JediSwap presentation
The community-driven AMM on StarkNet
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Introduction thread
Market issues
JediSwap's solutions
How it works
Funding and partnerships
Sources
1. Introduction thread
2. Market issues
1) User experience problem, to provide liquidity in a classic AMM, you have to make three transactions:
approve token A
approve token B
add the liquidity
This is a waste of time and money.
2) Problems with fee calculation because there are two kinds of fees:
AMM pool fixed fees (0.3% in general)
gas fees of the blockchain, which are variable according to the congestion of this one
These first two points compromise the user experience.
3) Centralized entity management problem, especially at the organization level (information flow is biased, employees are not free to do what they want, they have fewer options...).
4) "Average" people in crypto don't have the opportunity to really get involved in a project and be rewarded for it.
JediSwap aims to solve all these issues. Let's see how!
3. JediSwap’s solutions
JediSwap proposes to create a permissionless and composable AMM on StarkNet entirely built and managed by its community.
1) StarkNet solves this problem with the Account Abstraction provided by its Wallets. Account Abstraction enables many innovative features never seen before, including Multicall, which makes life much easier for users. If you want to know more about Account Abstraction, I invite you to read these articles from @argentHQ :
In particular, this feature allows users on JediSwap to provide liquidity with a single click as the approval of token A, the approval of token B, and the added liquidity are all done in one transaction. Saves time and money.
In addition to that, JediSwap offers the ZAP function on its AMM. This function allows you to convert any token into an LP token automatically, so there is no need to provide two tokens by calculating the 50/50 parity. Moreover, you can provide a pair of tokens with a token other than the two of this pair. For example, you can supply the ETH-USDC pool with BTC. The conversion and supply is done automatically.
Finally, the StarkNet Yield Aggregator, @yagi_fi, also offers a vault on its Testnet, allowing JediSwap pools to be supplied with a single token. There is a high probability that the same vault will be implemented on the StarkNet Mainnet.
2) Here, the solution is relatively simple but effective, JediSwap takes advantage of the low gas fees of StarkNet to grant these gas fees thanks to the exchange fees they will charge (0.3% on each exchange). Therefore, part of these exchange fees will be used to subsidize the StarkNet fees of the users. Thus, only the JediSwap pool fees will be charged to the users, not the StarkNet gas fees!
3-4) JediSwap fixes problems 3 and 4 by implementing a point-based contribution system that allows anyone to contribute to the project based on their expertise. Thus, JediSwap has no central entity and is built via a point system per action taken. Everyone is free to do what they want when they want, and according to their area of expertise. So, anyone can participate in developing the protocol and get shares of it. There are more than 300 contributors so far.
4. How it works ?
First, they are building a classical AMM (X*Y=K) inspired by Uniswap V2. Other solutions will be developed in the future.
Let's quickly recall what an AMM is.
An Automated Market Maker (AMM) is a decentralized protocol that allows users to exchange tokens between themselves, not through order books, but through liquidity pools. Orders are executed automatically via a smart contract that will calculate trade prices based on the liquidity pool.
Therefore, an AMM can be defined as:
A mathematical function to price assets algorithmically based on liquidity pools
Liquidity pools are usually organized between two assets (there are also pools with more than two but there are not of interest here). The liquidity in the pools is provided by users (liquidity providers/LP), who can deposit liquidity in order to receive the fees generated by these pools. For example, the LP in the ETH-USDC pool will receive the fees generated by this pool. These fees are the fees charged on all exchanges made in the pool (0.3% on JediSwap’s pools).
The LPs are thus rewarded for the risks they take (in particular the Impermanent Loss one) and the liquidity provided, allowing the pool to function. When an LP provides liquidity in a pool, the liquidity will be split between the two assets. For example, if an LP provides liquidity to the ETH-USDC pool, LP will deposit 50% in ETH and 50% in USDC.
Even if there are hybrid and average constant AMM, most AMM use a simple constant (like JediSwap) X * Y = K where:
X = the value of the token X
Y = the value of the token Y
K = a constant
If X increases, Y will decrease, and inversely, in order to maintain the value of K constant. This formula creates a range of prices for the two tokens depending on the available quantities.
Let's take an example where we have an ETH/USDC pair with the following liquidity:
1000 ETH
2,000,000 UDC
The price of one ETH is calculated as follows: 2,000,000/1,000= 2,000USDC
In order for the price to be consistent with the actual market price (and not just based on the AMM's liquidity), arbitrageurs step in to make a profit on any price shifts with the other DEX, which enables prices to follow the accurate price of all DEX.
AMM allow everyone to:
Exchange crypto directly from theirs wallets in a decentralized, non-custodial, and permissionless way
Become a market maker by providing liquidity in the pools
Thus, JediSwap builds this kind of AMM.
Regarding the building, the whole protocol is built through a contribution system. Each person is free to do what he wants and will be rewarded for it. The contributors have the choice to:
make some contributions periodically
make some contributions only once
be full-time on the project
Each contributor will receive rewards according to their involvement. A point system is set up for each activity style (writing, community management, design, dev…). These contribution points will be converted into NFT, which can be exchanged for JediSwap tokens when it goes live. These NFTs will also be used to demonstrate your on-chain reputation for contributing to JediSwap.
The available missions meet all the possible skills so that even non-devs can participate in the protocol’s growth:
Force wielders: independent Twitter, Youtubers, Writers, KOLs… to spread the word about JediSwap
Community managers: on Discord, Telegram, and Twitter
Writers: Documentation, Twitter threads, copywriting, blog posts, translations
Devs: Website development, Cairo dev, bots
Designers: UI/UX website, illustrations, emojis, stickers, banners, videos, gifs...
Problem solvers: finding problems and solving them, sharing growth ideas, execution ideas, brainstorming...
Finally, to become a JediSwap contributor, all you need to do is:
Go to the JediSwap Discord
Introduce yourself, explaining why and how you want to contribute to the project
You will be redirected to the contribution guild that coincides with your desires and skills
The members of this guild will find ideas and opportunities for you to contribute
You can now contribute
You can find full details of each contributor category and associated rewards here: Force wielders, Community managers, Writers, Devs, Designers, and Problem solvers. You can also check the contributors' ranking here.
5. Funding and partnerships
In terms of funding, JediSwap is also entirely funded by the community in a participatory way. Some highlights to mention:
They received a grant from @StarkWareLtd
Raised over $125k during Gitcoin Round 14 from over 30,000 donors
Raised $30k during Gitcoin Round 15
In terms of partnerships, JediSwap is very involved in the StarkNet ecosystem. So far, they have integrations (current or planned) with:
DEX aggregators: @TheCommercium and @FibrousFinance
The Yield aggregator: @yagi_fi
The lending and margin stablecoin trading protocol: @CygnusDAO
3D integration with the @altzone metaverse
A partnership with the NFT collection: @earlystarkers
6. Project links
To conclude this presentation, and if you want to go further, here are all the official JediSwap links :
JediSwap Website
JediSwap Twitter
JediSwap Discord
JediSwap Telegram
JediSwap Github
JediSwap documentation
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