The Terminator of White-hot "Swap" Competition - OneSwap

[cryptojess]

The black swan event on March 12 dealt a heavy blow to the crypto world as the value of DeFi pledged tokens fell from US$1 billion to only US$50 million. Fortunately, soon after the liquidity exhaustion in March, the DeFi market revived when COMP ushered in a DeFi rush by its liquidity mining, and went viral overnight.

DEX stands out in the DeFi field. As the driving force of DeFi and Ethereum, DEX enjoys an ROI 4 times higher than platform tokens of centralized exchanges, and at the same time has created many myths of hundred-fold value increases. Driven by the huge profits, a flood of investors have aimed the DEX sector. Now follow me to experience the wonder of DEX.

I.DEX That Braves the Tides

DEX is nothing new. After the slump in the Bitcoin due to the theft of 850,000 Bitcoins from Mt.Gox in 2014, the market started to realize the risks facing centralized exchanges, and the DEX solution emerged in response. By reshaping the exchange in a decentralized way and allowing users to keep custody of their own private keys without centralized asset custody, DEX proves to be a natural solution to all the security risks underlying in centralized exchanges.

During the development of DEX, from the Bitshare decentralized exchange at the very beginning, to EtherDelta, the first generation of Ethereum decentralized exchange, and to the Ox-based open-source protocol, DEX remained a niche market and struggled to expand due to such factors as low transaction efficiency and insufficient liquidity. Yet the story has changed upon the emergence of UniSwap.

The Historic Turning Point from OrderBook to AMM:

In the past, DEX adopted the OrderBook mechanism, similar to the centralized exchange. However, due to the poor efficiency in on-chain transactions and a small user base, it was difficult to match users’ buy and sell orders. The AMM model (Automatic Market Making) has resolved the painful realities in the OrderBook-based DEX by bringing together liquidity and making the market according to a certain mathematical algorithm. In this way, it ensures stable asset liquidity, and allows all users to provide liquidity and enjoy dividends from the transaction fees of the exchange. The AMM-based DEX represented by UniSwap has embarked on a journey of crazy growth.

According to data from ETH Gas Station, UniSwap has paid a total of US$7 million in transfer fees in the past 30 days, 25% higher than the total transfer fees of Ethereum. Each transfer fee in UniSwap consumes an average of 125GWEI, and a total of 17,700 ETH has been paid. That means over 140 billion transactions have been made on UniSwap in the past 30 days, pushing UniSwap to the supremacy in DEX.

The success of UniSwap has been a shot in the arm for the entire DEX world. The total trading volume in the first half of 2020 exceeded US$3 billion, compared with the figure of only US$2.4 billion throughout 2019. The trading volumes of IDEX, UniSwap, 0x, and Bancor have increased by 144%, 109%, 44%, and 112% respectively, quarter on quarter. It is worth mentioning that the DEX exchange has outperformed Kraken and Coinbase, two established centralized exchanges.

We are embracing an era of DEX, and it is no longer a fantasy to expect DEX to surpass CEX.

II.A White-hot Competition in DEX

The explosive growth of UniSwap has revealed the great power of AMM in front of capital ventures, institutions, and project developers. The huge daily trading volume of UniSwap has attracted numerous investors who want to grab a share of the big pie, and various types of Swap have sprung up. Linch, an on-chain aggregation trading platform, for example, copied and modified some UniSwap source codes, and launched the automatic market maker (AMM) Mooniswap. Apart from UniSwap, which is an overseas project that is more friendly to users abroad, some Swap applications targeting the Chinese domestic market have been unveiled, represented by JustSwap.

JUST is the first project released on the TRON network. With the popularity of UniSwap, Justin Sun launched the TRON version of UniSwap——JustSwap. Promoted by Justin, JustSwap has gained unprecedented fame, but unfortunately, its debut was a crushing failure.

As JustSwap applied no review for token listing just like UniSwap, counterfeit tokens proliferated, such as numerous fake Ethereum. What was worse, on the very night when JustSwap went online, many tokens with the same name were launched, baffling investors and incurring huge losses. More ridiculously, a project named looprex had its logo misused by others in advance, depriving the real looprex of its own trademark ownership.

It is evident that AMM-based DEX represented by UniSwap has solved the liquidity issue and thus entered the fast lane. Since its launch, UniSwap has witnessed an exponential increase in its user base, yet accompanied by drawbacks.

For example, the most notorious flaw lies in its poor trading experience. The AMM-based DEX completely abandoned the OrderBook mechanism. As a result, users, especially market users who prefer to trade limit orders, cannot trade limit orders in AMM projects like they do in centralized exchanges, but trade at the market price set by AMM upon the transaction. At the same time, the lack of OrderBook has led to large slippage when processing large transactions, leaving users unable to settle the deal at a satisfactory price. In addition, the congested Ethereum network has further pushed up the transaction fee of the AMM-based DEX. UniSwap, for example, costs more than ten dollars for each transaction.

The AMM-based DEX appears inferior by comparison with centralized exchanges in terms of trading experience, the biggest obstacle in its expansion. Feeling the pressure from increasing competitors, newcomers after UniSwap are working to create DEX that can rival centralized exchanges in trading experience. A significant change has been simmering in the DEX market layout.


III.New Swap Redefines DEX

Compared with UniSwap with a poor user experience, OneSwap, which concentrates on improving user experience, has come under the spotlight. Dubbed an upgraded version of UniSwap, it has comprehensively enhanced its user experience on the basis of UniSwap’s automatic market making, and is now as user-friendly as centralized exchanges.

What advantages does OneSwap have over UniSwap?

1. OrderBook

Without Orderbook, users of UniSwap couldn’t place limit orders like in a centralized exchange, but passively accepted the price set by the algorithm. If they wanted to buy tokens at a specific price, they had no options but wait till tokens at such a price appear, a waste of time.

OneSwap has tackled such a painful weakness of UniSwap by introducing the on-chain OrderBook based on AMM. Its users can place a market order or limit order at the target price, and leave them automatically executed. The integration of AMM and OrderBook not only provides users with a familiar way of trading limit orders, but also further enhances the liquidity of digital assets.


2.The candlestick chart and depth map

UniSwap has been criticized for its simple transaction interface with a cryptocurrency exchange section only, not even the basic candlestick chart. For professional traders, in particular, it is difficult to see the key trading information and price trend changes, greatly compromising the trading experience.

To benchmark against the centralized exchange in terms of user experience, OneSwap has introduced functions such as the candlestick chart, order ticket, and depth map. Just like centralized exchanges with professional charts, OneSwap provided the price trend, trading volume, depth, and other information of different cryptocurrencies for users to set out informed trading plans.

3.Liquidity mining + transaction mining

UniSwap allows everyone to make market and share transaction fees of the platform by injecting liquidity. The AMM model is believed to be the catalyst for the explosive growth of UniSwap. With an additional incentive mechanism of transaction mining besides liquidity mining, OneSwap leaves more core benefits to its users.

OneSwap will charge the Taker a fixed percentage of transaction fees based on the transaction amount, while the Maker does not need to pay. The transaction fees are divided into two parts: 60% for liquidity and 40% for the repurchase and burning of ONES, OneSwap’s governance token. In transaction mining, both liquidity providers and traders will receive ONES as an economic incentive.

Speaking of OneSwap's governance token ONES, let's talk about its role in the OneSwap ecosystem and how it captures value.

1. Ecological governance rights

On-chain governance involves proposal initiating and community voting. Users with a sufficient number of ONES (more than 1% of the total) can initiate a proposal, and anyone holding ONES can vote for or against it. The voting lasts for three days, following the one-coin-one-vote counting rule. After the voting ends, the proposals receiving more positive votes than the negative are passed.

2. Extreme deflation effect

Of the transaction fees generated on OneSwap, 60% directly goes to the liquidity provider, and the remaining 40% will be spent on repurchasing ONES, in the secondary market, which will be burned through smart contracts. For such a deflationary token, the sharply increasing trading volume of OneSwap entails more and more transaction fees and ONES to be burned. With fewer ONES left in the market, the purchase demand will remain robust relatively, stimulating the token price to grow continuously.

A promising future for OneSwap

The success of UniSwap has led the DEX boom, which has developed into a new force that cannot be ignored in the crypto world. As DeFi grows, DEX will embrace a new stage of development. Yet as UniSwap has revealed many of its drawbacks, of all the emerging Swap applications, which will be the ultimate king of DEX?

The emergence of OneSwap has aroused market expectations as well as attention. In terms of trading experience, OneSwap redefines DEX and is the first DeFi project dedicated to making DEX comparable to CEX by user experience. What miracles will OneSwap create? Stay tuned.