Introducing LuaSwap.org

Multi-chain liquidity protocol for emerging token projects with no seed investment, founder’s fees, or pre-mining.

TomoChain Publisher
Sep 25 · 5 min read

Motivation

The AMM pool has become a very important crypto primitive in DEFI as a place to not only list and trade tokens, but also to provide price feeds that other projects can build upon. LuaSwap is the new swap protocol inspired by the previous AMM-based swap protocols such as Uniswap and SushiSwap. However, LuaSwap’s redesigned tokeneonomics and operation strategy addresses the short-comings of other swap systems. At the core, LuaSwap delivers a community-governed, multichain protocol via the LUA token. The focus is to support smaller pools of emerging tokens instead of fighting for liquidity within the top token pools. Furthermore, LUA’s token economics is re-designed with a vesting schedule to not only reward early adopters but also incentivize them to stay and participate in governance for a longer period of time. The protocol will have a fair launch with no seed investment, founder’s fees, or pre-mine.

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Go to LuaSwap.org

LUA Token

The LUA token will be given to Liquidity Providers (LPs) to incentivize them to stay with the protocol. Holding the LUA token means holding a share in the governance of the protocol. All LUA token holders can decide the subsequent chains to implement LuaSwap on, how much LUA to distribute to LPs in the new chain, which new token projects LuaSwap should support, etc.

The Economics of Token Farming

Essentially, the purpose of token farming is to distribute a certain amount of protocol tokens over time. However, over the long term, the token has value if, and only if, the protocol is valuable. We can break down the long-term values of a protocol into several sustainable qualities such as: product innovation; product utilities; network effect of the community of contributors and users; and defensibility over forks and clones etc. Token distribution can have the biggest impact on solidifying the network of the community of users and contributors, and in our view it has to be designed carefully to prevent short-term opportunistic yield farmers who sell immediately and leave the protocol as soon as the farming yield drops. Furthermore, token distribution via yield farming can strategically support pools in which the majority of pool liquidity will reside in LuaSwap over the long term.

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Token Distribution

LUA hard-cap is at 500 million LUA. The base reward is 10 LUA per block divided across all existing LuaSwap pools. LUA farming features a short-term hyper inflationary period of 8 weeks in which block rewards have a 128 times multiplier in the first two weeks, and are halved every week afterward. 25 percent of tokens farmed in this period will be released immediately, while the 75 percent remaining will have a one year vesting period starting approximately at 17th week. The vesting period ensures token farmers have incentives to stay with the protocol over the long-term.

LUA hard-cap: 500 million LUA.

The base reward: 10 LUA per block divided across all LuaSwap pools.

The hyper inflationary period:

  • Duration: The first 8 weeks
  • Block rewards have a 128 times multiplier in the first two weeks, and are halved every week afterward.
  • 25 percent of tokens farmed during this period will unlock immediately.
  • The other 75 percent are fully locked for the first 16 weeks, then unlocked LINEARLY every block (appr 393,544 LUA/day) for a 1 year period, starting at week 17.
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Initial Pools

TOMOE*-USDC

TOMOE-USDT

TOMOE-ETH

LUA-USDC (x2)

LUA token holders can exercise governance immediately by voting for the next pools in LuaSwap. Subsequently, new pools will be listed approximately every 3 days after staking starts using LP tokens from Uniswap and SushiSwap pools.

*TOMOE is an ERC20 token hosted on the Ethereum blockchain (Contract address: 0x05d3606d5c81eb9b7b18530995ec9b29da05faba) and backed by an equal amount of native TOMO (on the TomoChain blockchain). One TOMOE is worth the same as one native TOMO at any given moment. Users can convert back and forth between TOMO and TOMOE at any time via TomoBridge.

Liquidity Migration

Farming LUA on LuaSwap will start by staking Uniswap LP tokens from our Uniswap Pools. The swapping facility will be launched approximately 4 weeks afterward. When that happens, we will run migration contracts that migrate staked pools from Uniswap and SushiSwap to LuaSwap automatically. Users and liquidity providers won’t need to do anything if they want to stay with LuaSwap.

Treasury Fund

An additional 10% of all LUA distributions will be set aside for the LUA treasury. The LUA treasury will be spent on auditing, development, rewarding contributors, and supporting new token projects by providing liquidity to LUA/new token pool. All spending proposals will be submitted via LUA governance platform. Similar to the Uniswap’s current setup, all the trading fees (0.3% of swap values) will be shared with the pool’s liquidity providers.

Later on, governance can trigger the smart-contract to impose a withdrawal fee of 0.5% or a time decaying fee on liquidity provider withdrawals and direct that revenue to LUA token holders. This proposal will reward token holders at the expense of short-term liquidity providers while keeping the fee share of loyal liquidity providers relatively stable.

Protocol Development

LuaSwap will improve with several additions planned for implementation. The first one is to port LuaSwap to other low cost, more performant public chains which will increase brand awareness, number of users, and increase the cash-flow to the protocol. The second is to work on a version of the AMM swap that can support leveraged trading which will potentially collect a larger share of fees than spot trading. The third is to improve the constant function algorithm to support new features, such as having more than a single pair of coins in one pool, or reducing impermanent losses. There are also other DEFI features beside protocol development that can be added into the LuaSwap platform. New developments and respective budgets will be proposed via the LUA governance platform. The community can decide on the development priority to fund and to be implemented in LuaSwap.

Smart-Contracts

The contracts are available at

https://github.com/tomochain/luaswap/tree/master/lua-contracts

The main two contracts are:

  • LuaToken: The LUA token contract. Implement token emission with vesting. Built-in voting with LUA token (Compound voting module)
  • MasterFarmer: Deposit LP tokens to farm LUA with new allocation points.

Governance, migration and swap contracts will be implemented in the later phases.

All contracts written have reasonable test coverages and subject to internal auditing. We will continue to do more testing, and invite professional third parties to audit the codes. If any of you think there’s any issue with it, please let us know (preferably privately if it’s a severe issue) via Telegram.

You can start depositing Uniswap LP token using the interface at

https://luaswap.org/

You will begin to farm LUA starting from block 10,950,600 (approximately in 72 hours). Be sure to stake your LP tokens prior to that for maximum LUA.

Follow LuaSwap on Twitter | Telegram | Medium | Website

LuaSwap

Multi-chain liquidity protocol for emerging token projects

TomoChain Publisher

Written by

LuaSwap

LuaSwap

At the core, LuaSwap delivers a community-governed, multichain protocol via the LUA token. The focus is to support smaller pools of emerging tokens instead of fighting for liquidity within the top token pools.

TomoChain Publisher

Written by

LuaSwap

LuaSwap

At the core, LuaSwap delivers a community-governed, multichain protocol via the LUA token. The focus is to support smaller pools of emerging tokens instead of fighting for liquidity within the top token pools.

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