The rise of decentralized finance has massively boosted the number of transactions occurring on the Ethereum blockchain. It led to the congestion on the network and users paying higher gas fees to process their transactions. The cost to execute a trade has gone so high that it made even smaller DeFi operations, like token swaps, completely unviable. While Vitalik’s brainchild transitions from proof-of-work (PoW) to proof-of-stake (PoW), it remains a distant dream for all DeFi users.
In Retrospect, QuickSwap was Inevitable
The tradeoffs of a blockchain are passed on to the project’s building on top of them. This is what happened with Uniswap, the world’s first decentralized token swap platform. It was the first decentralized exchange (DEX) of the crypto space, which attracted the community for its decentralization and ability to process trades without asking its users to go through rigorous KYC/AML processes. However, with all of the advantages UniSwap offers, its users suffer from high gas fees due to it being built on the Ethereum blockchain.
A simple transaction on Uniswap now often costs more than the transaction itself, leaving a gap that needed filling. QuickSwap was quick to address the issues plaguing Ethereum-based DEXs, by offering much lower transaction fees and almost instant block formation time.
A Brief Overview of QuickSwap
QuickSwap is a decentralized exchange that allows users to trade any ERC-20 tokens. Though the DEX is based on Ethereum, it is powered by the Polygon network, which provides several benefits not seen in other similar solutions. For example, QuickSwap can trade any of the ERC-20 tokens listed on its platform with almost no gas costs and at lightning-fast speeds, making QuickSwap (and Polygon) a great accompaniment for UniSwap and Ethereum.
Moreover, anyone can list any ERC-20 token on QuickSwap by providing liquidity to enable token swaps. In return, the platform rewards them with a 0.3% transaction fee (out of which 0.25% goes to the LPs, 0.04% to the dragon’s lair (which is the QUICK staking pool), and 0.01% goes to QuickSwap’s treasury (to fund development). In addition to the trading fee, liquidity providers can earn QuickSwap’s native governance QUICK token – which they can use to create, vet, and vote on proposals relating to the running of the protocol. They can also use QUICK tokens to stake in the Dragon’s Lair to earn additional QUICK.
Quantifying QuickSwap’s Traction
The integration with Polygon has made QuickSwap a liquidity magnet as it exceeds the TVL (total value locked) of all layer-two-based decentralized exchanges.
Though the DEX is just seven months old, it has attracted more than $500 million liquidity to date. Besides, QuickSwap has a 24-hour trading volume of more than $200 million – a feat that is nearly impossible to achieve in a short period.
Furthermore, QUICK, the governance token of QuickSwap, surged from under $1 to $1585 in just six months. The token is currently trading below its all-time high, and the price it achieved is a dream for many other digital assets of its category.
Taking a Big Slice Out of DeFi Space
Uniswap has seen over $2.68 billion in volume with the number of users dipping to 78.05k. On the other hand, QuickSwap has seen over $148.18 million while the number of users has increased to 11.48k.
Uniswap Users
QuickSwap Users
Comparing the most popular exchange puts QuickSwap success into context. However, it is equally important to understand how young the DEX is.
Factors Driving the Success of Polygon-powered DEX
Just like other leading decentralized exchanges, QuickSwap enables permissionless listing, non-custodial trading, and community governance. However, a few features make it entirely different from its predecessors, for example –
- Layer-two transactions: A Plasma-based Layer 2 solution, Polygon fuels QuickSwap’s entire ecosystem, meaning tokens can be exchanged within about two seconds at a fraction of the gas cost on the Ethereum network. Therefore, QuickSwap transactions have the security of Ethereum and the massive scale capabilities of Polygon.
- High yield on liquidity: QuickSwap enhances the crypto pooling experience by offering a high annual per yield (APY) to users who pool their tokens to provide liquidity on the platform. As per the data from APY.vision, QUICK was among the top five tokens as of May 12, 2021. With its pair of wrapped Ethereum, liquidity providers can earn a yield of as much as 188%. However, the exchange boasts even higher APY with other digital asset pairs. For example, the ETH/USDC pair on QuickSwap can bring in ~306% APY, while the DAI/ETH pair is currently earning about 251%.
Ending Thoughts
The growing interest of users in DeFi coupled with the delay of ETH 2.0’s launch has attracted many to the Polygon network. While the market is full of challenging solutions, most of them are either too centralized or hardly deliver on their promises.
The exponential growth of QuickSwap’s user base, price, and TVL is proof that the crypto community has accepted QuickSwap as a go-to DEX. Since it uses the Polygon network for token swaps, users can enjoy a much lower trading fee and quicker block confirmation times – all that while getting high APY for providing liquidity.
However, the DEX is still in its infancy. Though it has demonstrated much to the crypto community, QuickSwap still has more to prove. Considering its growth since its inception, it seems the exchange is right on its track of replacing “old finance”.
This article was first published on coinquora.com