Fighting inertia

For awhile now, I’ve been bugging @JohnKelleher that dxdao doesn’t have a level of urgency and that’s really hard to do when you’re not capital constrained.

Tonight I opened the budget for the second half of the year.

I have some candid feedback:

  1. Swapr is not on the right path.

Millions have been spent on Swapr over the lifetime of the product. If my calcs are right, Swapr currently does about $50k in fees a year but ~$1.2m is being spent on it annually.

That’s obviously not sustainable. I looked at the roadmap and I didn’t see any gamechanger.

Honestly, I think there needs to be more self-reflection and more innovative proposals to justify such a large continuing spend.

  1. Overhead

Depending how you calculate it, overhead is close to 50% of overall spend (let’s say 35-45%). This seems high given the relative lack of traction.

  1. Strategic priority

When I look at the Eth app landscape today, I still see a large hole in DAO frameworks. The 2017 ICOs have all come and gone.

If anything, seems like maybe dxdao is underinvesting here.


Maybe as a final note, it seems to me like DXDao has very much become an employee cooperative, but using the money from the DXD sale. I’d like to see more urgency around 1) value accrual for DXD (beyond just using the ETH from the DXD sale to buy back DXD and prop up the price) and 2) DXD holders having a larger voice.

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fwiw, i regret mention costcutting in this post.

the bigger point is making sure resources are allocated to things that can be successful for dxdao.

currently it looks to me like governance could be a big winner.

hard to see how another dex product is going to break out without either 1) something really novel or 2) really great marketing

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Hey Evan, Thanks for providing the feedback and glad to have someone take the time to actually come here and post about it. I will dive right in and give a few details on why Swapr is not just another dex.

Vision:
Zero-fee transparent and private multichain aggregator that provides users a great trading experience and tools for projects and DAOs to scale. I just made this up but it summarises it pretty well in what we are doing. A lot of jargon as well but I will try my best to break this down:

Zero-fee transparency: There are aggregators that take the postive slippage or aggregators that take a portion of a trade. We want to provide the user where he will get the SAME price for the trade if he traded through Uni / Sushi / Curve from their dapp or through our ecoRouter.

Private: We dont collect any data or hidden cookies to track the user’s data

Multichain aggregator: Swapr wants to build aggregator, not just for swaps but also for bridges and we have already integrated some of the leading bridges to the dapp. 1inch and 0x are leading swap aggregation right now and we are looking at taking a tiny percentage of this pie.

Great trading experince: I think the Curve UX is liked by a very few people and is so confusing even to perform a single trade. With Swapr, its just as easy as Uniswap. We are also integrating tradingView for charting experience for Pro traders, adding insights like trade history for AMMs, MEV protection, alternate receiver and more.

Providing tools for DAOs to scale: Once a project or DAO is established, we would like them to be able to use Swapr for all of their liquidity and governance needs.

  • A project should be able to create a token, perform a sale, create liquidity, create LM campaigns, spin up an onchain guild for their governance, bribe to get SWPR as campaign rewards to their pools, all from within Swapr, permissionlessly and trustlessly.
  • Permissionless campaign creation for liquidity mining, whenever they want, however they want. Locked, capped, unlimited, single token staking, multiple rewards etc. They could also create this with our new conditional token farming with Carrot.eth
  • They could also do a DAO-DAO reward campaigns with any project “trustlessly” with our new Top up campaigns.
  • Fee share with DAOs for bringing liquidity to Swapr.

Now, we do have challenges.

  • Like I mentioned in this budget post, this is the first quarter where we have a settled team and it is still only made of parttimers. There has always been people joining and leaving the last 9 months that didnt help us a lot. We require a person to lead the efforts that we want to do in the contracts side.
  • We are also shunted by the lack of dapp analytics (read privacy) and unsure how our ecoRouter is performing. So instead of a 1 day Google Analytics integration, we are working towards figuring out a very long way to understand our ecoRouter performance. When you had mentioned that we made only 50K fees, it would have been awesome if we could have responded back saying but we had over 5B volume with ecoRouter :slight_smile: Sadly, it was not possible :frowning:
  • Decentralisation, even though this is the mission, it is also challenging as everything that is built on total decentralisation takes atleast 3 times more effort in planning, prioritising and engaging the team. But, somebody should get it done and I think Swapr and DXdao is leading that right now.
  • As you rightly pointed out, we are not very good at marketing. I look at other dexes and AMMs in twitter making atleast 20 to 30 posts everyday, getting on podcasts even before they launch a product and I dont think DXdao has ever been a shiller like that. We need to upgrade our branding for Swapr to make sure that users feel that they can relate to the product better, but this will all be more investments.

We are the biggest DEX in Gnosis chain and strongly believe that Gnosis chain will grow in the coming years as it is the most decentralised chain after Ethereum in terms of having permissionless validators. We are also looking at launching in a few other chains the coming quarters. I feel strongly it is unwise to cut down on costs at this stage for Swapr when it has just started to get a decent footing.

I hope that this post makes you a believer of Swapr and spread the word around :slight_smile: And if you have any great ideas to share, please let us know. And most importantly, shower us with criticisms on what we are doing wrong and how we could improve.

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i appreciate the back and forth!

to me this is a simple question: is spending $1m+ on Swapr in the next year going to provide more than $1m in expected value to dxdao?

if not, are there better places to deploy the time and talent of most of the swapr team?

I think it’s really hard for a dex to get traction without something particularly novel. Right now Swapr is 88th in dex TVL, per Defillama. As someone who has been hearing about dxdao forking uniswap since before Sushiswap happened, I think it’s just hard to justify continued heavy investment in a swap product without something that is a gamechanger

And even with something particularly novel, you still have to educate users as to why it is better.

Let me put it this way: even if you delivered all of these things tomorrow, I am unconvinced it would gain market traction enough to be worth $1m investment this year.

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@EvanVanNess is telling the hard truth that Swapr needs to provide more value to have success. I’m afraid being on Gnosis Chain is not enough of a differentiator @0xVenky… As soon as Gnosis Chain gets big enough to warrant it, 1inch and other competitors can and probably will deploy on it. Poof, Swapr’s advantage evaporates, as capital is redeployed to a more well-known and fully featured platform

On August 3 of last year, I introduced an idea for leveraged trading. Integrating this into Swapr would provide the game-changing advantage Swapr needs to be successful.

At the time I proposed this idea, there were many other priorities, so it wasn’t feasible… Now that a year has passed and things have changed, and Swapr is DXDao’s #1 product, I’d like to reintroduce my leveraged trading idea. I wrote about it as an independent product, but to be clear, it should be integrated into Swapr, along with a lending platform. I’ve discussed the benefits of combining swapping and lending platforms on many other posts that I won’t repost here. Add “1 year” to whatever times I mentioned, since I originally posted this a year ago:

**EXECUTIVE SUMMARY: **
By using a special type of closed liquidity pool on a DeFi lending platform, it’s possible to achieve very high collateralization factors without the lenders taking on much if any more risk. While I laid out how this can be used to achieve RIDICULOUS amounts of leverage, it’s also amazing for everyday borrowers because it reduces their chance of being liquidated, and gives them much smaller penalties for liquidation :money_mouth_face:

FULL:
Idea: Leverage.Crypto, a swapping, lending, and leveraging super-platform

Problem being solved: DeFi lending protocols are inefficient because they are forced to keep the collateralization ratio of assets relatively low for security. It may not seem like a big deal only being able to borrow using 75% of the collateral you deposited, but if you’re multiple times leveraging - borrowing, then borrowing again - this is a much bigger limitation. A 75% collateral factor only allows for up to ~4X leverage, but a 90% collateral factor allows 10X leverage. 99% collateral factor? 100X leverage! This is the gateway to DeFi futures-equivalents (10X leverage) and also absolute degenerate super-leveraging

With regulators closing in on CeFi, 100X leverage trading and really any leverage trading above 20X is going away fast. Binance and FTX both cut it to 20X max leverage it in anticipation/advanced compliance.

I know what you’re thinking - “It’s not possible to get a better collateral factor without taking on more risk for the lenders.” But what if I told you it WAS possible to get to a 99% collateral factor, and allow for 100X leverage, without lenders taking on much added risk? :exploding_head:

Here’s how it works: Leverage.Crypto is also a swapping platform with its own liquidity pools. But these liquidity pools are unique in 4 ways

  1. They aren’t available for the public to swap with like other platforms - instead, they’re reserved for creating and liquidating leveraged positions.
  2. These liquidity pools aren’t traditional UNI-style liquidity pools, they don’t have an even amount of each asset on each side and they just track the spot price of the asset with data from Chainlink or The Graph, or whatever the oracle of choice is.
  3. These liquidity pools don’t have the same risks as other liquidity pools because every time there’s a swap, it’s done at the spot price of the asset. So there’s no impermanent loss, just possible decay of value over time if LPs happen to get the token that ends up going down instead of up.
  4. These liquidity pools are also composed of “patient swappers” who only add their liquidity for one transaction. More on that later

When someone who’s ~100X leveraging has the price drop below the 99% collateral factor, BOOM, the liquidity pool is used for instant liquidation of the sorry degen.

So how is this safe? Because the total amount of borrowing is capped at the amount of the token that’s in the liquidity pool. Remember, the liquidity pool is reserved only for liquidation and leverage creation, so there will always be enough liquidity to liquidate. The only risk is if the price of the asset falls by more than 1% within the seconds it takes for the oracle to update and the internal swap to be completed, which is very rare. The faster the oracle, and the faster the blockchain this is running on, then the higher the collateral factor can be set and the more leverage that can be levered

Now, for more about those patient swappers. This came up when discussing Swapr on a call during the past few weeks, and basically how it works is if you add single-sided liquidity in Uni V3 for a very narrow range, I.E., right below the current price of the asset you’re trying to swap to, you’ll be able to get your swap done without paying any swapping fee, and even earning a small amount of LP fees. Uniswap hasn’t set this up to be convenient though, which Leverage.Crypto will. Patient swappers on Leverage.Crypto will get PAID to swap at the spot price of their asset. There’s a lot of people who are willing to wait a bit who’ll take that deal

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Good to see you back in the forum @EvanVanNess.

I share all your concerns, one more than others, just want to add a few things:

About swpr, as you said, doing the simple math It is clear we are not on the right path or we are going very slow on it and missing opportunities and I think is the latter. It is clear that there are many things planned and work has been done and good work, it would be great and send a strong message to the dxd holder community to see some reflections on this.

Regarding DAO frameworks, we are working on this, we have a plan, and we are executing it. We just got the squad of developers formed a few months ago and the team has been growing a lot on the technical level, it is what I always envisioned for our governance dev team, a small group of developers supporting/building the entire governance stack and eventually on the future lead other initiatives in dxdao governance.

About the employee cooperative, yes, I feel that too sometimes and I dont like it, it is not what I envision for dxdao and definitely not how I want dxdao to be seen in the environment, on the technical governance side I always tried to build as much and better code I can with the less resources and people possible and I think all dxdao squads should do the same.

At last, DXD holders having a voice, yep, this is what ERC20 guilds were designed to, to include DXD holders in our governance stack. It should happen before devcon.

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I like to use my time for max impact :joy:

i’m probably more bullish on the swapr team…it’s just that I think the window for a new dex to gain enough traction to justify the investment is closed.

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