Introducing Polkaswap

A DEX for the Interoperable Future

Jul 18, 2020 · 8 min read

The multi-chain universe is on the horizon: the future is interoperable. As we can see with wBTC, renBTC, and other wrapped Bitcoins being used on the Ethereum blockchain, people want to move assets from one chain to another for trading, convenience, and arbitrage opportunities. However, there is no decentralized exchange on which to have access to a multitude of assets existing on numerous chains. Networks like Polkadot offer us the opportunity to make this possible.

This is why we are building Polkaswap — a DEX focused on interoperability to connect the rest of the crypto ecosystem to Polkadot.

Polkaswap is a non custodial AMM DEX designed uniquely for the Polkadot ecosystem and the interoperable future. Polkaswap aims for liquidity, security, convenience and a user-friendly interface, where an immediate exchange of assets can take place.

The current DeFi applications focus on serving the Ethereum ecosystem and have very little focus on interoperability with other ecosystems. Ethereum of course has the huge network effects, but historically many of the builders of DeFi products have little understanding of how markets, TradFi, or financial products work. The other side of the Ethereum-based DeFi products can be likened to a Rube Goldberg machine, e.g., Maker DAO. Maker’s lack of a tight arbitrage cycle prevents its long-term stability and scalability; the possibility to blow up is always lurking on the horizon, hanging over the heads of users like the Sword of Damocles.

DeFi is eating CeFi

In order to accelerate the usability of cryptocurrencies (and eventually greater adoption), one of the most important pieces of network infrastructure is cryptocurrency exchanges. Establishing decentralized exchanges that users can use as an alternative to centralized exchange markets puts the power back in the hands of the user. CEX’s are like a black box — we can’t see what is going on inside and we have to trust the CEX operators, which is against the fundamental nature and ideology of crypto and decentralized networks. We have already begun the transition from centralized exchanges to decentralized, non-custodial exchanges. DEX’s are increasingly taking market share from CEX’s and are becoming new, lower-barrier-to-entry listing venues for tokens, with competitive UI/UX. Therefore, it is necessary for the cryptocurrency industry and emerging networks to have high quality, decentralized trading exchanges to stay relevant.

CeFi can’t turn away from the looming specter of a DeFi future.

Liquidity is the most appealing factor when people trade on CeFi, but DEXs are taking an increasingly higher market share in the global altcoin liquidity pool by dominating the trading volume for several coins popular amongst DeFi aficionados, like MKR, SNX, BAL, and RPL, and Initial Uniswap Offerings have taken the place of ICOs and IEOs of the past.

Polkaswap vs Ethereum based DEXs

  • Lower gas fees
    On current Ethereum-based DEX’s, gas prices for transactions are especially high and don’t make sense for lower volume traders. Gas fees will be lower using the SORA Network because the core infrastructure which uses Substrate is more scalable than Ethereum and doesn’t use expensive mining for consensus. Finally, the overall Polkadot architecture allowing virtually limitless composability between blockchains, so the economies of scale for transactions volumes can lead to lower costs on the more modern and scalable architecture.
  • On-time transactions
    If you are currently using a DEX on the Ethereum blockchain, you will find that these DEX’s are simply too slow as there is a time lag between the time a transaction is sent and the time it is validated. Polkaswap solves this by using Substrate, which is much more highly performant than Ethereum. In the future, the multithreaded and scalable architecture of Hyperledger Iroha v2, written in high-performance Rust, and its Sumeragi voting-based consensus algorithm, will provide fault tolerance and finality for tens-of-thousands of transactions within seconds, providing Polkaswap users with an experience closer to trading on a CEX than current DEX’s.
  • A team experienced in building blockchain fintech
    Decentralized exchange protocols are often built by new and inexperienced developers and stress tested with real money. As we have seen with bZx, Balancer, dFund and FTX who played the BAL distribution, that’s why there are so many “hacks” that game flawed smart contract logic and token economics. With experience developing solutions for central banks and multiple blockchain technologies including Kagome, a C++ implementation of the Polkadot Host and the C++ Filecoin implementation, Soramitsu expects to create a framework tailored to interoperable DeFi on public blockchains.

The $PSWAP Token

Polkaswap will have 0.3% trading fees per transaction, like Uniswap. Trading fees are used to buy back and burn PSWAP tokens and new PSWAP tokens are minted to reward LPs. Rewards to liquidity providers start at 100% of burned trading fees and gradually goes down to a flatline at 35% of daily burned tokens after 5 years.

Web3 Foundation Grant

Polkaswap and Sora

Since the Polkadot relay chain is not meant for processing smart contracts, Polkaswap should be built on a scalable and robust platform that allows smart contracts that then connects to the Polkadot relay chain. The SORA Network fulfills this need.

What is SORA?

SORA NEO: The New Economic Order
SORA acts as an autonomous virtual state, governed by holders of XOR via multi body sortition, where token holders can vote on creating and allocating new tokens for productive uses within its ecosystem. The project has evolved based on macroenomics research and the latest DeFi possibilities and is in the midst of an exciting and innovative token redesign.

SORA Architecture

The SORA Network’s parachain will provide a bridging pallet compatible for any substrate based network. This framework will standardize a direct and secure interaction between Polkadot parachains implemented on top of Substrate and Polkaswap and the SORA network. This design allows bridging with the full security of a connected parachain; while this parachain uses relay chain security, the level of bridge security is intended to equal that of Polkadot relay chain security.

The SORA parachain bridge is quite an innovation for the Polkadot ecosystem, providing a new framework by which to build bridges and parachains connected to the relay chain which we believe could become a new standard. Additionally, any user of Hyperledger Iroha v2 (such as some enterprise use case) will also be able to take advantage of the parachain bridge, right out of the box, and be able to communicate with any substrate chain. This makes it trivial to move assets between many contemporary use cases and the Polkadot/Kusama ecosystems as a whole.

At the beginning, the SORA Network will be fully built using Substrate. However, SORA and Polkaswap will, in the future, take advantage of Hyperledger Iroha 2 framework using Iroha Special Instructions, which is a set of tools to create powerful and composable applications for digital assets. Functions such as creating assets upon certain event triggers, swapping assets atomically, and many more useful functions for DeFi applications are built into HL Iroha 2. The Sumeragi consensus algorithm achieves Byzantine fault tolerant consensus without Proof-of-Work mining, via a voting-based block proposal and finalization approach that can achieve finality within seconds. This means that the possibility of transaction throughput of up to 20,000 tps can be achieved.

This faster consensus will provide a better UX experience closer to the speed of CEXs for Polkaswap users, while the overall Polkadot architecture allows for virtually limitless composability between chains.

The Interoperable Future

The interoperable, scalable, and infinitely composable future of DeFi is on the horizon.

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A DEX for the Interoperable Future


A non custodial liquidity aggregator cross chain AMM DEX designed uniquely for the Polkadot ecosystem with boundless liquidity through one of a kind Aggregate Liquidity Technology (ALT) with the security and convenience of a DEX. Website:


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Polkaswap is a non-custodial cross chain AMM DEX designed uniquely for the Polkadot and Kusama ecosystems and hosted on the SORA 2.0 network.


A non custodial liquidity aggregator cross chain AMM DEX designed uniquely for the Polkadot ecosystem with boundless liquidity through one of a kind Aggregate Liquidity Technology (ALT) with the security and convenience of a DEX. Website:

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