On March 20th, Hayden Adams, founder of Uniswap, tweeted that “If I have to go another week without publicly announcing details of Uniswap V3, I might go insane”, suggesting that Uniswap V3 may be published in the next week or two.
After Hayden Adams tweeted, the platform governance token UNI quickly rose and approached the previous high.
The outbreak of DeFi and the rise of Uniswap impacted centralized exchange and made DEX a hot track.
Although Uniswap still occupies half of the market share of Ethereum’s DEX ecology, the competition of DEX has just started, and its market share is far from being finalized.
The opportunity for new generation of DEX is on the way.
I. Reshuffle of trading track
Before DEX came to the attention of the public, the competition in the trading market mainly concentrated among centralized exchanges.
From the launch of Bitcoinmarket.com in 2010 to the bankruptcy of Mt.Gox in 2014, and finally the approval of Coinbase for listing now, the trading track has grown out of nothing and expanded from a small to a large force, experiencing numerous major tests.
With the development of cryptocurrency market, the number of cryptocurrency exchanges has increased rapidly, and the competition among cryptocurrency exchanges has become increasingly intense. From products to services, assets to traffic, and community forums to public opinion wars, the competition on the trading track is beyond imagination.
After DEX made its debut with liquidity mining, a new competition and reshuffle with different dimensions began.
DEX not only makes the survival logic of second-and third-tier exchanges fragile, but also brings anxiety and challenges to the DEX giants.
Undoubtedly, DEX is the toughest challenger in the current exchange layout.
Currently, there are hundreds of DEXs on the market. However, most of them just simply copied Uniswap and modified its UI. Lack of innovation means being eliminated. Most DEXs are just a flash in the pan. When users find that they cannot make profits any longer, they will withdraw the funds and participate in the next project. Where there is innovation, there is prospect. The search volume and popularity of a new DEX YouSwap are constantly increasing in overseas media and social channels.
Recently, a new DEX, known as YouSwap, broke into the DeFi market. On the evening of March 19th when YouSwap’s second round of IDO ended, the over-subscription reached 4809%, an increase of nearly 50 times, and the total subscription amount exceeded USD 2.4 million.
As a new force on DEX track, what are the characteristics of YouSwap, what does YouSwap rely on to attract users, and how does YouSwap stand out from the competition?
II. Strategy of YouSwap
“The innovation of DEX track has just begun. As we all know that Uniswap is not the first competitor on this track. For instance, 0x protocol and Bancor protocol were both launched earlier than Uniswap. Why did Uniswap finally come out?”
Facing the converging attack by the established DEXs in Ethereum and the emerging DEXs, the project official talked to DeepChain and commented on the launch of YouSwap as below.
As YouSwap states, the innovation and competition of DEX track has just begun, so what is the competitiveness of YouSwap?
In terms of details, YouSwap has optimized the AMM (Automated Market Maker) model, integrated resources for liquidity and swap pricing, increased the exchange speed, and innovated the token economy model. From the major terms, YouSwap’s vision is not just to create a small and outstanding DEX, but to expand over the whole chain and layout the DeFi All-Eco product portfolio through DEX.
1. Extremely deflationary token economy
Token economy plays a very important role in blockchain projects.
With respect to token distribution, many projects in DeFi field distribute the governance tokens fairly through liquidity mining. For a single project, the mode and path of token distribution determines the initial influence and attention of the project to some extent. In this regard, Sushiswap is a typical example (100% distribution via mining).
The total supply of YouSwap’s platform token YOU is currently 200 million, of which 60% are used for mining. The mining method falls into LP liquidity mining, single-currency staking mining, trading mining and inviting mining.
The purpose of mining is to distribute tokens on the one hand, and to attract users on the other hand. It’s estimated that the various mining methods of YouSwap will effectively increase the influence and attention of the platform.
In addition, it is worth mentioning that YouSwap also introduces a burning mechanism. Many centralized exchanges have adopted the mechanism of platform token burning. Taking Binance for instance, 20% of quarterly profits will be used to buyback and burn BNB. The burning of platform tokens plays a guiding role in boosting token holders’ confidence, expanding platform influence and attracting users through the rise in value of platform tokens.
In terms of the burning of platform tokens, YouSwap has obviously done it insanely well. 100% of the fees and other income are used for buyback and burn, and the official team of YouSwap also publicly expressed its hope to create an extremely deflationary economic model.
2. Multi-chain and cross-chain
At present, the leading DEXs are all deployed in Ethereum. However, the congestion of Ethereum network and the high GAS fees have affected the user experience of Ethereum and hindered the usage by DeFi users.
This directly leads to the emergence of exchange public chains and Layer2 solutions and applications. Exchange public chain is more of a self-defense counterattack against traffic robbing on DeFi track, and Layer2 is the optimal capacity expansion plan before Ethereum 2.0.
As the leader of public chain, Ethereum has the most prosperous DeFi ecology and the most powerful network effect, and congestion will inevitably lead to traffic overflow and reselection, which is also an opportunity for other public chains and new DEXs.
For DEX, it is necessary to reach more high-quality assets and wider traffic. Multi-chain and cross-chain are inevitable trends. YouSwap seizes this development trend, and is deploying the cross-chain architecture.
First of all, YouSwap supports multi-chain deployment architecture. It will be built on BSC and Heco in addition to Ethereum and TRON.
On Ethereum chain, YouSwap will firstly adopt the technical development based on scalability solution ZK Rollup, that is, all trading data interacting with Layer1 are put on chain, the trading data of Layer2 are put off chain, and the Hash data of trades are also put on chain. Later, YouSwap will make its scalability solution compatible with Optimistic Rollup and Validum, so as to realize the interoperable application of Layer2 protocol in Ethereum.
In addition, encountering the expectation of Polkadot’s cross-chain outbreak, YouSwap team is also exploring the Parachain and Relay Chain of Polkadot, so as to help YouSwap users to participate in multiple public chain ecology and trade token assets on different public chains with one click.
3. All-Eco deployment
Apart from multi-chain and cross-chain, YouSwap is also making an All-Eco deployment, that is, DEX is only the first step, and YouSwap will continue its development in the aspects of lending, financial planning and stablecoin.
The most prominent characteristic of DeFi protocol is composability. It can be seen that EDXs including Sushiswap are integrating their services with other DeFi protocols or developing applications independently to expand their DeFi boundaries.
“We regard the integration and connection of these tracks as a significant trend. Therefore, YouSwap is trying to serve as the’ aggregator’ of the entire DeFi track. The modules are connected with each other, support each other, blend with each other and benefit each other.”
Serving as the “aggregator” of the entire DeFi track is the goal of the All-Eco layout by the official team of YouSwap, which also reflects the above-mentioned development vision of YouSwap, that is, more than stand-alone DEX.
III. Old pattern of Exchange creates a new opportunity for YouSwap
In 2018, when the public chain broke out, some users asked, do we really need that many public chains? Currently, the users and market are encountering with the same question. Do we really need that many DEXs?
As mentioned above, for the project owner, DEX is a new opportunity to grab market share and challenge the traditional trading track pattern.
For the market itself, there are still a variety of problems with DEX products on the market at present, and that’s why the old DEXs including Uniswap seek for upgrading and iteration.
So where is the opportunity for a new DEX like YouSwap?
From the perspective of external environment, the new DEXs buy themselves an important window period from the congestion of Ethereum and deployment of Uniswap on Ethereum. Whoever can make effective use of this opportunity window will be in the forefront of DEX.
Internally, only the comprehensive application of product innovation, mechanism innovation, rules innovation and abundant new assets can make a DEX stand firm in the market.
After all, we have witnessed the rapid rise of Sushiswap, as a latecomer, in the liquidity “vampire mode”, and now it has taken the second place in the field of Ethereum Ecological DEX.
Therefore, innovation matters most.
“YouSwap is the first DEX to fully use the fee to buyback and burn governance tokens. Meanwhile, YouSwap protocol is compatible with multiple chains, and assets are exchanged through cross-chain bridges. In addition, YouSwap pioneered multiple mining (LP liquidity mining, staking mining, trading mining, and invite mining).”
YouSwap officials are very confident about innovation. After all, YouSwap has many unique features ranging from product development to mechanism and strategy.
Last but not the least, quite a few DeFi protocols are lack of developers, and they are organized and operated in a very loose and inefficient manner.
Taking Sushiswap for instance, although it is remarkable in product development and external cooperation, there are still some hidden concerns, that is, the stability of the current organizational structure.
Compared with Sushiswap, YouSwap has a more sound team consisting of specialists for each aspect of DEX’s operation. In the field of DeFi, where Fork is a common practice, YouSwap believes that organizational and operational capabilities cannot be copied, which is also the moat and core competitiveness of YouSwap.
Let’s go back to our initial question. What does YouSwap relay on to stand out?
With high-quality products, unique mechanism and continuous innovation capability in a perfect time window, it might only take time and patience for new DEX like YouSwap to fight its way out.