Five minutes to understand Polkaswap: Polkaswap Ecological Interoperability Decentralized Exchange


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Polkaswap can support tokens issued by any other blockchain connected to the Polkadot network, and has the characteristics of low handling fees and low transaction delays.

Written by: Polkaswap
Translation: Lu Jiangfei

The multi-chain world is about to emerge: in the future, we will have an interoperable blockchain world.

Just as we have seen wBTC, renBTC and other parcels of Bitcoin being used on the Ethereum blockchain, more and more people hope to transfer assets from one blockchain to another in order to increase transactions and arbitrage Opportunities, but for now, there is no decentralized exchange in the market that can simultaneously access a large number of encrypted assets on multiple blockchains. However, networks like Polkadot have provided us with the opportunity to achieve this goal, and this is why we decided to build Polkaswap.

Polkaswap is a non-custodial AMM DEX designed for the Polkadot ecosystem and an interoperable future. It aims to bring more liquidity, security and convenience to the cryptocurrency market through a user-friendly instant asset exchange interface , And connect other cryptocurrency ecosystems to the Polkadot network.

At this stage, the “focus” of DeFi applications is still to provide services to the Ethereum ecosystem, and little attention is paid to interoperability with other crypto ecosystems. There is no doubt that Ethereum has a huge network effect. From a historical perspective, many people who develop DeFi products do not have a deep understanding of how the market, TradFi and financial products operate. What problems will the result cause? These products often use very complex mechanisms to implement some very simple financial services, just like Rube Goldberg machine (Rube Goldberg machine, chain note: Rube Goldberg machine is a kind of over-complex design The mechanical combination of the company uses circuitous methods to complete some very simple tasks, such as pouring a cup of tea or beating an egg, etc.). A typical example here is MakerDAO. Maker lacks a strict arbitrage cycle, so it cannot achieve long-term stability and expansion. The possibility of liquidation always exists, like a Damocles sword hanging on the user’s head.

DeFi is devouring CeFi

More and more evidence surfaced that DeFi is devouring CeFi.

In 2017, ICO was prevalent, and many people thought that blockchain technology was about to be adopted on a large scale, but these narratives are not real use cases of encryption technology, or at least it will not be used for many years (now there are still people deploying blockchain in the supply chain Technology?). Early adopters of public smart contract blockchain mainly came from two types of users, one is speculators, and the other is traders who believe in encryption technology-they are all encrypted native users. But what is really important and really relevant to us is to make the cryptocurrency in our hands more useful and provide users with a decentralized and composable financial infrastructure. This revolution will be a virtual revolution. Before the large-scale adoption of cryptocurrency, the entire industry must enable native users to better use cryptocurrency. Crypto users and native users want simple and easy-to-use products with real-world use cases.

Five minutes to understand Polkaswap: Polkaswap Ecological Interoperability Decentralized Exchange

In order to accelerate the availability of cryptocurrencies (and eventually make them more widely adopted), one of the most important parts of the network infrastructure must be further strengthened, and that part is the cryptocurrency exchange. Establishing a decentralized exchange, users can use it as an alternative to a centralized trading market, thereby re-surrendering power to users. A centralized exchange is like a black box-because we can’t see what’s going on inside, we can only choose to trust the operator of the centralized exchange, which violates the nature and basic ideology of encryption and decentralized networks. But now, we have begun to transition from a centralized exchange to a decentralized, non-custodial exchange. Decentralized exchanges are taking market share from centralized exchanges because they:

  • Competitive UI/UX
  • Low threshold for listing

Therefore, for the cryptocurrency industry and emerging networks, it is necessary to develop high-quality decentralized exchanges.

DeFi has become a general trend, and CeFi cannot stop it.

One of the most attractive factors that people would like to trade in the field of centralized finance is liquidity. However, as decentralized exchanges gradually “control” the trading volume of several of the most popular tokens in the DeFi field (such as MKR, SNX, BAL, and RPL), these exchanges are in the global altcoin liquidity pool. The market share occupied is constantly increasing, and “Initial Uniswap Offerings” (Initial Uniswap Offerings) have replaced the past ICO and IEO.

Polkaswap vs. DEX based on Ethereum

A large number of assets are stored on various blockchains

Polkaswap has the ability to get rid of the shackles faced by the current decentralized exchanges on Ethereum, and has the opportunity to add tokens from the Polkadot ecosystem and other blockchains to the exchange. In this way, compared to other decentralized exchanges, the trading pairs on Polkaswap can not only support tokens based on the ERC-20 standard, but also support any tokens issued by any other blockchain connected to the Polkadot network. currency.

Reduce gas fee

On the current decentralized exchanges based on Ethereum, the gas fees that need to be paid during transactions are particularly high, and it is often difficult for some traders with small transaction amounts to bear such transaction costs. Using SORA Network can reduce gas costs, because compared to Ethereum, SORA Network based on the core infrastructure of Substrate has greater scalability and does not require expensive mining to reach consensus. Finally, the entire Polkadot architecture allows an almost unlimited amount of composability between blockchains, which means that under the economies of scale based on transaction volume, transaction costs on a more modern and scalable architecture will become lower. .

Just-in-time transaction

If you are currently using decentralized exchanges on the Ethereum blockchain, you will find that the processing speed of these exchanges is indeed slow. This is because there is a time difference between sending a transaction and verifying a transaction. Polkaswap uses the Substrate infrastructure Solving this problem, its performance is much higher than Ethereum. In the future, with the multi-threaded and scalable architecture of Hyperledger Iroha v2 written with high-performance Rust, and the consensus algorithm based on Sumeragi voting, tens of thousands of transactions can be processed within a few seconds, which will bring users close to Trading experience on centralized exchanges.

Have an experienced team in building blockchain financial technology products

At this stage, some decentralized transaction protocols will be built by novice and inexperienced developers, and they will even use real money for stress testing. As we have seen in exchanges such as bZx, Balancer, dFund and FTX, “hackers” seem to be able to easily destroy the smart contract logic and token economic system of these exchanges. The development team behind the decentralized exchange Polkaswap is Soramitsu, a Japanese blockchain company. They have experience in developing solutions for central banks and are proficient in the C++ implementation of Kagome and Polkadot Host, and C++ Filecoin implementation. Among the various blockchain technologies, Soramitsu hopes to create a DeFi framework suitable for interoperability on public blockchains.

PSWAP token

Five minutes to understand Polkaswap: Polkaswap Ecological Interoperability Decentralized Exchange

Similar to Uniswap, Polkaswap will charge a 0.3% transaction fee for each transaction on the platform, which will be used to repurchase and burn PSWAP tokens, and mint new PSWAP tokens to reward liquidity providers (LP) . In the initial stage, the liquidity provider’s reward limit is 100% of the transaction fee that has been burned, and then it will gradually decrease, reaching a level of 35% of the average daily token burn volume after five years.

Web3 Foundation Grant

In order to further build the Polkaswap and Kusama ecosystems, as an open source contributor to Polkaswap, Solamitsu received W3F donation funding in the sixth round of Polkaswap funding. This donation will help Soramitsu build a solid code base for the initial release of Polkaswap, which will become an important part of the Polkaswap DeFi ecosystem. Polkaswap is very happy to be a member of the Polkadot family. This grant highlights that the Polkaswap ecosystem attaches great importance to decentralized exchanges to allow crypto assets to be exchanged freely through non-custodial solutions.

Polkaswap and Sora

Polkaswap exists in SORA Network, SORA Network has its own network and technology, and is closely integrated with Polkadot. The purpose of Polkaswap’s use of this hybrid solution is actually to take advantage of Polkadot’s network and technical advantages, while at the same time focusing on building a specific framework for decentralized finance.

Since the Polkadot relay chain is not used to process smart contracts, Polkaswap should be built on a scalable and powerful platform that allows smart contracts to be connected to the Polkadot relay chain, and SORA Network can meet this need .

What is SORA?

SORA is both a brand-new economic system and a network. The method implemented by the network can be connected to the Polkadot relay chain and the parachain of the ecosystem. It also includes built-in tools that focus on DeFi. SORA Network is good at providing tools for decentralized applications that use digital assets, such as:

  • Atomic token exchange
  • Connect tokens to other blockchains
  • Create programming rules involving digital assets

In addition to Polkaswap, one of the main applications running on the SORA Network is actually the SORA decentralized economic system itself.

Five minutes to understand Polkaswap: Polkaswap Ecological Interoperability Decentralized Exchange

SORA NEO: New Economic Order

SORA acts as an autonomous virtual state, managed by XOR token holders through multi-agent classification, and token holders can create productive use cases and allocate new tokens in their ecosystem through voting . Based on macroeconomic research and the latest DeFi possibilities, the SORA project is being further developed, and the innovation brought about by the token redesign is also exciting.

SORA architecture

SORA Network uses Substrate and includes “bridges” that connect Ethereum and Bitcoin to many other blockchains. SORA Network has its own set of validators and plans to build its own parachains for Polkadot and Kusama.

SORA Network’s parachain will provide a bridge pallet, which is compatible with any Substrate-based network. Based on this framework, the direct and secure interaction between Polkadot Parachain implemented on Substrate and Polkaswap and SORA Network will be standardized. This design makes the parachain bridging very secure, because the security of the parachain is equivalent to that of the Polkadot relay chain.

The SORA parachain bridge is an innovation of the Polkadot ecosystem. It provides a new framework through which bridges and parachains connected to the relay chain can be established. We believe this may become a new standard. In addition, any user on Hyperledger Iroha v2 (such as some enterprise use cases) can also use the ready-made parachain bridge to communicate with any underlying blockchain, which will enable many use cases and the movement of assets between the entire Polkadot/Kusama ecosystem. It’s very simple.

Five minutes to understand Polkaswap: Polkaswap Ecological Interoperability Decentralized Exchange

In the initial stage, SORA Network will be constructed entirely using Substrate. However, SORA and Polkaswap will later utilize the Hyperledger Iroha 2 framework and use Iroha special instructions, a set of tools dedicated to creating powerful and composable applications for digital assets. Hyperledger-Iroha2 has some built-in functions, such as:

  • Create assets on certain event triggers
  • Atomic swap assets
  • Provide more useful functions for DeFi applications

Sumeragi consensus algorithm does not require proof-of-work mining, but can achieve Byzantine fault-tolerant consensus through voting-based block proposals, which means that up to 20,000 tps of transaction throughput can be achieved in the future.

This faster consensus will provide Polkaswap users with a user experience close to the transaction speed of a centralized exchange. At the same time, the Polkaswap architecture can achieve almost unlimited composability between blockchains.

The future of interoperability

Polkaswap is currently in the construction phase and is expected to go live later this year. If you want to know more about the progress of the Polkaswap project, you can join the Telegram group and follow the project on Twitter.

A DeFi future with interoperability, scalability and unlimited combination possibilities has already appeared before our eyes.

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