High trading costs limit the success of decentralized exchanges and prevent DEXs from dominating the crypto exchange landscape.
A significant portion of the cost of trading on DEXs is due to indirect (or triangle) trades that involve more than one leg.
In 2021-2022, such triangular trades accounted for over 40% of all non-bot trading activity, resulting in losses of over $500 million per month across major DEXs on Ethereum alone.
What is VirtuSwap?
VirtuSwap’s primary mission is to reduce these inefficiencies and help DEXs dominate the crypto trading landscape.
Using cutting-edge financial technology, VirtuSwap eliminates triangular trading by executing each transaction directly, even when there is no relevant pool, and achieves a reduction in trading costs of up to 50%.
VirtuSwap’s financial technology is based on trading via “virtual pools”. Essentially, virtual pools are a representation of the pool architecture, in which pools can accept a “reserve” of different assets, even if those assets are not the “native” assets of a particular pool.
The result is a complete elimination of triangular trading and a significant reduction in average trading costs. In addition, trading through virtual pools lowers the profits of arbitrageurs and temporary losses of LPs.
This increases returns on liquidity provision, increases equilibrium pool size and further lowers trading costs – resulting in a “virtuoso cycle”.
The primary reason for VirtuSwap’s ability to reduce trading costs while increasing liquidity provider returns is its ability to reduce the profits of arbitrageurs (MEV bots), which capture a large portion of the price impact costs paid by traders.
When trading on reserves, the price imbalance is the result of a reduction on one side of the pool, while on other DEXs the price imbalance is higher due to a simultaneous increase on the other side of the pool.
Lower price imbalance on VirtuSwap results in lower profits being made by MEV bots – and more money stays in the pools, increasing returns for liquidity providers.
The VirtuSwap team consists of top academic researchers in finance, top executives in blockchain, an outstanding blockchain developer and experienced UI/UX designer, experienced data scientists, operational and marketing achievers, and talented UI/UX designers.
VirtuSwap was founded by two finance professors – Evgeny Lyandres, professor of finance at Tel Aviv University and head of the TAU Blockchain Research Institute; and Roni Michaely, Professor of Finance at the University of Hong Kong and head of the HKU-TLV Innovation Hub in Tel Aviv.
The business and data leader is represented by Alex Zaidelson, co-founder and former CEO of Agora Labs, former CEO of Beam and advisor to several startups.
VirtuSwap achieves a result that was previously seemingly impossible – it reduces costs for traders while increasing LP returns by breaking the link between traders’ liquidity costs and arbitrageurs’ profits.
tokenomics
VirtuSwap tokenomics are based on the VirtuSwap token VRSV and a governance token gVRSV. The total number of VRSV tokens ever minted is 1 billion (1,000,000,000).
The expected distribution of tokens is as follows:
● 27% — founding team and pre-launch staff;
● 7% – pre-seed investors;
● 2% — consultants;
● 7% — seed investors;
● 4% – Post-launch staff and consultants;
● 2% — initial distribution to the protocol;
● 1% – airdrops and incentive initiatives;
● 50% – Gradual release to the community.
All tokens of the founding team, employees, investors and advisors are subject to an initial lockup of 12 months and a lockup period of 36 months.
The community tokens will be released on a month-to-month declining schedule over a 15-year period and used to incentivize LPs.
VRSW token holders are encouraged to stake and lock their tokens and receive gVRSW tokens, which are used for voting on various issues, mainly protocol parameters and assets that can go into liquidity pool reserves.
Additionally, VRSW token staking and locking increases the return on liquidity delivery based on a state-of-the-art mechanism where rewards are a function of multiple possible staking/locking actions involving both VRSW tokens and liquidity pool tokens.
For more details on VirtuSwap Tokenomics, see this article, and for a full technical explanation of the VirtuSwap algorithm and simulations, read the VirtuSwap Tokenomics White Paper.
timetable and destinations
There are five main targets that VirtuSwap identified before starting the protocol:
- Completion of development and testing of all protocol components;
- Conducting extensive simulations of real trading scenarios on VirtuSwap and
quantifying the benefits of VirtuSwap compared to existing DEXs; - development of state-of-the-art tokenomics;
- community growth and expansion in preparation for launch;
- Launching the VRSW token.
Most of these goals have already been achieved; others will be completed over the next few weeks and ahead of the start of the protocol before the end of 2022.
This roadmap is just the beginning. The virtuswap team is already working hard on several improvements that will form the basis of VirtuSwap v2 and v3.
VirtuSwap’s big goal is to eventually become a major hub for financial innovation in DeFi.
Conclusion
VirtuSwap is dedicated to making DEXs dominate the crypto trading landscape, and it is fulfilling that mission through cutting-edge research, financial engineering, and data science to become a major player in DeFi for years to come.
Learn more about VirtuSwap:
Website | Telegram | Twitter | Middle
Disclaimer
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