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SpiritSwap SPIRIT: Another Scary DeFi App on Fantom

By 2sats | 2sats | 13 Jul 2022

*obligatory not financial advice*


What is SpiritSwap?

SpiritSwap is a decentralized exchange on the Fantom blockchain which is a smart contract chain that uses an unique scaling approach and has sort of a "spooky" theme that SpiritSwap obviously also follows.

The dApp offers many features but the main one is the DEX, which has been forked from Uniswap. With it people can provide liquidity to trading pairs that are then offered to traders in exchange for a trading fee of 0.3%. The prices of the tokens in the trading pairs are based on the ratio of the supplied cryptocurrencies. The 0.3% fee for every swap is the standard that almost every DEX offers, Spirit is distributing 5/6 of the fee to the liquidity providers as compounding reward and is using 1/6 to reward the holders of the native SPIRIT token.

The liquidity providers of certain pairs are also rewarded with the SPIRIT token thru yield farming. This is a further incentive to provide the much needed liquidity and also makes sure that the actual users are getting governance rights over the SpiritSwap smart contracts.

The dApp also has a bridge integrated that allows its users to move their cryptocurrencies between the Fantom, Ethereum, BSC, Polygon, Arbitrum and Avalanche chains. This makes it simple to use funds from Ethereum on a chain with much lower transaction fees and brings more liquidity to both SpiritSwap and Fantom in general.

There is also a lending protocol that works similar to Aave or Compound, where users can deposit cryptocurrencies to earn interest on them thru lending or to use them as collateral to borrow some other supported token. Such loans can be useful for things like leverage trading or to short the borrowed token. There is no KYC required because all loans are collateralized, but should the value of the collateral tank it will be automatically sold to pay the loan back before that becomes impossible. Participating in this lending protocol is also rewarded with SPIRIT tokens.

SpiritSwap is the third most used dApp on the Fantom blockchain and holds more than 34,000,000 dollars’ worth of liquidity. It’s well positioned within its DeFi ecosystem but has some strong competitors on Fantom, like SpookySwap.



The SPIRIT Token

SPIRIT is the native governance token of SpiritSwap. Its holders can lock their tokens to be able to vote on changes to the protocol and to earn a share of the trading fees.

The locking mechanism for the governance has been inspired by the Curve Finance DEX. You can lock SPIRIT tokens for between 1 month and 4 years in exchange for inSPIRIT tokens. This inSPIRIT is a non-transferable token that represents your voting rights. How much you receive depends on how many SPIRIT tokens you lock up and on how long you lock them, locking them for 4 years gives you more voting rights than locking them for 6 months because you have a bigger interest in the future of the protocol. Holding inSPIRIT also allows you to earn a higher APY with yield farming. The amount of inSPIRIT you hold constantly shrinks as the un-lock of your SPIRIT comes closer until it reaches zero at which point you can redeem your SPIRIT.

There is a total supply of 1,000,000,000 SPIRIT, which is a rather large supply. 81.82% are going to liquidity providers, 8.18% is going to the DAO treasury, 7.5% are going to the developers and 2.5% were used for airdrops. The developers supply was vested for 10 months until March 2022 and the farming rewards are constantly shrinking until they are fully distributed in 2025. The liquidity providers are earning a very large share of the supply in comparison to most other dApps.

The value of the token depends on how much liquidity is held in the SpiritSwap smart contracts because its voting rights would affect more money and because there would be more trading fees to collect. The DEX is the third most used dApp on Fantom and holds a lot of liquidity and also has a bridge and its own lending protocol. However, there is a very large supply that is highly inflationary in the beginning and plenty more tokens will be minted as right now only about 700,000,000 tokens are distributed.

You can buy SPIRIT on the MEXC Global exchange. You can also buy it on its DEX if you have some FTM coins for the transaction fees. You can use a MetaMask Wallet to interact with the dApp and to store your tokens.





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