On September 7, 2020 OneSwap team held another Telegram AMA dedicated to OneSwap “Gemini” Public Beta Launch. OneSwap’s Brand Promotion Officer Jennifer talked about cooperation with CoinEx, OneSwap & ONES unique functions and a recent market crash. Please enjoy the full recap below:
Can you introduce OneSwap in one sentence? What is the essential difference from other AMM DEX?
Jennifer: OneSwap is a fully decentralized transaction protocol based on smart contracts. It does not require permission to list tokens, and supports automated market making as well as limit orders.
As a transaction protocol based on the AMM (automated market-making) model, OneSwap applies the Constant Product Market Maker (CPMM) model, just like Uniswap, making it more concise and easier to use.
In centralized exchanges, orders need to be matched, which may cost some users much time before their orders can be traded, the “demand coincidence” as they call it in economics. One of the benefits of AMM is transaction automation. Users can greatly accelerate transactions by directly trading with robots. However, AMA is far from a perfect liquidity solution. As the experience of UniSwap suggests, the AMA model has such problems as impermanent losses, restrictions to market orders, and low efficiency of capital.
As a supplement to AMM, OneSwap adopts a combination of AMM and order book, which not only meets the needs of users but also enhances the liquidity of encrypted assets on the platform. That has proved to be an effective solution to long-tail token trading. Each Pair contract on OneSwap supports both market orders and limit orders. When processing a market order, the Pair contract will compare the best price in the order book with the AMM price, and try to respond to the transaction request at the best price.
Another difference from other AMM DEX is that OneSwap adds the candlestick chart, order ticket, depth map, and other functions to benchmark CEX in user experience. Users can see such information as the price trend, transaction volume, and depth of various tokens just like in the professional charts of centralized exchanges so that they can work out well-informed trading plans.
As we know, OneSwap is backed by CoinEx, a centralized exchange which has released its own public chain. Yet OneSwap is based on a DEX on Ethereum. What made this cooperation happen?
Jennifer: We have discussed this with CEO Haipo. As far as I am concerned, CoinEx included the DEX in its business layout a long time ago, and even launched CoinEx DEX last year. CoinEx DEX, a dedicated public chain based on CoinEx Chain, can achieve extremely high TPS and generate blocks within seconds, greatly improving the user experience. That is the biggest difference between the two. Moreover, users can issue tokens and create trading markets without permission. However, we all believe that as a brand new ecosystem, CoinEx Chain still has a long way to go before it is equipped with a perfect product architecture, user base, and asset foundation.
Ever since it paid attention to UniSwap in June, the CoinEx team has found this project very interesting. First of all, many of UniSwap’s concepts, such as permission-free and automated market making, are consistent with what CoinEx DEX believes. Despite its slow transaction and high transaction fees, Ethereum alone is currently the most prosperous common chain in the ecosystem. A large number of assets are issued on the Ethereum, making it a big source of demand for DEX.
But at the same time, UniSwap also has its shortcomings. For example, it does not support limit orders. In fact, most ordinary users trade through limit orders. In addition, limit orders can also be based on AMM to enhance liquidity and reduce trading slippage. What’s worse, UniSwap has a poor user experience, leaving many users who are used to centralized exchanges at a loss.
On a meeting by coincidence, we found we shared the same views on DeFi and AMM DEX. That was a nice talk, and has inspired us to develop a better UniSwap equipped with the order book and a terminal with a better user experience.
OneSwap supports both the limit order and the order book. Placing order matching off the chain, this semi-centralized solution was applied by many DEX, such as EtherDelta and IDEX, before AMM DEX appeared. What makes Oneswap’s solution different? Is it semi-centralized or completely decentralized?
Jennifer: As we know, many DEX that supported the order book, such as NewDex on EOS as well as OASIS, EtherDelta, IDEX, and DEX.top on ETH, followed the model of off-chain matching and on-chain liquidation. That is the semi-centralized solution as we mentioned before. In my opinion, they didn’t go on the chain because of the excessive gas consumption.
To be more decentralized, OneSwap is committed to being the order book on the chain to achieve 100% decentralization, trustlessness, and anti-censorship.
That is hard, technically, as the current transaction fees on Ethereum are at quite a high level, and it only makes sense when the gas is cut to a negligible level. Fortunately, our development team has gone deep into smart contract virtual machines for the past six months and gained much knowledge about EVM. That has brought us here, to control the gas consumed by operations, such as swap, placing limit orders, and canceling orders, to even lower than UniSwap.
One big advantage of Uniswap is that it increases the liquidity of long-tail assets. Many small coins that cannot be traded on centralized exchanges also come at a good depth on Uniswap. But some people think that this is precisely because of the absence of order book and candlestick charts, making users ignore price slippage and focus on liquidity. Will the order books and candlestick charts on OneSwap be more of a hinder than a help that keeps away these long-tail assets?
Jennifer: In fact, many long-tail tokens are poorly liquid with high slippage on centralized exchanges. Yet that has not hindered users from trading.
The success of UniSwap is based on its excellent constant product automatic market-making algorithm, which can, within an unlimited price range, provide liquidity better than that enabled by the simple order book of a centralized exchange.
Indeed, the lack of functions such as the order book and candlestick charts is its defect, not an advantage. Still, users can do the calculation. In fact, there are already many third-party tools trying to fix this problem, and OneSwap is a perfect mix.
Last week, Sushiswap surprisingly lifted Uniswap’s lock-up volume to a pinnacle, in an attempt to directly migrate liquidity from Uniswap. We all know what happened later: the market collapsed, driving down the price of SUSHI to the bottom. What’s your comment on SUSHI’s plan? What will OneSwap do to keep these users?
Jennifer: I am not very optimistic about the Sushi model, because for DEX, traders are as important as liquidity. If it just migrated liquidity yet without traders, these liquidity providers could not get sufficient incomes and would soon go back to UniSwap.
OneSwap cares about not only liquidity, but also traders and project developers. First of all, we create an excellent user experience, with a built-in wallet that can easily keep CEX users and the order book model that caters to market needs. Secondly, we have also added transaction mining and pending order mining besides liquidity mining, and supported more tokens for mining, including all well-known ERC20 tokens to get more traders involved. We will also launch various mining methods such as invitation mining and project developers’ rewards, while activating multilateral markets.
What is the economic model of Oneswap’s platform token ONES? How much for the initial circulation? How to get it?
Jennifer: As disclosed in the white paper, the total amount of ONES is constant at 100 million, of which 50% will be released to the community by various mining methods. In the early stage of the launch, 5% of the total tokens will be distributed to all participants in three ways: pending order mining, liquidity mining, and transaction mining. 11% of the total, including tokens for initial mining and the liquidity injected by the team into the market, will be in circulation at the very beginning.
Each transaction contract on OneSwap will charge a fixed proportion of transaction fees, of which 40% is automatically used to repurchase and burn ONES, thus making ONES a deflationary token.
ONES are to be distributed as below: 5% as rewards for users participating in the initial mining; 45% for future mining reward plans and community construction, promotion plans, etc.; 25% for project operation and maintenance (2.5% of which will be unlocked first and the rest unlocked in 9 times in four and a half years); 15% distributed to long-term strategic investment institutions (1.5% of which will be unlocked first and the rest unlocked in 9 times in four and a half years); 5% for the core team (1% of which will be unlocked first and the rest unlocked in four times in two years); 5% for early investors in core projects (1% of which will be unlocked initially and the rest in 4 times in 2 years).
To make OneSwap more transparent and credible, the ONES for long-term mining rewards are in the custody of the governance contract, and are gradually released when proposals are passed by voting through community governance. The ONES that need to be unlocked linearly in time are managed by the lock-up agreement. After ONES are created, 11% for initial circulation will be transferred to the specific address by the aforementioned proportions, 45% to the governance contract, and 44% to the lock-up agreement. The distribution and use of all tokens for forward mining requires on-chain voting. Fund applicants initiate a proposal on the chain, and the contract automatically distributes tokens after the proposal is passed.
What are the functions of ONES? What role does it play in the ecosystem?
Jennifer: ONES is a governance token issued by OneSwap based on Ethereum for on-chain governance, with a total amount of 100 million. Its roles in the OneSwap ecosystem can be summarized as two: value capture and the governance right.
Users can receive ONES as incentives by whatever functions of OneSwap, be they liquidity mining, transaction mining, or even pending-order mining, after the official launch. It aims to encourage more users to contribute to the construction of the OneSwap ecosystem. On the other hand, as transactions mount, users tend to expect more from future growth, which will significantly push up ONES prices.
In terms of ecological governance rights, users can initiate proposals and vote on the proposals in the community as a way of on-chain governance. Only users who hold ONES have the right to submit proposals and vote.
As its ecosystem further improves, OneSwap will play a more prominent role in governance and better empower ONES holders.
Some people believe that the market crash in the past few days is CEX’s counterattack against DEX and DeFi as they have encroached on its interests more or less. What’s your comment on this opinion? How will DeFi develop in the future?
Jennifer: I have to say it’s kind of far-fetched. DeFi has been popular for nearly 3 months from June to September this year, even longer than any of its counterparts. Financially speaking, this crash is a market behavior, which I believe is closely related to the overall picture. For the past few days, U.S. stocks have plummeted, along with the three major indexes, respectively, the Dow Jones, S&P 500, and Nasdaq, pushing the global capital market into a state of panic. Another DeFi project that generally follows a pattern of mining, has climbed to a high level against the fundamental sentiment and the overall market trend. Driven by profits, miners, including those who have earned profits in the early stage, undersold their tokens. That may be the biggest catalyst for the recent crash of the cryptocurrency market.
I don’t agree with that conspiracy theory. CeFi and DeFi are not in conflict, but complementary with each other. CEX is the best cross-chain transaction method and also receives fiat currencies. It cannot be replaced by DeFi considering its high-frequency and derivative transactions. Although DEX allows users to control their own assets, CEX may be more secure for users who are not familiar with encrypted wallets.
But still, I am positive about DeFi. If 2019 marks the infancy of DeFi, then DeFi is about to suffer the pain of growth in 2020. People who deny its value just because of those temporary fraudulent projects and bubbles will regretfully wave goodbye to a golden opportunity for value investment. After all, DeFi will still be the main battlefield to capture the value of the blockchain.