Towards a community-owned & driven DeFi middleware
As we just concluded (and announced) our $2.7M seed round, we’d like to take the time to share insight on our vision of where DeFi is going and what role will ParaSwap fulfill in the ecosystem.
2020: The Summer of DeFi
The summer of 2020 was explosive for DeFi! The $1 billion locked in DeFi was a significant milestone crossed in June and it soon led to other records. There are now over $8.5 billion locked in DeFi.
However, the real story lies beyond the figures — which are a delayed indicator of the shift at play. In a few months, DeFi became the world’s biggest and most active open financial laboratory.
Indeed, the pace of innovation in the DeFi space increased drastically in the wake of Yearn’s release in June. It triggered an unprecedented wave of diverse and ambitious financial experiments. On top of this boiling situation, the innovative launch (“Vampire-Mining”) of SushiSwap bolstered even more innovations for decentralized exchanges.
With the multiplication of decentralized exchange to pool liquidity on, attracting and retaining pooled capital became even more critical. The “Liquidity Wars” — the race to attract liquidity as fast as possible to reach critical mass — are just beginning. We expect to see more innovative DEXs emerging over the coming months.
Abstracting away abstract concepts
The Liquidity Wars is great for DeFi, as it’s driving more and more capital to be engaged and active on the markets by providing liquidity or staking tokens for instance, for additional earnings. However, it makes DeFi even hard to navigate for newcomers — how to filter through the noise?
Accessibility is a key value for our industry. And indeed, to start using any DeFi service such as ParaSwap, all you need is a wallet: pretty simple, right? However, that would be losing sight of all the learnings someone discovering the space today is facing:
- What option should I pick for my wallet? What are their advantages and benefits?
- Ok, I’ve got my wallet, how do I properly secure it?
- Alright, I’m ready to buy some tokens now: which ones, where, and how?
- Alright, I have some ETH —we wanted to take a minute to lay where/how to exchange them to other tokens efficiently?
- Ah, I see, so I have to transact on Ethereum — what is this gas thing about?
These are the basics anyone stumbling in the space quickly runs into. It becomes hard, not only for outsiders but even for people working in the space to navigate this complexity. And we haven’t even ventured into more advanced use cases like liquidity providing or staking yet.
Imagine a team developing an Ethereum wallet: do they have the in-house expertise to make the shots on which decentralized exchanges to support and why? Should they even be making this decision — is this part of the core value they provide? Once they’ve reached an agreement, how can they support it? How can they hedge against failing transactions & rising gas costs? It’s an endless list of questions remote from their core expertise.
Middleware + Expertise: ParaSwap’s path
Answering these questions and the many others that trail them requires a serious understanding of how Ethereum and the main DeFi protocols work. The ever-increasing complexity of token swaps is booting out of the space anyone without significant resources to dedicate to understanding it.
Yet as DeFi keeps growing, more and more people will onboard and look eventually move their way down the financial stack. They will learn about Ethereum and eventually get to swaps, staking, and even liquidity providing.
With its unique position as community-driven middleware, ParaSwap already provides a key element helping to solve this issue: a single interface to compare rates across the main DEXes and execute orders efficiently. It facilitates the integration of token swaps in any Dapp, such as a non-custodial wallet paired with a Visa card — Monolith — which integrated ParaSwap last June.
ParaSwap’s goal is to abstract the complexity of swaps for dApp developers to enable them, in turn, to deliver a simple and efficient experience for their end-users.
We picture the path forward as one of progressive decentralization. Indeed, while ParaSwap aggregates the liquidity from decentralized exchanges and sticks as close to the chain as possible, there are still some parts of the infrastructure running on web2.
So we’re now working on the next step — a structure to orchestrate the interactions between all parties involved in the ParaSwap ecosystem: users, liquidity providers, market makers, gas token minters, the team, and others.
Of course, the road to decentralization is paved with more than technical bricks. This journey necessitates an engaged community ready to take charge & we’re now working on making sure ParaSwap is worthy of it.
Stay tuned, as this is just the first step! We have more exciting news coming we’re looking forward to announcing. Thanks to several key hires we’ll reveal shortly, we’re now ramping up firepower to support our rapid growth — both for the product development as well as for the community engagement.
Thank you for your support!
Let us conclude with a huge thank you to our early users and investors: ParaSwap is growing since day one thanks to the support of its community.
We’re thrilled to have received support from key players of the ecosystem, including Blockchain Capital, Lemniscap, Coinfund, Spartan Capital, CoinGecko, Alameda Research, CMS Holdings, Arrington XRP Capital, Woodstock Fund, Jarvis Network, DeFiance Capital, Stani Kulechov (founder of Aave), Itamar Lesuisse & Julien Niset (founders of Argent), Zurab Kazhiloti, Réda Berrehili, Cyril Paglino, Rand Hindi and David J. Namdar., and many others!
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