asset Vaults, it incurs little to no impermanent loss when users provide liquidity.
We believe we see eye to eye with Axial in many areas, especially when it comes to reducing impermanent loss for users and LPs! We can expect strong growth with $AXIAL. 🚀🚀🚀
A key area that we believe the OpenSwap Bridge can complement with Axial is through opening easy access points for new users and additional liquidity from different chains such as Binance Smart Chain, Ethereum, Polygon, Fantom, and pretty much any other EVM compatible chains in the future.
For OpenSwap, the inclusion of $AXIAL token to our Bridge Founders Program will help to enhance liquidity synergies for our bridge during the mainnet release, and we anticipate the Axial team to be an excellent strategic partner on Avalanche in addition to our existing strong network of strategic partners on BSC side such as Coin98 and Impossible Finance!
“Could you explain the basic concepts behind the liquidity queues and how it differentiates it from other DEX aggregators?”
Bruce: This is a great question, and I love that community members are reading up about our technologies!
OpenSwap’s liquidity queues is a new approach to onchain liquidity that offers traders and market makers a novel and efficient mechanism for carrying out onchain trades.
Onchain trades are growing exponentially since the introduction of Automated Market Maker (AMM) based DEXs due to the ease of listing new pairs and a straightforward pricing mechanism. However, all is not perfect with impermanent loss, lack of control for market makers and liquidity providers, and high transaction fees and price slippage for market takers.
At the core of all DEX swaps are the pricing mechanism. AMM DEX’s base pricing off of predefined constant product formulas (i.e. x*y=k) and arbitrage traders are incentivized to trade off the pool to keep it pegged to market prices. Although such a mechanism will reflect market pricing, it will only work for small volume trades due to the inherent slippage in the mechanism.
As noted above, rather than simply refining AMM formulas for modest improvements, OpenSwap’s liquidity queue technology removes the one-size-fits-all approach of current DEXs. instead of a single pricing mechanism. OpenSwap believes that pricing should be based on individual use cases. As such, the liquidity queue base layer technologies can be shaped to create different queue types, with each queue type based on a different pricing mechanism.
Liquidity Queue will enable trades to occur at spot-market prices obtained from decentralized oracles, and it uses a secure adaptor protocol that guards against many of the shortcomings of using oracles. The secure adaptor protocol includes a series of customizable circuit breakers that ensure that liquidity providers are protected against front-running or recent security exploits as trades that fail any of the circuit breakers will not be carried out.
OpenSwap Liquidity Queues are designed for token pairs that have a well-established off-chain spot market price provided by oracles. Instead of using the oracles directly, OpenSwap has created a secure adaptor protocol to leverage oracle pricing in a controlled manner providing traders with the security of layered circuit breakers that guard against sudden price fluctuations, front-running, and compromised smart contracts.
“What role does the Bridge Troll NFT play in the Openswap ecosystem and is it traded in any secondary NFT marketplace?”
Bruce: Not to say that other NFTs are bad but ours is really one of a kind. Our NFTs have actual DeFi utilities. Upon deploying our single asset cross chain bridge on mainnet, there will be validators monitoring each order request and only our NFT bridge troll holders can become node validators, so you can think of it as a license to earn lucrative bridge fees for helping keep the troll network secure.
Moreover, we integrated with Chainlink VRF in the generation of our NFT trolls. Even though all NFTs of the same level share the same functional role in our Open Interchain Protocol (single-asset cross chain bridge), they are NFTs with graphical properties such as backgrounds, clothing, facial expression, and rarity etc. We needed an RNG that is secure and open to ensure system integrity and prevent potential manipulation. We went with Chainlink’s VRF, this way our participants are provided with automated and publicly verifiable assurance onchain that our Trolls are truly generated randomly. We value integrity, fairness, and true randomness at OpenSwap!
“What kind of partnerships with different projects/platforms/protocols can we expect from #OpenSwap in the future?”
Bruce: Yes, at OpenSwap, we believe that having strong partnerships is the key to success in the DeFi space, and as I am a buidler myself, I love helping other projects and people to buidl as well. We have a lot of top tier projects and institutions as partners. Axial is of course on the list!
To name a couple more, we have the likes of Impossible Finance, C98, Double Peak, NGC, DeSpread, as our backers. And through our recent and ongoing co-operative initiatives such as the OpenSwap Bridge Founders program, we expect a lot of our partners to integrate with our single asset crosschain bridge upon our release on mainnet.
Currently, our Bridge Founders’ combined TVL is at around $500m, and we look forward to welcoming a portion of these liquidity as transactions using OpenSwap Bridge as their crosschain solution!
“Can I participate in Testnet now?”
Bruce: Yes, most definitely! The OpenSwap Bridge testnet event is on-going until our release on mainnet! We will be actively making changes and improvements to it on a weekly basis, so community members are welcome to continuously participate in it and help us find flaws and bugs as we update each subsequent patch!
Axial is an Avalanche-native decentralized exchange that is the centerpiece for liquidity of value-pegged assets in the ecosystem. It provides traders swap functionality with ultra low fees and slippage and is integrated into the best DEX aggregators in the space. Axial specializes in providing liquidity between a variety of stable assets, including bridged, synthetic or derivative assets.
The Axial DAO was the first project to be launched as a spinout of Snowball Venture Studio, which is led by one of the most experienced teams on Avalanche with a great record of transparency, community-focus and innovation.