This article will explore the features and define the value proposition of ZeroSwap for DeFi.
DEX and its Present Status
Exchanges are one of the core parts of the blockchain and crypto ecosystem. Centralized exchanges (CEXes) like Binance and Kraken have helped to greatly facilitate crypto adoption in the past couple of years, albeit with a couple of issues associated with centralization.
Currently, the need for decentralized solutions have never been more in demand. We are at a tipping point, where users are trailing away from the shackles of censorship and centralization – in favour for decentralized options such as AMM’s, and other DEX solutions. Decentralized Exchanges (DEXes) are in a key position. Though CEXs still have the upper hand in areas such as liquidity, fiat on-ramps, and lower fees. Running through various major crypto data sources reveal that DEXes are catching up, and maturing fast.
Data showcases that the monthly trade volume for DEXs peaked at $12 billion, with about $4 billion processed in the year of 2020. The Year-to-Date Returns for DEX to CEX tokens are 241% to 44%.
This indicates that the crypto adaptation trend is shifting from CEX to DEX. This is primarily due to the emergence of DeFi as a hot branch, scoring 300% and 200% Year-over-Year growth in 2019 and 2020, respectively. At present, more than $9 Billion of total value is locked in DeFi. The exponential growth of DeFi is essentially powered by DEXes and DEX aggregators.
However, DEXes’ access to DeFi is limited due to numerous challenges, such as –
- Token liquidity is fragmented amidst multiple DEX protocols and services
- The obligatory high gas costs associated with on-chain transactions
- Incurring trade fees
- Absence of efficient market-making mechanisms
- Subpar user interfaces
There are a few projects like Uniswap, KyberSwap, and ParaSwap that try to solve this problem. But they have achieved varied success.
ZeroSwap tackles these exact issues. It aims to make trading extremely easy for a non-technical user and brings forward novel solutions that assist DEXes in multiple areas; thus strengthening the DeFi backbone – in the spirit of true decentralization.
ZeroSwap is a multi-chain trading protocol that supports four utilities –
- DEX Aggregation – This enables the trustless swapping of crypto assets across various layer 1 solutions. ZeroSwap employs a truly multi-chain architecture which will initially support the Ethereum and Binance Smart Chain, and will gradually support more chains over time, thus solving liquidity fragmentation in different chains.
- Liquidity Mining – This enables users to pool tokens for liquidity provisioning across various DEXes through ZeroSwap. Users are incentivised through rewards based on the volume of tokens pooled.
Liquidity mining is a significant factor to DeFi growth, responsible for driving Ethereum’s DeFi traffic.
- Market Making Suite – The Market-making suite empowers true on-chain trading through ZeroSwap SDK. The SDK can be easily integrated with users’ existing workflows.
- DEX Token Offering (DTO) – The DEX token offering platform is a platform for participating in initial tokens offered on ZeroSwap. Users will be able to buy tokens, and it will provide a fair opportunity for them to participate in the initial offering unlike currently in Uniswap where the non-technical trader is against bots in the backend. ZeroSwap will have an algorithm operating underline to manage this.
With all its utilities combined, ZeroSwap brings forward the following features –
- Gasless Transactions – ZeroSwap utilizes transaction fee mining to offer gas-less transactions for all on-chain trades, and any addition or removal of liquidity.
- Zero-Fee – Adding or removing liquidity, and trading attracts zero charges completely.
Rewards – Users will earn rewards from on-chain trades, liquidity mining, and when they provide liquidity.
- DEX Aggregation – It offers aggregate liquidity from all the existing protocols to provide the best market token rates.
- Governance – ZeroSwap employs a time-changing governance mechanism to bring unanimity to protocol governing.
- Developer-friendly – ZeroSwap protocol is completely tech-enabled, developer-friendly, allowing users to build workflows seamlessly..
The ZEE Token
ZeroSwap’s ticker token is called ZEE. It serves various utility purposes, such as enabling gasless transactions, and empowering liquidity miners and traders.
The ZEE token incentivizes trade participants for on-chain trade and liquidity mining. During every trade, the protocol supplements a portion of the token rewards to a relayer to fund for the gas. This is how it makes the ZeroSwap protocol self-sustainable.
The total supply of ZEE is 100 million, with 22 million in initial circulating supply. The rest will be distributed through private sales and seed rounds.
How is ZeroSwap better than Uniswap?
Now that the features ZeroSwap offers are clear, it’s time to draw a comparison with the popular Uniswap.
- Most projects such as 1inch and Uniswap are trying to solve the liquidity problem. All these protocols also have a fee. ZeroSwap is trying to solve the gas fee problem. Hence, all of these projects can co-exist with ZeroSwap as it is an Aggregator that offers zero fees and gas-less transactions.
- Uniswap charges a trade fee of 0.30%, which is a little above the global industry average of about 0.25%. ZeroSwap charges no such fee.
- A mere Ether to DAI token exchange on Uniswap demands a staggering $55 in gas fees. ZeroSwap promises pure gas-less transactions through its transaction fee mining as detailed above with a relayer model.
- Uniswap only supports the Ethereum blockchain, whereas ZeroSwap is a multi-chain protocol supporting various chains, including Ethereum Binance Smart Chain, and more to come. This opens up opportunities for liquidity and exposure to different assets on different layer 1 platforms
- ZeroSwap offers liquidity mining to pool in resources and earn rewards from it. Uniswap, till now, didn’t have one, but the STP network will offer its STPT token through Uniswap’s liquidity mining program in Uniswap version 2.
Compared to the current version of Uniswap, ZeroSwap’s major differences include zero transaction costs, access to multiple chains, and a somewhat near CEX-level exchange experience with limit orders with on-chain trades accessing various DEX protocols.
ZeroSwap vs. Others
Uniswap recently exceeded its centralized peer, Coinbase, in daily trade volume – $426 million to the $348 million of Coinbase as recorded on August 30, 2020. This shows users shifting towards DEXs. Yet, Uniswap is just a single chain DEX service.
An end of July survey reveals that DEX aggregators accounted for roughly 20% of all DEXs. This clearly showcases the potential for ZeroSwap, which offers a true DEX aggregator facility with on-chain trade.
ZeroSwap has way more functionalities than other swap-enabled DEX services such as KyberSwap, ParaSwap, or 1inch –
- None of them have multi-chain architecture. Being based on a single chain limits its liquidity capabilities.
- None of them offers gas-less transactions.
- While 1inch and Paraswap don’t incur trade fees, Uniswap and KyberSwap do.
- Barring Uniswap, none provide liquidity mining.
- Except for KyberSwap, none offer governance facilities.
- Chandrashekar Ramu, CEO & Co-Founder – More than 6 years of experience in crypto trading, arbitrage, and algorithmic trading. DeFi evangelist with an in-depth understanding of DEXes through his bot trading development experience.
- Aayushi Jain, COO & Co-Founder – With 4+ years in the blockchain space, her experience has been in product management and building customer relationships. Helping shape various products, including Frontier in the initial days.
- Puneet Bagewadi, CTO & Co-Founder – He has 10+ years of experience in software development. A full-stack developer, Puneet has developed blockchain software for Visa Inc. Ex- Mobstack and Wipro.
ZeroSwap has uniquely positioned itself as none of its potential competitors offer what it brings to the market. This creates an immense value that is likely to be a game-changer in the DeFi space.