Swim Protocol — A Deep Dive
What stableswaps did for DeFi
Curve became popular during the summer of 2020 as it provided an avenue for users to swap stablecoins at a stableswap rate close to 1:1. This allowed users to switch between different stablecoins when participating in different DeFi Protocols, ultimately bringing the DeFi ecosystem closer together.
We generally witnessed that users did not mind trading stablecoin to stablecoin for a few basis points away from the typical 1:1 ratio as they would frequently earn more through a few hours of yield farming than what was lost from the magnitude of the slippage and fees. Stablecoin rates rarely deviated 10 basis points away from fair market value (as indicated from centralized exchanges). This demonstrated that market makers were willing to deploy large amounts of capital to earn just a few basis points on stablecoins, ultimately balancing these liquidity pools closer towards equilibria.
What are we?
As of today, it is clear that connectivity within the DeFi ecosystem will rely on cross chain interoperability. Bridges are typically designed for locking and unlocking on the source chain and minting wrapped assets on the destination chain.
However, Swim approaches the bridge solution by extending the stableswap design. As discussed in our first Medium article, Swim is a multi-chain AMM for native assets, designed to make bridging as easy as possible. Our protocol eliminates the need for wrapped assets by allowing users to swap from a native asset on one chain to a native asset on any other supported chain. Swim’s solution reduces the barriers faced by users when performing cross-chain transactions, enabling true interoperability between various blockchain networks.
What is it like to use the Swim Protocol?
For starters, Swim allows users to simultaneously connect wallets on multiple chains such as Ethereum, Solana, and Binance Smart Chain wallets. Once the user’s wallets are connected, you will be able to swap native stablecoins at stableswap rates — this capability is backed by our AMM technology and Wormhole’s cross chain communication technology. Adding, removing, and swapping across chains also becomes more seamless and efficient.
Initially, we will launch with a stableswap stablecoin pool connecting Ethereum, BSC, and Solana to facilitate trading between these chains. With the broader DeFi ecosystem transitioning towards a multi-chain paradigm, DeFi applications and liquidity are becoming increasingly scattered across siloed and separate networks.
Our LP token has advantages over existing LP tokens in the following ways:
- Fungibility: ability to go across all chains that Swim protocol is connected to
- Composability: capacity to integrate with any protocols connected by the Swim multi-chain network
As Swim develops and grows, so will its composability — our LP token will be able to integrate into several different chains for multiple use cases such as borrowing, lending, collateral, etc.
What does the current landscape look like?
Although there currently are DeFi bridges with wrapped tokens, centralized bridges, stableswaps with wrapped tokens, and solutions with third party chains and tokens for gas fees, no single player has truly solidified their claim to the space as the dominant bridge in ways such as Compound, Aave, Uniswap, Sushiswap, Pancakeswap, and Venus have to their respective DeFi primitive functionalities.
Why? For the most part, these existing platforms are not user friendly and difficult to use. Many of the current solutions require multiple steps on various platforms which can result in serious performance and/or usability drawbacks.
In hopes of creating a bridging platform with ease of usability, the Swim team is working day in and day out with the Wormhole team to bridge the multi-chain universe for you.