Introducing Swap Drops: Risk Free OTC Trades in a Shareable Link

Published in

FerrumNetwork

6 min readAug 12, 2020

Dear Ferrum Community,

Since we founded Ferrum Network in 2018, our goal has been to advance mass adoption of cryptocurrencies by building useful technology that solves fundamental problems in the space. From our fiat gateway for the underbanked in Africa, to our Link Drop technology, to our DeFi Staking Platform for decentralized high-yield returns, Ferrum has been solving real problems for real users since day one.

With that approach in mind, we are proud to announce the launch of Swap Drops: Risk Free OTC Trades in a Shareable Link.

Swap Drops is nothing short of a revolution in the OTC market. It eliminates escrow and replaces it with a decentralized atomic swap smart contract embedded in a shareable link. This means participant can make risk free OTC trades over any messenger app using a link, turning any mobile device into its own risk-free OTC desk.

Want to make a P2P trade over Telegram with no counter party risk? Want to avoid slippage and high fees on on Uniswap? Want to sell $50,000 of an alt coin position without moving the market? Perhaps you want to buy the hottest new altcoin, but don’t want to risk getting scammed in an OTC channel.

With Swap Drops, you can swap any ERC-20 token in UniFyre Wallet peer to peer with no counter party risk and you can conduct those swaps anywhere — Telegram, We Chat, Discord, even e-mail!

In this article we describe the problems in the OTC market and limitations in existing solutions, we also provide a demo on how to perform a Swap Drop, and an explanation of the transformational technology underlying this innovation.

So who’s ready to Swap Drop?!

The Problems with Traditional OTC: Escrow, Fees, Middlemen and Scams

Over-the-counter trades (OTC) always present the same issue of counter-party risk. Say you agree to buy $10,000 USDT worth of LINK tokens from someone and send them the funds, but the other side does not uphold their end of the deal? Traditionally, this problem is solved by a middleman, also known as escrow, which takes custody of the parties funds and ensures both sides complete the transaction before releasing the money.

Of course escrow agents charge high fees, slow down the speed of transactions, and they sometimes even scam people and run away with the money!

Swap Drops solves the problem of escrow and eliminates middlemen entirely, bringing the power back to the users. But it also adds a layer of security and innovation in terms of its ability to perform these Swaps over any medium.

The Limitations with Other Smart Contract OTC Solutions

Because the OTC is market is so large, and the problem of escrow so pervasive, projects have launched a number of different decentralized solutions to this problem. And while all solutions have their pros and cons, we believe Swap Drops has some clear advantages over the competition.

For one, most existing decentralized OTC products confine the entire OTC experience within their own closed system. Meaning you need to log into their portal or website, locate buyers and sellers there, do the swaps within their closed system.

However, most of the action in crypto does not happen in just one website. The action happens on Telegram, We Chat, and Discord. But there was no way to do a risk free OTC transaction directly over these chat apps…until now.

With Swap Drops, you can conduct OTC trades over any platform. If you’re on Telegram finding a buyer and seller is easy — join our Swap Drops OTC Channel today!

The Limitations of Uniswap: Slippage and High Fees

While not a direct competitor to Uniswap, Swap Drops does offer some advantages over Uniswap in terms of slippage and fees. The primary issue with Uniswap is that there can be a lack of liquidity, especially among the smaller cap alt coins, which can result in slippage. For instance, if you want to buy or sell a large amount of a small cap project, you will inevitably experience “slippage”, or a discrepancy in the market price and the price you actually pay. If you hold any meaningful amount of a small cap alt coin, it becomes very difficult to exit that position without losing money due to slippage.

But even if you are a smaller trader not concerned about slippage, you still need to deal with $10+ fees for making even a small trade on Uniswap.

With Swap Drops there is no slippage, no impacting the market, and the fees are low. Plus finding a buyer and seller is easy through our Swap Drops OTC Channel!

How To Execute a Swap Drop

Executing a risk-free OTC transaction over Telegram using a Swap Drop is fast, easy and low-cost.

In fact you will pay no fees for the first two months (aside from Ethereum gas fees), after which time we will introduce a small fee in FRM tokens.

Here’s how it works. After you and a counterparty agree to terms on a trade, to execute the Swap Drop first to go “More Settings” on the UniFyre Wallet main page, and then to “Peer to Peer Swap”.

Then input the type/amount of tokens you will send, in exchange for the amount you wish to receive. You will sign this transaction, which will then allow you to create a Swap Drop link that can be shared anywhere (like Telegram private message). The counterparty will click the link, follow the same procedure, and both parties’ tokens will be sent onchain and ultimately arrive in the other’s UniFyre Wallet, all without any counter party risk. For a complete tutorial, please watch the demo below.

Watch the step by step demo -> https://www.youtube.com/watch?v=YdyFSJfxU4g

How Swap Drop Technology Works

Swap Drop technology adds an innovation to OTC trading by removing the escrow step and replacing it with an atomic swap. Here’s an example.

Let’s say Alice and Bob want to trade 1000 FRM for 500 USDT.
Alice will create a Swap Drop transaction using UniFyre Wallet. In this process she allows the Swap Drop smart contact to use 1000 FRM from her wallet.
She them generates a Unifyre Swap Drop link and shares it with Bob over Telegram.

Bob opens the link and executes the swap by signing the call to the smart contract. FRM and USDT will get exchanged between Alice and Bob accounts atomically.

Atomic execution means if any of transfers fail for any reason the whole swap will not execute. So there is zero risk to Alice or Bob to participate in this swap.

Swap drop adds an innovation to the OTC trading experience by removing the escrow step. So the contract will not escrow user funds, instead we have made the transaction atomic. This will improves the user experience, reduce gas fees compared to escrowed swaps and provides higher smart contract security as the balance of assets held in the smart contract will always be zero.

Final Thoughts

We know people may have questions about how to perform a Swap Drop, and in general how it can benefit them. For all questions, we encourage you to join the Ferrum Network channel where a friendly admin will be there to assist you 24/7.

Finally, cannot thank you enough for being on this journey with us. We look forward to seeing you in the Swap Drop channel making trades with each other!

-The Ferrum Network Team

About Ferrum Network

Ferrum Network is bringing DeFi to the masses with an ecosystem user-friendly DeFi products for swapping, staking, earning, buying and selling cryptocurrencies. Ferrum’s non-custodial UniFyre Wallet has revolutionized the way people send crypto with innovative Link Drop technology, and it will soon transform the OTC market with Swap Drop technology for risk-free OTC transactions embedded in a shareable link. Ferrum partners with quality projects to supercharge their success with technology such as the high-yield DeFi Staking Platform and a Token Bridge for swapping tokens between chains. Look for Ferrum to launch more transformative DeFi products throughout 2020 and beyond.