Announcing KLAYswap: Klaytn’s decentralized, automated liquidity protocol
Finally, the day that everyone has been waiting for!
Today, we introduce the official launch schedule of KLAYswap, the AMM protocol for the Klaytn Network, as well as KLAYswap’s capabilities and governance token, KSP (KLAYswap Protocol).
The AMM (Automated Market Maker) protocol we are launching is a decisive DEX protocol that has now brought the Decentralized Finance (DeFi) market to the general public. Simply put, AMM is a protocol that supports immediate swapping between tokens by replacing the existing buy/sell orderbook structure with a Liquidity Pools created on- chain by liquidity providers.
Looking at representative DEX examples like Uniswap, an Ethereum-based AMM protocol currently hosting around $2.7B USD in liquidity pools, it is clear that plentiful liquidity is needed to boost the Decentralized Finance ecosystem as a whole by allowing easy transactions. For this reason, ozys, the developers of KLAYswap, created a high liquidity environment in which assets not only of the Klaytn network but also of other networks, including Ethereum, can enter Klaytn.
We even take it a step further than Uniswap by ensuring significant trade volume by using a transparent IBC bridge, ozys’ Orbit Bridge, to offer yield farming with asset pairings previously unconnected in the decentralized world. We’ll touch upon more of that later. Today, we introduce KLAYswap, a DeFi solution that can take advantage of this high liquidity environment.
KLAYswap!- AMM-based Instant Swap Protocol
AMM is an innovative trading mechanism that evolved from order book-based DEXs to change the way we trade cryptocurrencies on-chain. Instead of buy/sell order books, liquidity pools created by liquidity providers allow traders to trade freely, and liquidity providers share any generated transaction fees as revenue in proportion to their individual liquidity contributions. In addition, any holder of KCT (Klaytn Compatible Token) type tokens can become a liquidity provider.
The AMM mechanism of KLAYswap is based on the formula x * y = k where x = KLAY, y = KCT Token, and k = Constant Function. The token price range is set according to the quantity of each token when the corresponding liquidity pool is created. For example, if the liquidity supply of x (KLAY) increases, the supply of y (KCT token) decreases to maintain the constant function, k. In this way, the supply of each token in the liquidity pool is designed to fluctuate with prices set accordingly.
In other words, KLAYswap is an instant swap protocol that operates with an on-chain liquidity pool, where liquidity is guaranteed by automated market-making (AMM) mechanisms. It is an on-chain swap service that allows anyone that has any KLAY or KCT-type token cryptocurrency to become a liquidity provider and earn income from transaction fee commissions.
Liquidity Providers: You can provide liquidity by matching KLAY-KCT pairs with the token contracts created in KLAYswap’s Pool Menu. If providing liquidity, you will receive a Liquidity Provider (LP) token as a supply certificate. You will receive a reward share of the fees from that respective pool as a contribution reward.
Traders: Tokens listed in the protocol can be traded with KLAY or KCT within the scope of the respective pool. The transaction price is based on the existent number of pairs of the respective tokens.
*Note that slippage (a difference in the estimated price at the point of transaction and the actual price at time of transaction) may occur in AMM-based swap protocols. In addition, a liquidity provider may experience Impermanent Loss (change in price of deposited assets compared to when they are deposited) as token prices in pools are adjusted by an AMM mechanism after the point of supply.
Please keep these risks in mind when providing liquidity or conducting transactions.
KSP (KLAYswap Protocol) — Governance Token
KLAYswap, as a trustless on-chain swap protocol, is a service created by all participants (liquidity providers, traders, and community members) and not by a particular operator. With this and the decentralized, trustless philosophy of blockchain in mind, KLAYswap issued the KSP (KLAYswap Protocol) governance token so participants can create KLAYswap’s policies and direction and lead to the gradual, continued development of the service.
With the KSP governance token, KLAYswap is officially owned by all participants and allows participants to obtain their own continuity of service. KLAYswap, valuing the principle of neutrality and trustlessness, limits the role of KSP to contributing to the development of protocols and the development of service ecosystems so that the protocol’s governance can be strictly observed.
The KSP token has a structure in which tokens can be acquired through Liquidity Mining according to the role defined by ecosystem governance. Total Supply is 126,144,000 KSP and Initial Starting Supply volume is 0 KSP. The first liquidity mining program will begin at the block
43407094 (November 11, 2020 at 09:00 AM (UTC+9)). Further details of the liquidity mining program and the KSP token matrix are shown on the following pages.
1. KSP Allocation
- Total Supply: 126,144,000 KSP
2. Initial Starting Supply*: 0 KSP
3. Daily KSP Mining Volume**: 86,400 (1 KSP per block for the first 63,072,000 Blocks (around 2 years))
4. Halving: Every 63,072,000 blocks after the Liquidity Mining Program begins, the daily mining volume is halved.
5. Development & Stabilization Commission***: 15% of mined tokens, only for the first two years (After 4 years, it will amount to 7.5% of total supply)
* Setting the initial KSP supply at 0 ensures that initial users will have equal opportunity to freely grow and make systemic decisions. From the beginning, KSP is distributed only through liquidity mining in each Genesis block, and is distributed to KLAYswap liquidity providers as compensation.
** All KSP mined until block
48681371 will be locked-up (Initial supply until this point: 5,184,000 KSP) to stabilize governance and the early token economy. (Estimated time until block
48681371 is around 61 days)
** The first minableBlock is block
43407094 . The KSP mined during the period from this first minableBlock to the unfreezeBlock
48681371 , will be unlocked at block
*** The Development & Stabilization Commission is used by the developers in the initial stages of setting governance and optimizing the overall transaction environment of KLAYswap.
KSP (KlaySwap Protocol) Token Contract: 0xc6a2ad8cc6e4a7e08fc37cc5954be07d499e7654
2. Main Utilities of KSP
A. KCT Token Pool Contract Creation Fee
- A specific amount of KSP (Pool Contract Creation Fee) must be paid when new KCT token pair pools are created on KLAYswap. This amount will be burned.
B. Governance Voting
- KSP holders directly participate to decide the direction and policies of KLAYswap
- Example) Decisions over changing important factors such as the Pool Contract Creation fee, transaction fee, mining distribution, and contracts.
3. List of Initial KSP Mining-Possible Token Pairs and Mining Ratio
1/KLAY-sKLAY — 25% — 21,600 KSP
2/ KLAY-KDAI — 15% — 12,960 KSP
3/ KLAY-kETH — 15% — 12,960 KSP
4/ KLAY-kORC — 15% — 12,960 KSP
5/ kETH-kUSDT — 15% — 12,960 KSP
6/ kETH-kWBTC — 15% — 12,960 KSP
- As new mining-possible token pairs are added to KLAYswap the mining ration and amount will change. As stated previously, KSP can be used by any holder of KLAY/KST type tokens can create a new liquidity pool through Governance voting.
- Orbit Chain’s Orbit Bridge [https://bridge.orbitchain.io] allows you to securely bring Ethereum-based tokens, including ETH, into the Klaytn network. However, when moving tokens to another chain, be sure to refer to the documentation guide for the precise transfer method.
KSP is a governance token with which holders have the responsibility and authority to determine governance agendas in compliance with the protocol-related rules and regulations. Governance is the decision of protocol policies, so holders can have a significant impact on the future direction of the service. As such, please use careful consideration when you participate in governance.
KLAYswap — Competitive Advantages
KLAYswap is having a security audit conducted by Certik, a globally renowned security audit agency. The KLAYswap protocol is comprised of and operates through a variety of smart contracts. A single, small vulnerability within a smart contract can lead to devastating accidents related to service availability and security. KLAYswap puts the safety of its users’ transactions first, and is in the process of getting a security certification with Certik to assure safe protection against any possible security incidents in the near future.
KLAYswap is not a copycat of Uniswap, neither is it a simple fork. We’ve developed KLAYswap from the ground to make it go much further than just offering liquidity mining as Uniswap does. The structure itself assures substantial and significant trading volume centered on sKLAY and KLAY. In particular, since sKLAY is an asset bonded to a staked KLAY, there will be an interesting market where the demand for a ‘discount’ to avoid the 7-day unstaking period and the demand to purchase KLAY at a lower price than the market price will meet. Especially if one contributes to this sKLAY-KLAY pool, the possibilities are:
1. Acquiring KSP Mining Tokens
2. Obtaining KLAY from KLAYswap transaction fees, and,
3. Holding sKLAY allows you to obtain KLAY staking compensation.
The guaranteed return on item (3) is not found in any other swap service and will enable the creation of more value while also addressing the sustainability issues of DeFi.
KLAYswap can deal with not only Klaytn-based tokens, but also with other network-based tokens by utilizing Orbit Chain’s interoperability to meet the Klaytn Foundation’s goal of addressing a wide range of real-life digital assets. Ethereum-based tokens (ETH, ORC, DAI, WBTC) can be transferred to the Klaytn ecosystem via Orbit Bridge.
In addition, the LP tokens given as supply vouchers to liquidity providers can generate profits on their own. They are enabled to be linked to other financial protocols and be exchanged among all stakeholders in the ecosystem. Klaytn can create innovative financial applications by utilizing the LP token. To sum up, KLAYswap is an important starting point to activate Klaytn’s economic ecosystem with guaranteed scalability due to its injection of increased interoperability and asset efficiency.
KLAYswap awaits your participation!
In KLAYswap, a complete on-chain instant swap protocol, traders can not only experience immediate transactions via liquidity pools, but also develop services by deciding the policy and direction of KLAYswap with the KSP governance token.
In addition, users can receive various forms of compensation, including transaction fee revenue, for contributing to the growth of the protocol. Various people can participate in the KLAYswap ecosystem, including long-term investors who want to hold cryptocurrency for a long time, investors who want to earn income through commission fees, and miners who want to participate in KLAYswap governance through KSP mining.
For those of you who have wanted to experience DeFi but have had difficulty participating due to its low accessibility and being unfamiliar with how it works, we expect that you will be able to experience and enjoy DeFi easily with the launch of KLAYswap.
For those of you who are familiar with DeFi, we expect that you will be able to experience a new avenue of growth opportunities, where returns and APY are set with full transparency. With KLAYswap you have the chance to be an initial user, with the initial allocation volume being zero. Everyone has free opportunity to grow. You will be the first users that decide and make the system.
We look forward to your participation and look forward to the various DeFi protocols that will be created in the Klaytn network with the start of KLAYswap.