Swarm Markets introduces the SMT Token
Powering payments on the world’s first regulated DeFi exchange
Introducing SMT
Today we are announcing the SMT payment token. The SMT token facilitates efficient payments on the Swarm Markets platform and powers incentive mechanisms such as rewards for liquidity providers.
This blog post explains SMT’s relationship to the functional economy of the Swarm Markets platform and explores how the ecosystem benefits from SMT.
What is Swarm Markets?
Swarm Markets is a licensed Decentralized Finance (DeFi) exchange for securities and crypto.
Swarm Markets holds banking licenses from Germany’s Financial Supervisory Authority (BaFin) to operate an exchange where both cryptocurrencies (e.g. Bitcoin, Ether, DAI) as well as regulated financial instruments, like stocks (e.g. Tesla, Apple) or commodities (e.g. gold) can be traded together in one unified marketplace.
Powered by DeFi technology, it allows participants on Swarm Markets’ exchange to transact directly with one another using automated market maker (AMM) technology that uses code to determine the best transaction prices without the need of centralized order books or market makers.
Swarm Markets Stakeholders
A DeFi marketplace is more complex than just buyers and sellers. Each group of stakeholders performs a different function for the markets to operate on the platform.
- Liquidity Pool Creators — set the terms for trading between two assets, including the “swap fees” component of the transaction fees.
- Liquidity Providers — make their assets available to traders in liquidity pools in return for a portion of the transaction fees
- Traders — look for pools that meet liquidity needs for buying and selling while offering the best terms and lowest fees
- Influencers — use their reach and reputation to bring more users to the platform
- Strategics — benefit the platform via business relationships which add value in the form of increasing liquidity or volume, adding new asset classes and verticals, or other strategic benefits
Why do we need SMT?
SMT is first and foremost a payment facilitator that reduces the number of steps required to execute transactions.
SMT also performs the essential function of aligning the interests of all the above stakeholders and can be used for rewarding activities which benefit the platform as a whole, e.g., trading high volumes, providing high volumes of liquidity, as well as for keeping a high ratio of SMT in relation to the assets you keep in your Swarm Markets wallet.
During the first months after the launch of the Swarm Markets platform, SMT incentives will be focused on growing the platform in liquidity, users, and trading volume. As the platform matures, SMT will provide further stability by rewarding top participants and entities which expand the platform’s capabilities.
How is SMT used and what are its benefits?
SMT is part of a virtuous circle of fee payments and rewards flowing through Swarm Markets. SMT enters circulation at the time of the token sale and is released via regressive distribution systems to users. Thereafter, SMT is used to pay transaction fees as well as the basis to determine rewards.
Reduced Protocol Fees
DeFi transaction fees are generally a fraction of the cost of fees charged by centralized exchanges and stockbrokers. Swarm Markets fees can be even lower when paid in SMT because SMT reduces the technical complexity of the transaction process.
Traders can get 50% reduced protocol fees when they choose to pay using SMT.
In addition to gas fees, transactions on the Swarm Market platform incur swap fees set by the pool creator that are then paid to liquidity providers within the pool along with the pool creator, thereby increasing liquidity available to the pool. Protocol fees are a part of the swap fees paid for each transaction.
The swap fee is typically a few percentage points of the total transaction value and set by the pool creators. The protocol fee is calculated in relation to the swap fee and deducted from the swap fee by Swarm Markets. Typically the protocol fee is a fraction of one percentage point of the total transaction value, but this varies depending on the types of assets in the pool and their liquidity.
Liquidity Rewards
Special incentives are built into the token economy to reward liquidity providers who prime the pump, so to speak, by providing liquidity before the public launch. Since these liquidity providers take on a higher risk by putting up their assets on a new platform, they rightfully earn the highest rewards in return for seeding viable markets on Swarm right from the start. Learn more at https://swarm.markets/launchlp
Loyalty Level Rewards
Loyalty Level Rewards are paid to SMT holders according to the ratio of SMT to other crypto assets on the protocol, e.g., $100,000 worth of ETH / $10,000 worth of SMT equals a ratio of 10%.
Users holding SMT and other assets in the same wallet are eligible to receive SMT as part of Loyalty Level Rewards. The wallet must be connected to Swarm Markets and the rewards are determined according to the following levels:
Other Incentives
Swarm Markets will also distribute SMT to encourage activities that benefit the platform as a whole but may not fit one of the above criteria.
Groups likely to receive these incentives are the top liquidity providers on the platform or the traders with the highest trading volumes. Liquidity providers who introduce new tokens to the platform or who help expand the variety of asset classes available to traders would also likely receive SMT for their trailblazing efforts. Strategic partners and influencers who help grow the platform would also be rewarded as well as strategic partners who benefit the protocol and help grow its utility.
SMT Token Model
Key data
- Ticker: SMT
- Type: ERC20
- Smart Contract: the smart contract address will be announced after the token generation event (TGE)
- Supply: 250 million (250,000,000 SMT)
- Initial circulating supply: 10.3 million tokens (10,304,259 SMT)
- Private sale: 12%
- Public sale: 8%
- Team allocation: None → 0%
- Vesting: Yes
Token Allocations
We will share more details about the token sale and other allocation groups along with detailed information on the rewards distributions model in a subsequent blog post.
So stay tuned and in the meantime join our Launch Liquidity Program.
