An Overview of the EDDASwap Ecosystem

2020 has been the year of DeFi.

On January 1st 2020, the total value of funds locked in DeFi protocols was $675 million. Now, just 10 months later, that amount is more than $10 billion. DeFi is experiencing exponential growth, fuelled by lightning-quick innovation. And yet, the market cap of all DeFi-related tokens combined stands at a mere 4% of the total market cap of the cryptocurrency industry. Clearly, the DeFi revolution has only just begun, and there, lies the opportunity for enormous further upside.

The exponential growth of DeFi (courtesy DeFiPulse)

So DeFi seems to be a big deal. But what exactly is DeFi?

DeFi, or decentralized finance, broadly includes the digital assets, smart contracts, protocols, and decentralized applications built on blockchains such as Ethereum. In simpler terms, DeFi is an open financial ecosystem where anyone can build financial tools and services in a decentralized manner, allowing users to engage in activities such as borrowing, lending and trading. These activities are normally firmly in the domain of traditional finance, and require intermediaries such as banks. With DeFi, users have complete control over their assets and investments, and can also potentially earn a higher return than from the legacy financial system.

So DeFi really seems to be a big deal. How do I take part in all of this?

Therein lies the problem with DeFi. Most DeFi applications today are difficult to use for the average user that lacks experience interacting with smart contracts or transacting on the blockchain. The user experience is poor, the interface is often unnecessarily complex, and the pre-requisite technical knowledge serves as a high barrier to entry. To make matters worse, scams galore, with opportunistic developers releasing questionable products to make quick money. Navigating this emerging DeFi landscape demands such commitment from the interested user, in terms of time and effort spent in familiarizing themselves with the applications and deciphering the jargon, that many have preferred to stay away altogether. It is clear that to continue its explosive growth, and bring on board the majority of the cryptocurrency users that have so far remained on the sidelines, DeFi needs a change.

Introducing the EDDASwap Ecosystem

The fundamental vision of the EDDASwap ecosystem is to bridge together the excitement and innovation of decentralized finance with the accessibility and familiarity of traditional finance, and to create a comprehensive DeFi ecosystem in which every platform has been built to be simple and intuitive to use, requiring no technical knowledge or prior experience.

At the core of this ecosystem will be EDDASwap’s native token, EDDA. EDDA Token holders will be the primary beneficiaries of the success of EDDASwap, and will benefit from the continued usage and growth of the platforms within the ecosystem, through built-in mechanisms in each of these platforms. Ultimately, once all the platforms have been released, the EDDA Token holders will have the ability to govern them in a decentralized manner. The EDDASwap ecosystem will be rolled out in several phases, as explained further.

Decentralized Asset Management (Jan 2021)

Yield Farming. Liquidity Mining. Crop Rotation. Sushi. Yam.

Chances are, unless you have been spending hours every day keeping track of developments in DeFi, none of those words make much sense to you. In fact, we wouldn’t blame you if you thought this article had suddenly pivoted to discussing the intricacies of agriculture…

To simplify the DeFi jargon, all of the above are related to the generation of passive returns, or yield, on your crypto assets. As explained earlier, DeFi protocols allow users to engage in activities such as lending and borrowing which can generate interest. Additionally, a lot of these protocols incentivise usage, such as by distributing their native tokens, to users of the protocol. The savvy DeFi user can generate a high APY (annual percentage yield) using several such DeFi protocols in tandem, and strategically moving their funds wherever the highest return is available.

As an analogy, think of it as the difference between merely keeping your money in the bank, where it sits and stagnates, versus investing the same amount into an index fund to generate passive returns. Similarly, instead of HODLing your crypto assets in your exchange or personal wallet, waiting for them to moon, here you can put them to work, and generate yield. The difference is that unlike in the aforementioned index fund, in DeFi, the yield can be much higher!

That kind of made sense. But more importantly, tell me more about that juicy yield. How do I get that?!

As perhaps expected, that high yield comes with high barriers to entry. Only experienced DeFi users that can devote their entire time to this process, or sophisticated investor groups that have access to constant information and research, can truly derive maximum benefit from these protocols. Having significantly large capital is another pre-requisite, due to the high fees using the Ethereum network (on which most of these DeFi protocols are built) has required in recent times. Additionally, the optimum strategy to achieve the highest possible yield changes every day, and often, every hour, requiring speed of execution and a constant stream of information. The end result is that the average user is often too late to the party and misses out, or worse, is left holding bags of worthless assets.

So, what’s the solution? I hope there’s a reason you made me read all this.

The solution is EDDASwap’s Vaults. We understand that most users don’t have the time or technical expertise to research, create, and maintain complex strategies to maximise their yield. But that doesn’t mean they should miss out on the exciting opportunities that DeFi provides.

With our Vaults, we provide users automated yield optimisation. All you have to do is deposit your crypto assets into our platform with a few simple clicks. They are then automatically allocated across the different DeFi protocols, with the smart contracts powering the Vaults optimising the allocation strategies, with the ultimate aim of maximizing the yields for the users. There is no lock-in period either, and you can withdraw your crypto assets whenever required. Upon withdrawal, you will receive your principal, that is, the original amount of the asset you first deposited, plus the yield generated by the Vaults.

What about the EDDA Token holders? How does any of this benefit them?

EDDA Token holders receive two major benefits from the Vault platform.

1) The Vaults will have two fees associated with their usage. A 0.5% management fee will be deducted from the crypto assets when users withdraw them from the Vaults. Additionally, from the yield generated by the Vaults on your crypto assets, a 5% performance fee will be deducted. This is a similar model to traditional finance, where fund managers charge these fees (usually much higher percentages) to investors. The difference is, that whilst those fees go into the pockets of the fund managers, the fees generated by the Vaults will be used to automatically market-buy EDDA Tokens, that will then be distributed to EDDA Token holders that have staked their EDDA or EDDA LP Tokens in their respective Vaults. We believe the token holders are the most important participants in any crypto ecosystem, and therefore the interests of EDDA Token holders will always be prioritized, for being an integral part of EDDASwap’s journey.

2) Once our governance system is launched, EDDA Token holders will be able to submit proposals to create or improve yield optimisation strategies, and vote for such proposals by other EDDA Token holders. The creator of a profitable strategy that is successfully voted in by the other EDDA Token holders will receive a percentage of the yield generated by the strategy. This encourages participation by the EDDASwap community, by rewarding contributors, and ensures the Vaults are dynamically evolving in real time by taking into account new developments in DeFi protocols to maximise yield.

I’m new to DeFi, so this is still too complex for me. Do you offer an even simpler alternative?

Yes, EDDASwap also provides the “Gain” platform. This is the simplest possible DeFi yield optimiser, with no complex allocation strategies employed. Users deposit their crypto assets into the Gain platform, and they are automatically lent by the platform through lending DeFi protocols such as Compound and Aave to earn interest. Gain automatically allocates the crypto assets between the different lending protocols, depending on which protocol is offering the highest rate of interest. Similar to the Vaults, a 0.5% management fee will be deducted when users withdraw their crypto assets from the Gain platform, which will be used to automatically market-buy EDDA Tokens, that will then be distributed to EDDA Token holders that have staked their EDDA or EDDA LP Tokens in their respective Vaults.

NFT Platform (Jan 2021)

“Fungibility” sounds complicated, but it’s really a very simple concept that relates to the assets you own and use every day, including real-world assets and digital assets. The dollar in your pocket, or the Bitcoin in your crypto wallet, is an example of a fungible asset. Both can be easily replaced by another, which for all intents and purposes, is identical. For example, if Arthur lends Sam a ten-dollar banknote, he wouldn’t need to receive exactly the same banknote back, because all ten-dollar banknotes are equally as valuable. This changes with a non‑fungible asset. If Jeff lends Mark lends his rare Pokémon card, and Mark gives him back a common card, Jeff would probably be annoyed. The two cards may be similar, but the details printed on them make each of them unique.

This is where Non-Fungible Tokens come in. Unlike Bitcoin for example, which has a supply of 21 million identical coins, NFTs have individual characteristics that set them apart. They are unique, rare, and indivisible in nature, creating several exciting use-cases such as digital art, collectibles, gaming, and even tokenization of real-world assets like property.

Interesting, so what does EDDASwap’s NFT platform offer? And how does any of this benefit the EDDA Token holders?

The NFT platform is an integral part of the EDDASwap ecosystem. EDDASwap has partnered with leading global artists, designers and producers to create a specially curated collection of digital art and content that will be exclusively accessible to EDDA Token holders. The ultimate aim is for the platform to also facilitate the representation of unique, real world assets through tokens on the blockchain.

Decentralized Exchange (Q1 2021)

EDDASwap is a decentralized exchange with a core focus on security. A decentralized exchange, or DEX, offers several advantages over existing centralized exchanges. The most important benefit is the security a DEX provides, by not requiring you to hand over control of your crypto assets to the exchange. In an industry where centralized exchanges seem to experience hacks, have lawsuits filed against them, or get raided by authorities all too often for comfort, a DEX allows you the comfort of knowing your funds are securely in your own hands, unaffected by any central point of failure.

A DEX is also permissionless. In a centralized exchange, the exchange’s management decides which tokens are allowed to list on the exchange, often charging an exorbitant listing fee, or demanding a large allocation of the tokens, and exercising undue influence over the project’s future. However, anyone can list their tokens on a DEX, creating ease of market entry for new projects, and allowing users to trade and invest in exciting early stage projects with potentially high returns.

But if anyone can list their tokens, how do I know I’m not being scammed?

One of the major issues plaguing existing DEXs are the frequent “rug pulls”, whereby malicious actors create a new token, list this token onto the DEX by adding liquidity, and wait for early buyers. Once buyers swap their existing tokens (such as ETH) for the newly created token, the token’s creators pull out all liquidity, leaving the buyers with a worthless bag they can no longer sell.

Our priority for EDDASwap is to eliminate such risks, and provide users a completely secure trading environment. To this end, EDDASwap will implement “Liquidity Lock”, an optional feature whereby anyone that lists their token onto EDDASwap will have the ability to lock in the liquidity for the token for a designated period of time. Every project that wishes to legitimise themselves would be able to make use of this feature to create trust, and provide token buyers the security of knowing they will not wake up the next morning to an exit scam.

What about the EDDA Token holders? How does any of this benefit them?

The most important contributors to a DEX are the liquidity providers, that is, the users providing liquidity to the DEX by placing their crypto assets into the liquidity pools, without which no trading would be possible. DEXs reward these liquidity providers by distributing to them the trading fees generated by the DEX. In many existing DEXs, a percentage of these trading fees are retained from the liquidity providers, and distributed to the creators of the DEX.

However, in EDDASwap, continuing the idea of prioritising EDDA Token holders, this fraction of trading fees that are retained will be used to automatically market-buy EDDA Tokens, that will then be distributed to EDDA Token holders. Therefore, as EDDASwap grows and trading volume increases, the EDDA Token holders will be the ultimate beneficiaries.

Decentralized Launchpad (Q2 2021)

In traditional finance, only the venture capital and private equity firms have access to investments in early stage start-ups and promising companies that have immense growth potential. These seed or early investments are usually made at bargain prices, and with rigid terms and conditions attached, often because the start-ups are starved for capital, and lack other fundraising options. Further, the average retail investor does not have access to such investment opportunities, and must wait for such companies go public, that is, get listed on a recognised stock exchange. However, at that point, the only real winners are the aforementioned VC investors, who have made several multiples of profit, and upon listing, the unsuspecting retail investors are merely their exit liquidity.

Hasn’t crypto solved this, with the ICOs and IEOs?

Not really. Most ICOs have sold their tokens on hype and vapourware, by overpromising and underdelivering, and often provide no transparency. Due to the lack of a vetting process or safeguards, ICOs have attracted several unsavoury projects, and now, seasoned crypto investors tend to be wary. On the other hand, in IEOs, similar to the traditional finance narrative with VC investors, the centralized exchanges receive large allocations of tokens at discounted rates, and exert undue influence on the project. Although these models will evolve as the industry matures, finding a balance between the two seems the way forward for now.

So how do you find this balance? And how does any of this benefit the EDDA Token holders?

EDDASwap is introducing a Decentralized Launchpad. Any crypto project that wishes to raise capital through this Decentralized Launchpad will be required to create a prospectus, containing all necessary information about the project. EDDA Token holders will be able to vote on whether the project will be accepted onto the platform, thereby providing a decentralized vetting process, and ensuring only quality projects can access the Decentralized Launchpad.

Additionally, only EDDA Token holders will be able to invest in these projects, and the tokens will be purchasable at seed or early stage valuations. All the terms of purchase such as the price and vesting period (if any), will be included in the prospectus, and will uniformly apply to all EDDA Token holders, to ensure fairness. Projects will be allowed the flexibility to offer unique investment structures and incentives, such as allocating bonus tokens on a gradual vesting period to purchasers, to increase their chances of receiving a positive vote and gaining access to the Decentralized Launchpad. After a successful round of fundraising, the tokens will be listed on EDDASwap.

This model of decentralized fundraising provides early investment opportunities in high-growth projects to EDDA Token holders, and ensures that founders of innovative projects have easy access to capital, without being hamstrung by the dominant influence of traditional VCs or the centralised IEO process.

Q3 2021 and beyond

EDDASwap is creating a comprehensive and accessible DeFi ecosystem that the entire cryptocurrency industry can benefit from, in which several functions of legacy finance are rebuilt and innovated upon, including trading, asset management, capital markets, insurance, and beyond. Besides the platforms discussed here, we will continue to explore new ideas, and create several more DeFi products.

However, no decentralized ecosystem can achieve success without its community. We are customer obsessed, and our ethos will always be to place special emphasis on EDDA Token holders, by providing them access to the best DeFi infrastructure and tools, and ensuring they are the ultimate beneficiaries of EDDASwap’s success. We seek to build a strong and committed community that shares this vision, and one that will encourage and support independent community members and developers that wish to build for EDDASwap, and bring their most ambitious ideas to fruition.

Stay tuned for more updates, including details on the upcoming EDDA Token public sale!

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EDDASwap is an ecosystem of DeFi + NFT applications with a DEX supporting ERC-20, Binance Smart Chain and Polkadot