A decentralized platform claims it is helping to create a connected network of DeFi ecosystems — and offers an innovative hybrid model that blends transaction-free mining and liquidity mining in one place.
MiniSwap says that cryptocurrency exchanges currently process billions of dollars in trading volumes every single day, but serious issues have been identified with centralized platforms. The team points to the sorry saga of QuadrigaCX, the Canadian exchange that lost customer assets worth approximately $190 million when its owner died.
Although the project firmly believes that decentralized alternatives help eliminate trust issues by allowing traders to buy and sell cryptocurrencies on a peer-to-peer basis, MiniSwap says there are downsides that decentralized exchanges need to solve. Sustainability, unfairness and long confirmation latency are three of the biggest problems — and incentivizing liquidity providers to get involved can be a challenge due to “flawed incentive designs.”
MiniSwap aims to change this by encouraging traders and liquidity providers alike to join its ecosystem. The project also says its approach is sustainable, given that it uses a mining process that can last for 100 years.
Warning that the status quo cannot continue, the project’s white paper states: “Many exchange platforms have been created to provide convenient services for users to trade their coins. However, a vast majority of them are centralised platforms and require access to users’ private keys. In other words, users would have to fully trust the services provided by the exchange platforms. Generally, such a strong trust cannot be established and this also contradicts the design principle of a decentralized financial system.”
Where MiniSwap comes in
The MiniSwap project is creating a decentralized, automated trading platform that’s based on Ethereum — paving the way for any pair of tokens supported by Ethereum’s ecosystem to be exchanged easily. This is where the hybrid mining model comes into play. As the white paper explains: “All participants, including traders, liquidity providers, and MINI holders, will obtain MINI for their contribution as trading rewards, reserving rewards, and community rewards, respectively.”
This will pave the way for the launch of MiniSwap DeFi, featuring a suite of decentralized finance products, including derivatives such as options and futures. DeFi is one of the fastest-growing sectors in the cryptocurrency industry right now, and the team behind this project says this stage is crucial for ensuring that MiniSwap is an ecosystem “rather than just a liquidity pool or an exchange service.”
Last but not least, the team has grand designs for a service known as MiniSwap Global, enabling its DeFi platform to communicate across distributed ledgers and allowing traders “from different blockchain platforms to trade seamlessly.”
While MiniSwap acknowledges that transaction-free mining and liquidity mining, which are the key components of the hybrid model, are nothing new, the project says that past attempts to deliver them have been unsustainable. It points to FCoin, the first crypto startup to propose such an approach, and warns that this system will lose liveliness once all coins are minted because “There is not enough supply to be distributed.”
To get around this issue, MiniSwap has an upper limit on the number of tokens that can be created every day — 500,000, to be exact — and this limit will be reduced every month gradually until the final, lower limit of 18,000 tokens is reached.
MiniSwap listed its first project, YMI, on Sept. 7 and says it has already attracted a vibrant community. In a blog post on Sept. 11, it revealed that its Telegram channel has 3,540 members and that it now has 3,117 followers on Twitter. The platform also has a big following in China, where more than 2,826 people are watching developments as it continues to journey along its roadmap.
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