APYSwap Showcase
APYSwap is a protocol for the decentralized exchange of shares in tokenized vaults, with cross-chain support. This allows users of different blockchains (Ethereum, Polkadot, and Binance Smart Chain for now) to create and delegate digital tokenized vaults in their native blockchain. Users benefit from financial service applications, like yield farming, portfolio rebalancing, etc., without having to sacrifice ownership of their assets, in a decentralized manner.
This is achieved by the creation of a Layer 2 Blockchain, using which users can swap accounts and assets from different blockchains in a decentralized manner. Here’s a pictorial representation of how the protocol works.
The cross-chain compatibility is currently implemented by using the layer 2 blockchain as a bridge for Ethereum and Binance Smart Chain, while Polkadot is integrated with the help of Virtual Machines that are compatible with Ethereum-based smart contacts. Currently, only these three blockchains are available, but as more public blockchains support DeFi, APYSwap will support these platforms as well.
The Present Scenario in the DeFi Ecosystem
The DeFi landscape, characterized by rapid development and growth, has truly changed the way cryptocurrency users think of cryptocurrency. With an increase in the number of services available in the market, crypto assets can now enjoy features like compound interest and decentralized trading, something which was not possible before the exploding popularity and growth of DeFi platforms. However, the ecosystem in its present state does come with its fair share of problems.
For instance, it is extremely easy for an average user to get confused with the overwhelming number of products available in the market. Along with this comes the requirement to stay up-to-date on the different products available in the market, and the onus to carefully analyze the intricacies between the projects to come up with a risk-reward parameter. It is becoming increasingly difficult for everyone interested in the DeFi space to constantly rebalance their portfolios when looking to maximize profits. Rewards on offer by different protocols often change, and Liquidity Provider and Yield Farming tokens are illiquid. Add that with the ever-increasing transaction fees in the Ethereum network, where more than 90% of DeFi assets are hosted, one can see why these limitations could curtail the boom of the DeFi ecosystem.
APYSwap has come up with a solution to tackle these very problems in the DeFi space.
How Does APYSwap Solve These Problems?
The APYSwap tackles these problems with a mix of Delegation, Democratization, and Innovation.
Average crypto users and DeFi enthusiasts need not stay up-to-date on the different protocols, and the opportunities available in the DeFi ecosystem, as they could choose to delegate asset management by purchasing managed portfolios from APYSwap (more on that, in the Use Cases section below). This essentially means crypto users will be able to partake in the passive income generated from the crypto assets, without active management or sacrificing the decentralized ownership of such assets. Users will also be able to delegate
By enabling traders to trade using the layer 2 Polkadot, Binance Smart Chain, or Polkadot blockchains as the layer 2 networks, users can minimize Ethereum gas costs while the assets themselves are anchored in the Ethereum network. An example of this, as quoted from the whitepaper, can be “ A Uniswap-style exchange, using pooled assets & automated market makers, where users can exchange between tokens on Chromia layer 2, without the high gas fees and transaction times of Ethereum. In the meantime, a trustless bridge allowing the transfer of assets to and from the Chromia Layer 2 blockchain.”
Currently, the tokens listed on the platforms are vetted by the developers, but in the near future, a decentralized economy will be responsible for whitelisting the tokens listed on the exchange. If a DeFi project seeks to be whitelisted on the platform, a percentage of APYSwap tokens are added to an insurance pool, as decided by the users based on a vote. If a project is deemed subpar, the APYSwap tokens locked in this insurance pool will be distributed to all users who own a part of the project’s token. More details on the APYSwap tokens can be found in the section titled “APYSwap tokens”.
As users can trade “shares” of APYSwap vaults, rather than selling the underlying assets, APYSwap allows users to trade the previously illiquid assets which were locked because of staking/lending/pooling. By trading APYSwap vaults, users will be able to trade LP tokens without forfeiting any rewards/bypassing penalties that may have been the case otherwise. The whitepaper describes APYSwap vaults as being “much more flexible than index funds or other asset baskets; instead, they are akin to decentralized trading funds”
APYSwap — Use Cases
If you’re an average user looking to maximize profits from the DeFi ecosystem, here’s how your APYSwap experience will look like. You can purchase these portfolios managed by professional crypto traders and be able to partake in the passive income generated. Not only are you able to delegate asset management, but you will also be able to delegate the governance process in return for token rewards. These portfolios will be in the form of shares of an APYSwap vault, where each vault will contain different combinations of LP, YF, and other tokens, along with synthetic instruments.
This project can be roughly (not to be taken literally, used as a metaphor to enable an easy understanding of the project) equated to a decentralized version of mutual funds, wherein the funds are exclusively used to invest in DeFi projects.
You may also choose to use the hybrid on-chain solution to select your portfolio rebalancing strategy, and let the smart-contract do the hard work.
If you’re a seasoned veteran trader, on the other hand, looking to create portfolios, you can do so without much friction in the form of Ethereum gas funds, or the necessity to take care of technical development and end-user experience. By using APYSwap, you will be able to design financial products, without having to worry about cross-chain limitations. The example quoted in the Whitepaper is the best way to describe the user experience for a professional crypto trader — “by leveraging lending protocols, portfolio managers could create a DeFi index fund that also generates dividends.”
APYSwap tokens
The APYSwap tokens have multiple uses within the protocol. Primarily, the tokens are used as an insurance pool to ensure that only reputable DeFi projects are available on the marketplace. The tokens are also to be used to pay reduced fees (fee structure yet to be decided by the community) to the portfolio managers of APYSwap, and also for the governance of the platform.
When used for governance, the priority is not only given to the number of tokens held but also by weighing in the historic voting activities and the duration held by the token owner. This rewards token owners for voting regularly and ensures decisions are taken by token owners who understand the needs of the community. Needless to mention, this also incentivizes long-term participation, as the duration of ownership directly transfers to greater voting power.
At any point in time, there will be a maximum of 100 million APYS tokens.
APYSwap — The Roadmap
Currently, the project is under development, beta-testing the APYSwap Vault concept (Ethereum and Binance Smart Chain). The APYSwap website lists the following roadmap for 2021.
Q1 2021: Proof-of-Concept -Much remains to be done to deliver to our users the final vision of the marketplace where LP tokens can be combined into portfolios, managed, and freely traded on layer 2 blockchains whilst assets remain anchored in Ethereum.
Q2 2021: APYSwap Beta — finished APYSwap Vaults, APYMask, the Layer 2 bridge with our strategic partner Chromia tailored specifically for our users, and a basic version of Layer 2 Vault trading platform. Marketplace rules under research. Portfolio evaluation by the oracles under research, as well as project governance based on token staking.
Q3 2021: APYSwap + Governance ecosystem; Layer 2 token trading and additional features, such as the auto purchase of APY token for paying fees.
Q4 2021: APYSwap automatic portfolio rebalancing
Final Verdict
APYSwap has been one of the most eagerly-awaited projects in the DeFi space. If executed successfully, it could integrate the user-experience of traditional FinTech in a decentralized fashion, without having to sacrifice the ownership of assets. Along with bringing more users into the DeFi space, this could also potentially be the perfect platform for institutional and professional traders to list their financial products.
However, as much as we’re all looking forward to the success of this platform, the key to the success of the platform remains in the execution of these plans, and how they navigate certain legal and regulatory concerns. Much remains to be seen for this ambitious project which could revolutionize the DeFi landscape.
Follow APYSwap on:
Website: https://apyswap.com/
Whitepaper: https://apyswap.com/APYSwap_Whitepaper.pdf
Twitter: https://twitter.com/apyswap
Telegram: https://t.me/apyswapcom
Medium: https://medium.com/@apyswap
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