OpenSwap AMA Highlights: A Conversation with BTSE on July 15, 2021
On Thursday, July 15, Bruce Chau, the founder of OpenSwap joined the BTSE Exchange Telegram chat for an AMA.
OpenSwap is a cross-chain decentralized liquidity booster for traders seeking concentrated, large-volume liquidity. The DEX is a pioneer of liquidity queues, which provide traders with an extra dose of liquidity at critical junctures when there is a shortage.
OpenSwap is currently in beta as its developers improve the exchange’s functionality.
This post covers edited highlights from the event.
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BTSE Moderator
Bruce, could you start by giving us an introduction to you and your team?
Bruce Chau
I’m Bruce, a key member and founder of OpenSwap, a “recovering” enterprise dev who was enlightened by blockchain in 2018 and never looked back.
My team has been building up a community of talent that spans technology, finance, marketing, and more. We hope to attract more developers and contributors through events like hackathons to shape the DeFi community.
• • •
BTSE Moderator
In your view, what is a fundamental problem in the DeFi space? How is OpenSwap’s team working to solve it?
Bruce Chau
As the DeFi universe expands, liquidity will be increasingly scattered across multiple chains. The situation will get worse as new chains emerge with individual DEXes on each chain.
On-chain trading and liquidity lacks the flexibility and choice found in centralized options. This is a problem that we at OpenSwap aim to solve by introducing new technologies and concepts, including liquidity queues, hybrid smart routing, inter-chain liquidity swaps, and DEX aggregation.
We present this through partnerships with other projects and with our DeFi hub, where we will offer the best on-chain pricing and multi-chain arbitrage opportunities.
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BTSE Moderator
What inspired you to develop these solutions?
Bruce Chau
The project began about a year ago during the “DeFi Summer” of 2020, when Uniswap was gaining popularity with its AMM liquidity pools. We decided to address two primary problems: slippage and impermanent loss. The idea is to provide on-chain, spot-priced swaps in the form of liquidity queues.
Our team believes that users should have the freedom to swap with any liquidity source. Instead of competing for liquidity with other AMM DEXes, we want to let users make informed decisions about the optimal swaps that fit their situations. Liquidity queues provide spot-priced swaps without slippage, offering users a reference price to compare with other sources.
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BTSE Moderator
Who are some of OpenSwap’s partners?
Bruce Chau
IJS Technologies is OpenSwap’s technology contributor. They received a grant from a long-time decentralization and DeFi advocate, the OAX Foundation.
OpenSwap’s contracts are reviewed and audited by CertiK, and we are also part of the first cohort of Impossible Finance, who are on BSC.
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BTSE Moderator
How do liquidity queues, hybrid routing, and DEX aggregation work together on OpenSwap?
Bruce Chau
Our primary goal is to revolutionize on-chain liquidity with a series of tools to reduce friction in inter-chain swaps.
It all starts with the DEX aggregator offering users the choice to fulfill their swap with any liquidity source on any chain.
Then, liquidity queues are a source of liquidity that provides more attractive prices by bringing spot-priced swaps on-chain without any slippage.
Next, the hybrid smart router will allow OpenSwap to utilize existing liquidity in AMM pools in conjunction with OpenSwap liquidity queues to execute swaps in the most efficient manner, providing the highest return for your swaps.
Finally, all these critical pieces will be linked up to make inter-chain swaps a seamless reality!
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BTSE Moderator
Liquidity queues are a new concept. What are they and how can the average joe use them?
Bruce Chau
All spot queues execute swaps based on an oracle feed that tracks the market price. That means if you want to perform a swap, OpenSwap will show various options from DEXes, including OpenSwap’s own liquidity queues.
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BTSE Moderator
When liquidity queues work with hybrid routing and DEX aggregation, how do they solve the problem of liquidity being stretched across multiple chains?
Bruce Chau
The DEX aggregator provides the interface to show the amount of liquidity that is available, while the optimum routes provided by the hybrid smart router show you how to get from one token to another, leveraging a blend of existing liquidity in other DEX AMM pools and OpenSwap liquidity queues.
Liquidity queues and the hybrid smart router will be launched on other chains. The initial targets are EVM-compatible chains, like Arbitrum, Optimism, and Moonbeam on DOT.
Finally, our bridge vaults, which are managed by our bridge troll protocol, manage the flow of assets between chains in a decentralized manner to enable inter-chain swaps utilizing OpenSwap’s hybrid smart routers.
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BTSE Moderator
What sort of advanced features will OpenSwap build on top of liquidity queues?
Bruce Chau
Up first will be our spot priority queues, which will allow DeFi trades to swap at spot market prices without slippage and with transaction fees that match what CEXes offer.
Soon after that, we will introduce spot range queues that allow liquidity providers to set a floor price for their trades. This is ideal for providers who want to activate their liquidity in a specified price range.
We’ll also roll out pegged queues that offer a fixed price for a token, and limit offer queues that enable an institution to set the price for their liquidity based on their pricing strategy.
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BTSE Moderator
How will OpenSwap avoid or mitigate impermanent loss?
Bruce Chau
To enable inter-chain swaps, OpenSwap will let liquidity providers deposit their assets in bridge vaults. These vaults will only contain one type of asset, eliminating impermanent loss and allowing LPs to earn bridge fees and farm LP tokens.
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BTSE Moderator
Speaking of swaps, one of the major concerns for everybody is transaction fees. How does OpenSwap ensure low transaction fees for its users?
Bruce Chau
Transaction fees are one of the risk parameters that may be voted on by decentralized governance, allowing fees to adapt to current market conditions. For liquidity queues, transaction fees will be set to 0.1% to be in line with what CEXes are offering.
Our hybrid smart router will also take into account transaction fees and slippage price impact to determine the optimal return for each swap.
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BTSE Moderator
How is your solution for impermanent loss better than others?
Bruce Chau
Impermanent loss typically applies to AMM pools where you provide liquidity by depositing both sides of the asset pair. This is more evident when a stablecoin pegged to fiat, like USDT, is paired with a non-stable asset. For this reason, you will see less depth in liquidity for pairs involving a stablecoin on one side in AMM pools.
The deeper pools would involve a token paired with BNB or ETH, since tokens tend to move up and down together, reducing the exposure of impermanent loss. Since OpenSwap primarily deals with one-sided assets for queues and bridge vaults, liquidity providers will always receive the principal they deposited plus any transaction fees earned.
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BTSE Moderator
Tell us about the OpenSwap token. What does it do?
Bruce Chau
The OpenSwap protocol will issue a governance token called OSWAP as part of the protocol’s release. The token will be established as an ERC20 token and will be bridged to Binance’s Smart Chain to enable the governance of the BSC version of OpenSwap during the initial launch.
Users may use the OSWAP token for the following purposes:
· For liquidity providers, they can stake OSWAP into liquidity queues to increase the priority of their liquidity, prioritizing their earnings for trade fees.
· Node operators for the inter-chain bridge can stake OSWAP to earn the eligibility to be a bridge troll and earn fees as assets cross the bridge.
· Yield farming by providing liquidity for OSWAP pools as well as other contests.
· For users to participate in governance by staking OSWAP to create proposals or vote on risk parameters for the protocol.
OpenSwap farming will be introduced soon after our IDO. We organize staking campaigns periodically. In fact, we will soon launch a new staking campaign, where users can stake OAX tokens and earn OSWAP tokens.
The tentative token launch time is the end of summer this year and will be on the Impossible Finance launchpad.
If community members have any ideas for reward programs, or even collaborations with other projects, please be sure to reach out to us on Telegram. We are a community-driven project. There’s nothing more important to us than giving the DeFi community what they want.
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BTSE Moderator
There are more than one “OpenSwaps” in the space at the moment. How do you set yourself apart from them? Are they your competitors?
Bruce Chau
When we chose the name OpenSwap early this year, we were not aware of any other projects using the name. Our goal has always been to focus on our innovations and build trust with our partners to establish our name and reputation. As far as I know, we are the only OpenSwap token (OSWAP) listed on industry-standard indexes such as CoinMarketCap and CoinGecko. Soon, we will be announcing other partners.
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BTSE Moderator
Liquidity seems to be the goliath in DeFi that we are trying to slay. How does your project’s liquidity solution compare to others?
Bruce Chau
OpenSwap liquidity queues sit between AMM DEXes such as Uniswap or PancakeSwap and order book-based CEXes. Spot queues always execute at spot market prices, removing the possibility of sandwich attacks by frontrunning and backrunning given that trades do not affect the reference price.
Our limit offer queues will not expose the order book to limit frontrunning opportunities.
• • •
BTSE Moderator
Speaking of new innovations like OpenSwap liquidity queues, Uniswap V3 has a list of features that focuses on solving the current problems on liquidity. How do your project’s features stand against Uniswap V3?
Bruce Chau
Uniswap provides one of the best solutions for AMM pools. Instead of fighting for this liquidity, OpenSwap prefers to leverage their liquidity to fulfill swaps through our hybrid smart router and use liquidity queues when it offers better returns on the swaps. For our inter-chain swaps to be successful, we would need to use existing liquidity available in AMM pools when liquidity queues do not have sufficient supply.
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BTSE Moderator
One of Uniswap’s features is concentrated liquidity, which they claim makes higher capital efficiency possible up to 4,000x. What will OpenSwap’s maximum capital efficiency be?
Bruce Chau
Capital efficiency is for liquidity providers to maximize their returns on capital deployed. This is a known issue for AMM pools because the only capital being put to work to earn fees is concentrated at the current price of the asset being traded. However, the fees are shared among all liquidity providers in the pool. For OpenSwap, liquidity queues are best suited for users who want to exit their position at market prices. If their liquidity is used, they would receive the transaction fee as opposed to sharing it with all the providers.
If a liquidity provider really wants to be ultra capital-efficient, they could stake a large amount of OSWAP in a priority queue for both sides of a pair to ensure that their liquidity is prioritized to be used first. They would just need to set up an automated bot to continuously flip their liquidity back and forth in the pair to keep their liquidity in the queue.
• • •
BTSE Moderator
What are OpenSwap’s plans for the future?
Bruce Chau
OpenSwap plans to launch liquidity queues on BSC, adding new types of queues to offer more choices to users, and expand liquidity queues onto other EVM-compatible chains, including L2 options like Arbitrum and Optimism. The bridge troll protocol will enable inter-chain swaps leveraging our hybrid smart router and liquidity queues deployed on different chains.
Longer-term plans are to expand to other chains such as SOL, DOT, AVAX, and other popular chains.
• • •
BTSE Moderator
We will now open the floor for the community for questions!
Mr Crypto (@MrCrypto70)
There are so many rug-pulls and exit scams nowadays. How can users trust your project? And how you are different from others?
Bruce Chau
All our tokens are subject to a vesting period. Our team tokens will be locked for a minimum of six months and vested linearly over four years. No rug-pull will happen.
• • •
JuanTores (@Juantores1)
Do you have a token-burning plan to increase token value and attract Investors?
Bruce Chau
This is still under consideration. As of late, there have been studies showing that buybacks-and-burns are equivalent to stock buybacks, so they may not fit new projects. A more effective approach may be the “buyback and make” plan, meaning tokens are bought and redistributed to the community through usage incentive programs such as farming or staking campaigns. This would provide a sustainable future for projects.
• • •
Forrest Parson (@ForrestParson)
Collaborations and partnerships are some of the most important cornerstones for improving adoption. Could you please tell us about the current partners, plans for partnerships, and what everybody stands to gain from these partnerships?
Bruce Chau
Our partnerships are primarily focused on other BUIDLers who we can co-integrate with, liquidity providers, and communities that extend our reach to enable no slippage and inter-chain swaps for everyone. We are excited to have strong backers for our project, but we cannot disclose their names at this point in time. For those who play Hangman, one name starts with “B” and another starts with “C.”
• • •
Find out more and connect with OpenSwap through these channels.
Docs: https://doc.openswap.xyz
Medium: https://openswapdex.medium.com
Telegram: https://t.me/openswapdex
Twitter: https://twitter.com/openswapdex
