Introduction
MeldSwap is the first aggregator that offers the best rates and unique AMM (Automated Market Maker) system with native integration mechanism for automatic arbitrage built on Metis Andromeda.
MeldSwap uses:
- the best mechanism to route exchanges to get the best rates;
- native built-in mechanism for automatic arbitrage;
- modified AMM Uniswap V2 model;
- liquid staking mechanism;
Benefits
MeldSwap offers six critical benefits that positively impact the Metis ecosystem:
- Improved resistance to MEV
- Enhanced exchange rates
- Earnings on reserve provision
- In-built mechanism for automatic arbitrage
- Сreating a single entry point for users
- Attracting new users through an innovative approach
Website
MeldSwap is a product of DefiMoon, which developed algem.io (protocol #1 on the Astar blockchain) and kyc.systems.
Features
MeldSwap offers a whole ecosystem that will definitely be attractive to both users who want to exchange tokens and users who want to farm on maintaining the protocol ecosystem.
Key features of MeldSwap:
- Increased protection against MEV and frontrunning;
- Routing the exchange of tokens with the best rates;
- Earnings on automatic arbitration;
- Earnings on the provision of liquidity;
- Earnings on liquid staking;
Innovation
MeldSwap offers an innovative type of liquidity pools with native integration of an automatic arbitrage mechanism that allows both users who make exchanges and protocol participants who provide reserves to earn.
If the user wants to make an exchange at an unfavorable rate, this means that the exchange in the opposite direction is more profitable at the current time, which means that the platform can perform an automatic reverse exchange at a favorable rate, thereby adjusting the exchange rate for the better for the user.
RoadMap
Q2 2023
- Development of optimal strategies.
- Development of project design and overall architecture.
- Platform UI development.
Q3 2023
- Development of smart contracts.
- Project launch with support for all major liquidity pools.
- Development of automatic arbitration mechanisms.
Q4 2023
- Platform update with the addition of support for automatic arbitration mechanisms.
- Development of own liquidity pools with automatic arbitrage mechanism.
Q1 2024
- Launching own liquidity pools with an automatic arbitrage mechanism.
- Launch of liquid staking of LP tokens.
- Development of additional platform products.
MeldSwap presentation
Formed from two names: MeldSwap and MEVShieldSwap.
“Meld” because:
- It combines support for all major liquid pairs, laying out the exchange route in such a way as to extract maximum benefit.
- It combines exchange routing mechanisms, overlays for automatic arbitrage, and next-generation proprietary liquidity pools.
- It combines the ability for both users to extract greater benefits from exchanges and providers to earn from providing reserves.
“MEVShield” because: - Provides greater resistance to MEV since it routes calls to different liquid pairs.
- Provides greater resistance to MEV since it includes an automatic arbitrage mechanism that helps maintain the best exchange rates for users.
MeldSwap offers a reliable mechanism for making exchanges with maximum benefit, as well as a completely new view of the DEX segment and an innovative approach to implementing next-generation liquidity pools.
- Increased resistance to MEV
- Improved exchange rates
- Earnings from providing reserves
Problems
Traditional liquidity pools play an extremely important role in the modern DeFi segment, but even they have a number of serious problems.
- Large slippage, which can make the exchange less profitable
- A large number of liquid pairs scattered across different platforms and protocols
- Vulnerabilities to MEV and arbitrage bots
- Natively non-stabilizing exchange rate
Our solution
MeldSwap offers a comprehensive architecture that will include a mechanism for routing swaps to available liquid pairs for greater benefit and a mechanism for automatic arbitrage using the platform’s reserves in such a way that it will be beneficial for both end-users and reserve providers. In addition, the platform plans to create its own next-generation pools that will natively include an automatic arbitrage mechanism.
Mechanism for routing calls:
- Will automatically build the exchange chain in such a way as to obtain the maximum benefit.
- Due to the routing of calls, resistance to MEV will be increased.
Mechanism for automatic arbitrage:
- The protocol will try to make a more profitable exchange rate for the user, using the reserve stock.
- Due to the more favorable exchange rate, the user will get a larger profit.
- Due to the stabilization of the token ratio, the platform will make a profit.
Mechanism for routing calls
The exchange of the user’s funds will be routed by the platform through available liquid pairs in such a way that when the chain of exchanges is completed, the final result is more profitable.
Built-in automatic arbitrage mechanism
Before exchanging user funds, the platform can perform its own token exchange in the opposite direction from the user’s exchange to:
- The platform made an exchange at a more favorable rate in the opposite direction;
- The user made an exchange at a more favorable rate in the desired direction.
Built-in automatic arbitrage mechanism
- Increase of the protocol’s reserves (profit)
- Providing more favorable exchange rates
- Resistance to third-party automatic arbitrage mechanisms
Use case #1
Routing the chain of exchanges.
Imagine that the platform supports interaction with the following liquidity pools:
A ↔ B | A = 1980, B = 2020, k = 3 999 600
B ↔ C | B = 3900, C = 4000, k = 15 600 000
A ↔ C | A = 6000, C = 6000, k = 36 000 000
The user wants to exchange 100 tokens A for tokens C.
If he makes the exchange directly through the A ↔ C pair, he will get 98.36 tokens (C - k / 6100 = 6000 - 5902).
But if using MeldSwap, the exchanges can be routed, for example, as follows:
42.648 A → 42.5921 B
42.5921 B → 43.2122 С
57.352 A → 56.8089 C
Total 100 A → 100.021 C, which is more profitable by 1.661 tokens or 1.688%.
Use case #2
For users
- The ability to make exchanges at potentially more favorable rates. It’s that simple.
Use case #3
For reserve providers
- Providing their own token reserves for the built-in automatic arbitrage mechanism
- Earning profits from exchanges in the pool.
- Reusing LP tokens in other protocol contracts.
Example for cases 2 and 3:
Example using classic DEX with liquidity (like PancakeSwap):
Imagine that the pool stores liquidity in tokens A and B.
1500 tokens A and 2000 tokens B.
Then k = A * B = 3 000 000.
The user wants to exchange 100 tokens B for tokens A. In this case, he will get 71 tokens A, because
RES = A - k / (B + 100) = 1500 - 3 000 000 / 2100 = 1500 - 1429 = 71
The exchange rate was 71 / 100 = 0.71
Example using MeldSwap, which includes an automatic arbitrage mechanism:
Imagine that the pool stores liquidity in tokens A and B.
1500 tokens A and 2000 tokens B.
Then k = A * B = 3 000 000.
MeldSwap stores reserves of 300 tokens A and 300 tokens B. Each of the reserves was exchanged at a rate of 1.0
The user wants to exchange 100 tokens B for tokens A. In this case, the protocol checks if it is possible to make a profitable exchange in the opposite direction (A to B).
If we consider the option of obtaining a minimum profit for the platform of 1% and the maximum benefit for the user, then we use the formula
X = B / 1.01 - A = 2000 / 1.01 - 1500 = 1980 - 1500 = 480.
This means that the platform can exchange 480 tokens A for 485 tokens B (B - k / 1980 = 2000 - 1515 = 485), which would be approximately 1% more profitable compared to the rate at which reserves were deposited on the platform. But since the reserves are only 300 tokens A, when exchanging 300 tokens A, the platform will receive 333 tokens B (B - k / 1800 = 2000 - 1667 = 333). In this case, the profit will be 11%.
After that, the pair’s reserves will be equal: 1800 tokens A and 1667 tokens B.
As a result, 100 tokens B of the user will be exchanged for 102 tokens A already (A - k / 1767 = 1800 - 1698 = 102). This means that the rate of this exchange was 102 / 100 = 1.02, which is 1.02 / 0.71 = 1.44 times more profitable than without using this mechanism.
In the example considered, both the user and the platform itself benefited.
Benefits brought to the ecosystem
MeldSwap offers a new approach to conducting DeFi operations, which will positively impact the ecosystem.
- Simplification of user interaction with the DeFi segment by creating a single entry point.
- More reliable, profitable and secure exchange process by creating new exchange strategies and automatic arbitrage.
- Participation in the development of the community and attracting new users to the Metis ecosystem by creating a completely new DEX protocol.
- The potential increase in interest of new users in the DeFi segment.
- A new look at earnings through the provision of reserves.
Differences from traditional liquidity pools
| MeldSwap | Traditional DEX with liquidity | Traditional CEX | |
|---|---|---|---|
| Slippage protection mechanism | high | low | low |
| Measures to combat frontrunning | high | low | low |
| Exchange routing mechanism for greater benefit | high | low | low |
| Earnings from providing liquidity | + | + | - |
| Earnings from automatic arbitrage | + | - | - |
| Automatic adjustment of the exchange rate for the better | + | - | - |
We going to distribute money:
- 30% - marketing
- 30% - development
- 20% - audits
- 10% - core team
- 10% - arbitrage strategy development
Risks and mitigations
Like any DEX protocol with liquidity, MeldSwap is subject to risks associated with the volatility of the DeFi market, but unlike traditional DEXs, MeldSwap provides a more stable and reliable mechanism for partial or complete elimination of risks associated with slippage and frontrunning.
Business model
MeldSwap does not require users to pay any fees and does not charge direct fees from user operations.
The platform’s profit implies fees from the total profit of platform participants.
When routing calls, a portion of the funds from the user’s profit is collected.
For automatic arbitrage, commissions are charged from the PROFITS of reserve providers.
In addition, all funds received do not immediately leave the platform but are automatically reinvested in the platform on behalf of the platform itself, which allows increasing the volumes of reserves.
Roadmap
-
Mechanism for routing calls
- Study of the blockchain ecosystem and liquidity pool algorithms presented in it.
- Development of optimal strategies for the most profitable routing of exchanges with interaction with different pools.
- Development of project design and overall architecture
- Development of the platform’s website.
- Development of smart contract routers for conducting complex exchanges within a single transaction.
- Professional audit of smart contracts
Milestones
- A ready mechanism for finding optimal exchange routes with maximum benefit
- Launched project with support for most liquidity pools
- Launched project with support for all major liquidity pools
-
Mechanism for automatic arbitrage
- Development of project design and overall architecture
- Development of optimal strategies for automatic arbitrage
- Development of the website
- Development of a smart contract ecosystem for interaction with liquidity pools presented on the platform, using the automatic arbitrage mechanism
- Professional audit of smart contracts
-
Next-generation liquidity pools with native support for automatic arbitrage mechanism
- Development of project design and overall architecture
- Development of the website
- Development of a smart contract ecosystem with native support for automatic arbitrage mechanisms, based on previously developed strategies
- Deployment of own liquidity pools
- Development of optimal tokenomics and additional ecosystem products that will allow extracting additional benefits from reusing LP tokens. This will not only allow reserve providers to extract additional benefits and make the protocol more attractive, but also guarantee more stable operation of the protocol due to the fact that reserve providers will have less motivation to withdraw their funds from the platform and more motivation to invest in it.
- Development of additional ecosystem products.