BlockTalks x OpenSwap AMA Transcript!
We recently hosted an AMA with OpenSwap, on August 4th at 11 AM UTC. Many of you might have participated or many of not. But we make sure no one missed out from the knowledge shared by Bruce Chau, Founder of OpenSwap. So here we are up with the AMA transcript, for those who missed the live session, this blog post will be a saver & feeder of knowledge for them.
Introduction Questions Asked By Team BlockTalks!
Q1. Could you please introduce OpenSwap to our community in layman’s term?
Ans — The aim of OpenSwap is to revolutionize on-chain liquidity with a set of solutions that act as cogs to fulfill the ultimate goal of supporting Inter-Chain swaps. It all starts with a DEX aggregator to provide users with choice, the choice of executing a swap with any liquidity source. From there, we introduce a concept of Liquidity Queues to provide users with zero slippage swaps where Spot Queues will always execute swaps at spot-market prices. The OpenSwap Hybrid Smart Router will take a swap and execute it against a blend of AMM pools and Liquidity Queues to provide the user with the most return for their swap. Liquidity Queues and Hybrid Smart Routers will be deployed on various chains to become a piece in the Inter-Chain puzzle to enable the OpenSwap Open lnter-Chain Protocol to perform swaps across chains in a decentralized and efficient manner.
Q2. What are the advantages of OpenSwap to other alternatives in the Blockchain field?
Ans — In the current DeFi and blockchain space, everyone is facing the same problem: as the DeFi universe continues to expand, liquidity will only be increasingly scattered across multiple chains and the situation is poised to get worse as more new chains emerge with individual DEXes on each chain.
On-chain trading and liquidity currently lacks the flexibility and choice found in centralized options. This is a problem that OpenSwap aims to solve by introducing new technologies and concepts such as liquidity queues, hybrid smart routing, and Inter-Chain liquidity swaps. We present this to the community through partnerships with other projects and with our own DeFi hub, where we will be able to offer the best on-chain pricing and multi-chain arbitrage opportunities.
Regarding how OpenSwap compares to other competitors, we at OpenSwap believe in a co-opetition model, especially in our case where our solution and focus areas span across different areas such as AMM swapping, farming, DEX aggregation, cross-chain bridging, etc. Our focus at OpenSwap is to introduce novel concepts and technologies such as our liquidity queues and hybrid smart routing that will strengthen the industry as a whole.
Q3. What are the major milestones OpenSwap achieved so far & what are in the future pipeline?
Ans — Our ultimate goal is to revolutionize on-chain liquidity with a series of tools culminating into reducing friction with 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. Liquidity Queues will be one of these sources of liquidity that provides more attractive prices by bringing spot-market priced swaps on-chain without any slippage. Hybrid routing 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 most return for your swaps. All these critical pieces will be linked up to make Inter-Chain swaps a seamless reality.
The next milestone our team is most excited about is the pending release of our liquidity queues and the underlying decentralized framework we have developed to enable different flavors of queues to address different usage cases in the DeFi space. Up first will be our Spot Priority Queues which will allow DeFi traders to swap at spot market prices without slippage and with transaction fees that match what centralized exchanges can offer. Soon after that, we will introduce Spot Range Queues, which will allow liquidity providers to set a floor price for their trades. Other queues that will be coming include Pegged Queues that offer a fixed price for tokens, and Limit Offer Queues that enable institutions to set the price for their liquidity based on their pricing strategy.
As you know, the OpenSwap end game is to reduce friction of moving digital assets between chains. The DEX aggregator provides the interface to see liquidity available, the optimum routes using the hybrid 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 Hybrid Smart Router will be launched on other chains (initially targeting EVM compatible ones). Finally our bridge vaults managed by our Bridge Trolls (validators of our Open Inter-Chain Protocol) manages the flow of assets between chains in a decentralized manner to enable Inter-Chain swaps through utilizing OpenSwap Hybrid Routers.
Our future plan in the near future is to launch Liquidity Queues on BSC, adding new types of queues to offer users with more choices and expanding Liquidity Queues onto other EVM compatible chains including L2 ETH such as Arbitrum and Optimism. The Open Inter-Chain Protocol will enable Inter-Chain swaps leveraging our hybrid smart router and liquidity queues deployed on the different chains. Longer-term plans are to expand to other chains such as Solana, Polkadot and other popular chains to support.
Questions Asked on Twitter For OpenSwap Team!
Q1. I have read that OpenSwap's Hybrid Routing will allow users to be able to perform the best and smartest operations, but will these smart operations be performed automatically? Or will it really require users to have some knowledge of the market to be able to use this product?
Ans — With the introduction of OpenSwap’s Liquidity Queue concept, market makers and takers have a mechanism to carry out efficient spot-market trades on selected pairs, notably pairs involving stablecoins.
OpenSwap’s Hybrid Smart Router takes the Liquidity Queues to the next level by enabling the coupling of swap trades from AMM pools with Queues to provide a clear advantage over existing AMM pool-only approaches.
The Hybrid Smart Router is a set of smart contracts that identify potential swap paths leveraging both AMM pool smart contracts and Liquidity Queues contracts. Based on the potential paths, it will be possible to identify the most cost efficient routing based on availability of Liquidity Queues and AMM pools. If no Liquidity Queues are present or required, then only AMM pool paths will be presented. Similarly, if a single Liquidity Queues is all that is required to perform a swap, then only the Liquidity Queues will be used.
Since Liquidity Queues offer advantages on stablecoin pairs such as BNB-USDT, it is envisioned that the Hybrid Smart Router will demonstrate its ability the best when swaps based on stablecoins are requested. In such a scenario, whether a user wants to swap into a stablecoin or out of one, the Hybrid Smart Router will set up a multi-hop swap leveraging both AMM and queues to provide the lowest cots scenario for the user. OpenSwap’s Hybrid Smart Router is aimed to be simple to use, and one click away from the best price.
Q2. I read that the validators (Bridge Trolls) of the Open Inter-Chain Protocol must post $OSWAP as a bond to cover the transaction size for inter-Chain swaps. So, can you explain how this process works? And how this affects the development of OpenSwap?
Ans — Yes, this is correct. Bridge Trolls participating in the validation and execution of Inter-Chain swaps are required to stake $OSWAP as bond. This bond dictates the maximum transaction size the Bridge Troll may support.
There are two types of validators (trolls) in the network:
1. Bridge Trolls - anyone who stakes the minimum bond will be eligible to participate in validating the transactions for Inter-Chain swap
2. Super Bridge Trolls - are voted into the network by decentralized governance based on Bridge Trolls who have an excellent track record, vouched by the community, and have sufficiently larger stake to cover the transaction sizes.
The Super Bridge Trolls create the transaction required to fulfill an Inter-Chain swap order and Bridge Trolls will validate the transaction before it is broadcast onto the blockchain to be executed. Bad actors will have their bonded stake slashed to ensure the integrity of the Open Inter-Chain Protocol.
Q3. I saw that OpenSwap intends to build an Inter-Chain Bridge. What exactly does it mean to be “Inter-Chain,” and how would this bridge function? What benefits may consumers derive from its implementation?
Ans — One of the primary missions for OpenSwap is to reduce the friction in moving digital assets between different chains by providing Inter-Chain swaps.
Currently there are two ways to move digital assets between chains:
1. Lock and mint synthetic tokens
2. Cross-chain liquidity pair pool model
The first way is the simplest and requires takers who are willing to trade native tokens on the target chain for the synthetic ones. OpenSwap does not want to contribute to the large number of synthetics being created on a daily basis. Users want to get native tokens on the target chain - and we will provide that!
However, instead of using the AMM model to incentivize liquidity in Cross-chain pools, OpenSwap uses single asset vaults so that liquidity providers are not exposed to impermanent loss. They will get a share of the Inter-Chain swap fees and have the opportunity to farm $OSWAP tokens.
Inter-Chain swaps are supported by our network of Bridge Trolls who are required to stake $OSWAP as bond to cover the transaction sizes across the bridge. The Bridge Trolls will collaborate to utilize the funds in the bridge vaults funneled into the OpenSwap Hybrid Smart Router to provide users with efficient swaps to minimize transaction fees.
Q4. I've read that OpenSwap prefers the Secure Adapter Protocol for operations on core oracles. What is the main purpose of this protocol and why do you use Oracle service for spot market transactions?
Ans — In order to offer spot market prices, there must be a reference price. This is achieves by utilizing Oracle Price feeds such as the ones provided by ChainLink. Even though ChainLink has its own measures to ensure price feed oracles are not manipulated, OpenSwap provides an additional layer of security in the form of the Secure Adapter Protocol that allows developers to add circuit breakers to mitigate the risk of swaps using Oracles.
For example, we could add a circuit breaker to take oracle prices from multiple sources including AMM DEX pools to ensure that the primary feed does not deviate too much from other sources. This also provides an added benefit of preventing swaps during extreme price fluctuations from wicks or price feed latency due to network congestion in writing to the blockchain.
Q5. I saw that a key component of the OpenSwap Liquidity Queues will be the Secure Adaptor Protocol, so, can you please disclose some of the reasons why this new protocol will boost the development of the Liquidity Queues?what makes it a different protocol?
Ans — The Secure Adapter Protocol offers developers a framerwork to build the price adapters for OpenSwap. The framework consists of a set of circuit breakers to ensure the security of the smart contracts and provide a tool in risk mitigation. At the core, the price adapter smart contract must be audited and issued a security score provided by CertiK Skynet that will continuously scan the smart contracts against new vulnerability definitions to update the score.
All swaps against Liquidity Queues must use a price adapter voted in by decentralized governance and meet the minimum score required before the swap will be completed.
Other circuit breakers may be added by the developer to provide additional security such as trade size limits and cross-checking the price provided by the Oracle against the latest price from an AMM pool of a DEX. Any significant deviation between the prices would also prevent the swap from going through.
We believe that the dynamic security checks through circuit breakers will enable developers to provide price adapters trusted by the OpenSwap Community. In fact, we hope that other projects would be able to leverage OpenSwap price adapters under the Secure Adapter Protocol.
Questions Asked by our BlockTalks Community Members during live Session to OpenSwap Team!!
Q1. Can you elaborate on the use cases and utility of $OSWAP tokens? OpenSwap will develop the utility of $OSWAP tokens as the DeFi space continues to evolve as not all projects are committed to this important point?
Ans — 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 Smart Chain to enable the governance of the BSC version of OpenSwap during the initial launch.
The OSWAP token will be able to be used for the following purposes:
- For liquidity providers, they can stake OSWAP into Liquidity Queues to increase the priority of their liquidity, thus prioritizing their earning for trade fees.
- Node Operators of the Open Inter-Chain Protocol can stake OSWAP to be eligible to be a Bridge Troll, and earn fees as assets cross the bridge.
- Yield farming by providing liquidity for OSWAP pools, vaults and other contests.
- For users to participate in governance by staking OSWAP to create proposals or vote on risk parameters for the protocol.
Q2. I could read that initially OpenSwap was launched on BSC and then it will be implemented on other blockchains, but could you explain why to launch it first on this network instead of other more known ones like Eth? Is it necessary to start on BSC and then expand to the rest?
Ans — We originally developed OpenSwap for the Ethereum chain with integration with UniSwap V2 and SushiSwap for our DEX aggregator. However, earlier this year when BSC was gaining a lot of traction and mindshare from users due to lower gas fees, we elected to pivot to the BSC chain as it presented a good option for us to introduction Liquidity Queues and users may try it with low gas fees.
As we all know, ETH is the cadillac of chains and we will be getting back on there soon!
Q3. Limit order features in dex platform is very rare used and many DEX platform now in race to support and provide this feature, did Openswap have any plans to provide this feature in next update?
Ans — Our initial set of Liquidity Queues in the form of Spot Queues will offer spot-market price swaps to users. Queues operate in a FIFO (first in first out) manner where the liquidity gets eaten up at spot market prices as swaps occur. Liquidity providers may stake $OSWAP to gain priority on their liquidity so they it gets used first.
The second version of Spot Queues will offer what we call Spot Ranged Queues. This provides an option for liquidity providers to set the price range in which their liquidity will be valid for market prices swaps. So if you wanted to do a limit order, you could set your range to your desired price and if the spot market price hits this range, your liquidity will be used for the swaps.
Q4. How can I buy this tokens? Is it available on any exchange?
Ans — There are no $OSWAP tokens in circulation at this moment in time. However, you will be able to participate in our IDO which is currently pencilled down for end of summer. We have already begun an IDO whitelisting contest. So if you want to secure your allocation before everyone else, be sure to check out our campaign.
Q5. Can I buy your tokens right now and also which wallet support your token?
Ans — As we mentioned earlier, there are no $OSWAP tokens in circulation. You may participate in our whitelisting contest for the IDO or one of our staking programs currently available for token holders of our partner projects $IF, $C98, $OAX.
For the IDO, you would require a wallet that supports the BSC chain.
Q6. How does on-chain liquidity provide legit liquidity with low price impact in OpenSwap platform? Also can The on-chain liquidity solve unstable slippage problem?
Ans — Our Spot Queues will always execute swaps at spot-market prices provided by trusted Oracle price feeds from price adapter smart contracts voted in by decentralized governance. Using a reference spot-market price means that the price of your swap will NOT change based on the size of the transaction like AMM pools and orderbooks. Spot Queues provide zero slippage!