What is a DEX — and What Makes FairySwap Different from the Rest?

FairySwap is the first Automated Market Maker DEX to launch on Findora.

To understand the magic of FairySwap, it’s important to know what DEX is. Here’s a quick rundown:

What is a DEX?

If you’re at all familiar with crypto, chances are you’ve heard of a DEX — short for decentralized exchange. DEXs allow people to earn passive income and trade cryptocurrencies without any central authority. It’s an automated trading platform where users reap the rewards usually taken by bankers and investment managers. Users hold the private keys that control their assets meaning the DEX itself can’t freeze or seize your funds.

Centralized exchanges, on the other hand, are ‘custodial,’ meaning they do control your funds and can freeze your money. The main benefit of a centralized exchange (or CEX) is they allow users to convert fiat money into cryptocurrency. Although CEXs also let users trade and earn passive income, they require a KYC process (short for “know your customer”) that forces users to divulge personal, identifying information.

By contrast, DEXs tend to have no KYC requirements. Anyone is allowed to access them and benefit from them. DEXs are DeFi’s version of banks and stock brokerages rolled into one — except without bankers and middlemen facilitating trades and taking large percentages. People often get 10x to 100x the return they would get from any bank-issued interest account.

Why don’t DEXs need bankers or brokers? They use Automated Market Makers (AMMs) which are a bunch of code that automatically matches trades and traders. Trading on a DEX, you actually trade with the AMM which represents your offers to other traders and other traders to you. All transactions are public on the blockchain ledger so that they can be publicly and transparently verified. The DEX is funded through small fees that traders pay for each trade.

The Problem with DEXs

DEXs don’t come with all the safety nets a bank does, but for many, the benefits seem to outweigh the drawbacks. The TVL (total value locked) in DeFi rose from just $19 billion at the beginning of 2021 to $310 billion by the end of the year.

With that much money at stake, privacy becomes more and more important. While many people believe crypto is anonymous, this simply is not true — all your transactions are traceable to your wallet address, and all the transactions to and from your wallet are put onto the blockchain so they can be publicly verified. It’s this system of verification on a public ledger that allows DEXs to bypass banks and any central authority — because everyone can check the blockchain, you don’t need to trust a central institution to make sure everyone is being honest.

If your wallet address ends up being tied to your personal identity, it would in some ways be worse than a data leak on Web2 — essentially, your entire transaction history will be permanently and immutably public.

Thus, while public ledgers and blockchain technology represent a huge advance in finance, they also pose novel privacy headaches.

FairySwap changes this. By using cutting-edge cryptographic technology, FairySwap evolves decentralized finance into privacy finance, or PriFi, creating a safer and more consumer-friendly path to democratized money.

What Makes FairySwap Different

FairySwap was made, first and foremost, to tackle the privacy problem — we believe that privacy should be as essential to crypto as decentralization. But its founders wanted to do more than that. FairySwap, using the Findora Blockchain’s EVM, offers fast transactions with low gas fees, and will let users easily transfer assets from other chains. By giving users control not only of their funds but also their data, FairySwap is bringing a new age of digital dignity to Web3.

What makes FairySwap Private?

FairySwap offers confidential transactions by allowing smart contract inputs to be encrypted. Users will be able to shield certain transaction data like the sender, receiver, transaction amount, and type of asset involved.

The key to this functionality is the Findora Blockchain. Using zero-knowledge proofs, The Findora Blockchain has a unique public ledger that lets transactions be publicly verified without revealing any details of the transaction. FairySwap uses Findora’s advanced cryptographic functions, like bulletproofs and anonymous transfer to protect user information.

Users can choose not to shield certain data, or even allow public third parties to audit it without revealing it on-chain. This is an important feature for compliance requirements in various countries and gives control of data back to the user — the people who truly own it.

Community Governance

While many projects claim to be community governed while barely giving users over 50% of governance tokens, FairySwap will distribute 97% of its governance tokens to members through liquidity mining. Absolutely none are reserved for advisors, founders, or insiders of any kind. It is truly a community-governed project. The remaining 3% of its tokens will be used to launch and fund the DEX and various community events.

FAIRY tokens are distributed through liquidity mining. FAIRY tokens give voting rights to the holder on FairyDAO, where members will vote on Fairy Improvement Proposals. The FAIRY token has deflationary mechanics similar to Ethereum built into its tokenomics with a portion of every trade being sent to a “swamp address” (the equivalent of being “burned” on Ethereum). Users will get to vote on things like adjusting yield farming multipliers, taxation policies, reward levels, and more.

Fast and Friendly

Using Findora’s EVM, FairySwap offers transactions that finalize in seconds with minuscule gas fees. Because it is EVM-compatible, FairySwap will be interoperable with any EVM-compatible chain, like Polygon, Ethereum, or Binance; the Rialto Bridge already links FairySwap to BNB Chain. High speeds and low fees — that’s the magic of FairySwap.

Conclusion

The first DEX on Findora, FairySwap takes the issue of privacy head-on and evolves DeFi to Pri-Fi. FairySwap will mint FairyNFTs on Findora, which will be able to keep the owner address anonymous and act as avatars in FairySwap’s upcoming play-to-earn ecosystem, “FairyVerse.”

Decentralization freed finance from the traditional gatekeepers, but privacy is another necessary layer that must be built to make DeFi truly successful. Otherwise, with all data permanently and immutably recorded on the blockchain, Web3 may end up being more invasive than the worst parts of web2.

To help promote privacy on DeFi, or to enjoy it for yourself, join the FairySwap community on Discord, Telegram, or Twitter. Or farm FAIRY tokens yourself to vote in FairyDAO. We believe DeFi will play a big role in the future — but only if projects like FairySwap succeed in making privacy an integral part.