Behind the Code EP7: Swapa

Swapa is the first veDEX on Alephium, a vote-escrowed decentralized exchange. Its goal is to create deep liquidity on Alephium and allow users to earn a yield on any pool in a fully decentralized, trustless, and permissionless way.

Let's get into the interview!

Hiya Esse, Thanks for having our interview! To those who don't know you yet, could you please introduce yourself and tell us a bit about your background? How many people are on your team? How did you first get involved in the crypto world, and how and when did you discover Alephium? What inspired you to start building on Alephium?

I'm Esse. I studied physics before dropping out a few years ago to focus on my own business. I was introduced to crypto through Bitcoin and trading meme tokens on ETH and Solana.

At the beginning of this year, I had the idea for an on-chain game. I started to learn to code and tried Solana. But I soon discovered Alephium and found it much easier to start here. The core developers were a big help, as Cheng and Hongchao, among others, would quickly answer any questions in the developers' channel.

I released the first version of Gold Castle Club. The smart contracts are released and functioning, but the game itself is still in development.

Swapa has a small team. I wrote the smart contracts, backend, and most of the initial frontend. Recently, after some well-deserved criticism of the initial UI, we made a new addition to the team. Since then, Minijudie has made many improvements to the UI.

What inspired you to develop Swapa?

A few months ago there was a discussion in the Alephium discord about new projects. Panxcake made a suggestion in the Alephium discord, that it would be cool to have a veDEX on Alephium. I started asking him questions and soon after I started working on it.

ELI5, what is a Ve33 DEX and is there a similar DEX on another blockchain that we can compare it to?

Imagine a DEX where users can lock up tokens to vote on how rewards are distributed, and in return, users get more benefits for voting and providing liquidity, like higher yields and voting power. This is what a Ve(3,3) DEX does. It’s like a game where everyone wins, and it's designed to keep the ecosystem strong and fair. A similar DEX on another blockchain would be Equalizer on Fantom, which also uses this model to align the interests of token holders and users.

Could you provide us with an overview of your Yield Farming design? How does the DEX work? How can a regular user earn yield from Swapa?

A user can earn yield in two ways. The first is voting. You can use your SWAPA and convert it into xSWAPA, which is held by a unique Swapa account (a veNFT). The amount of xSWAPA determines your voting power. By voting on a pool, you earn a share of the fees and bribes on that pool. Bribes are incentives that anyone can add to a pool. For example, an ALPHAPAD pool could have four different rewards: ALPH, SWAPA, xSWAPA, and APAD.

How did you ensure that the emissions and the tokenomics are sustainable?

Emissions decay each epoch, meaning that early investors are not overly diluted. The decay is 1% for the first 10 weeks, and 2% after that. Until at week 200 it stabilizes at 200. This can be adjusted if decay gets too low or too high.

Of the initial supply (1.23 million), including the first year's rewards, the SWAPA sold in the presale and added to the ALPH/SWAPA pool, only 0.8% is allocated to the team. 1.4 million is allocated to emissions over the DEX' lifespan. 27400 Will be vested over 50 months. This includes the team, community rewards, partners and rewards for important pools.

Further, the incentive that locking SWAPA into xSWAPA offers also removes some SWAPA from circulation. When xSWAPA is reconverted into SWAPA on a fast track instead of by vesting, a cut is taken and redistributed to liquidity providers.

On a high level, what security measures/redundancies were installed to guarantee maximum security of the smart contracts and the pool?

We have done auditing and extensive testing. The smart contracts were written from scratch for Alephium as this is the first veDEX and there was no example to follow. When making the smart contracts, security has always been the NO 1 concern as it's the most important issue.

Our contracts have not been audited by the core team. We have done our own internal audits, and the contracts have been audited externally.

Are you aiming for open sourcing on day one?

We'll follow AlphPad's example and open source after a three-month period.

Looking ahead, how do you see Swapa evolving? What changes or new features do you plan to implement in the future?

I have a lot of ambitious and innovative ideas on how we can evolve, but it is too early to talk about those ideas. First, we want to improve the core features, especially the UI. We'll listen to feedback from the community and make improvements. Users can expect regular updates and quick fixes.

Are there any projects in the space that you plan to collaborate with, perhaps in the DeFi or maybe NFT sectors?

We collaborate with the number 1 launchpad on Alephium, Alphpad. The Swapa presale will be held there. Candyswap is working on an arbitrage contract, which will enable swaps using pools on Swapa. We have also implemented both https://alphnames.com/ and https://www.alephium.domains/

Everyone would like to know about the token. Could you share with us some information on the date of the IDO on AlphPad, how much is going to be raised, and how much a regular 150k APAD staker should prepare to utilize the maximum limit?

We have not made a final decision on this yet. It largely depends on when we launch. Alphpad has recently announced a big improvement, the tier system. We'll announce the specifics of the Alphpad listing soon. Apart from staking APAD, which guarantees a whitelist spot, there will be some competitions to earn a spot. This will be announced on the Swapa discord and telegram.

Any advice or tips for people new to the crypto space? What should they keep in mind as they explore DeFi dynamics or maybe just crypto investing in general?

Don't be afraid to take some profit. Get to know people who are more experienced and smarter than yourself.

Surely, taking some profits and meeting awesome people will definitely change your life for the better. That's beautiful. Thank you, Esse!

Thoughts on Swapa...

Swapa is poised to be the first Vote Escrowed Dex on Alephium. If Alephium represents the future of DeFi, then Swapa will embody the future of Ve33 DEXes—Simple, secure and community-owned. Keep in mind, when the L1s do well, their DEXes will also do well. It is a known fact that both Uniswap and Sushiswap have shown remarkable performance during the early ETH days. DEXes can co-exist!

And as we all know, having just one solid DEX pool is not as healthy as we might think. If an L1 only has one source of liquidity, (in our case, AYIN), it risks having a single point of failure. On the flip side, having multiple thin DEX pools is also not ideal and not optimal, as this fragments liquidity, leading to higher slippages. This could change as the very first DEX Aggregator is rumored to be developed by Team AlphPad.

With many projects aiming to launch on Alephium, we prefer to avoid excessive speculation. Always ensure you have a solid foundation for your investment thesis, not just promises and wishful thinking. Swapa will be deployed with a fully functional features on day 1.

That said, Swapa is one of the few projects I am genuinely optimistic about. It checked all my boxes. I am rarely very optimistic about projects, but when I am, I make sure it is something I can be truly proud of. No hype involved. Just a functional Ve33 Dex.

Here's something for you:

1. Today, September 2nd: Esse will be working on the AlphPad listing. Please note that the project will only appear on the AlphPad website after they merge it. Given the efficiency of the APAD team, it will likely show up very quickly.

2. The sale should be two weeks after the listing.

3. Max raise: 40'000 ALPH.

I'll leave some room for our community analysts to speculate on the 65.7 million APAD tokens currently locked in the APAD vault among 298 stakers who can participate in this IDO.

We're not done yet.

We have 5 whitelist spots that I will give to 5 random community members who will quote tweet this article and write: Swapa x AlphPad IDO. Winners will be announced closer to the sale. Very simple, and everyone is invited! (just like the dex!)

Swapa is now live on testnet, and you can try it here: https://swapa.exchange

Follow their socials:
Twitter: https://x.com/alphswaps
Discord: https://discord.gg/CJ8CJGTmqq (no expiry, I created this myself)
Telegram: https://t.me/swapadex

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