<\/p>\n
Swaap protocol has launched the v2 of its non-custodial market making infrastructure on Ethereum mainnet and Polygon<\/a>,<\/p>\n As of May this year, the protocol had just over $2 million total value locked in its contracts, with the majority of the tokens denominated in wETH, wBTC<\/a> and usdc<\/a>, Swaap’s second version officially went live on July 10 and drew over $1 million in pool liquidity within the first day.<\/p>\n Balancer, the dominant protocol in the automated market maker (AMM) space, boasts $1.1 billion in total liquidity.<\/p>\n Swaap itself is a fork of Balancer v2, but with a twist. Swaap’s quotation model \u2014 which checks the recent sale price of any traded asset \u2014 is run off-chain, and there is an additional settlement module that has been added to run authenticity and performance checks on quotes.<\/p>\n For users, this means that it is cheaper to use Swaap than other market makers, as its AMM strategies are not dependent on on-chain networks such as Ethereum, Cyrille Pastour, co-CEO and cofounder of Swaap Labs told Blockworks. <\/p>\n That’s a potentially notable development given the long-standing issue of transaction costs<\/a> on networks like Ethereum, particularly during periods of heavy activity. <\/p>\n Pastour said that running off-chain quotes improves the performance of market making strategies. <\/p>\n “Oracle data are updated several times per second compared to once every 27s at best on-chain,” Pastour said. <\/p>\n This means that it will be possible to run more complex computations and adapt to market conditions in real time.<\/p>\n Of course, there are always risks involved with off-chain management. Pastour acknowledged three in particular: corruption of price data sources, so-called “fat-finger” errors in models, and malicious actors who could seize control of the quotation module. <\/p>\n To mitigate these risks, Pastour said Swaap has a rigorous internal control system and follows strict cybersecurity practices. It also utilizes on-chain safeguards that help mitigate risks and limit LP exposure to unforeseen events.<\/p>\n \u201cSwaap v2 employs several pioneering on-chain safeguards, including max imbalance, last look, and max drawdown mechanisms. These protections shield LP funds during extreme market conditions and potential malicious attacks,\u201d he said.<\/p>\n Max imbalance relies on a mechanism that reverts trades which imbalance a pool, and LPs can easily check their imbalance risk exposure. Last look is a tool that is used to reject trades that have quotes which deviate too far from on-chain prices. <\/p>\n “Max drawdown is our most innovative mechanism,” Pastour said. \u201cIt’s a pool-level stop loss. If a trade causes a loss for LPs of more than x% of the pool value in a given time duration, the transaction will be reverted. The x% is an immutable parameter, deployed in the smart contract of the pool. It has been fixed at 4% every 24 hours for the first pools deployed on Swaap.\u201d<\/p>\n Max drawdown is also used as a defense layer from exploitation of the trading function, Pastour explained. Setting a percentage limit on the total amount of funds an attacker can drain. <\/p>\n \u201cThese pioneering mechanisms enable v2 to ensure pool security even amid highly volatile market conditions. It provides robust defense against malicious attacks and extreme scenarios,\u201d Pastour said.<\/p>\n Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter<\/a> now.<\/strong><\/p>\n Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief<\/a>,<\/strong><\/p>\n Can’t wait? Get our news the fastest way possible. Join us on Telegram<\/a> and follow us on google news<\/a>,<\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Swaap protocol has launched the v2 of its non-custodial market making infrastructure on Ethereum mainnet and Polygon, As of May this year, the protocol had just over $2 million total value locked in its contracts, with the majority of the tokens denominated in wETH, wBTC and usdc, Swaap’s second version officially went live on July […]<\/p>\n","protected":false},"author":2,"featured_media":121782,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-121781","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/121781","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=121781"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/121781\/revisions"}],"predecessor-version":[{"id":121783,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/121781\/revisions\/121783"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/121782"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=121781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=121781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=121781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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