SpiritSwap V2 Review

By paragism | paragism | 13 Aug 2022

Fantom has posted extraordinary growth in DeFi TVL in the last year and SpiritSwap is one of the most successful projects on Fantom. With its focus on providing a seamless user experience and friendly interface, the DEX quickly became a go-to investment for crypto enthusiasts. A strong community and continuous progress towards decentralization kept SpiritSwap in the news always. Recently, the project has rolled out V2 with many protocol upgrades and changes in user experience. This is not a minor protocol update and a lot of work has gone into it. The architectural design of AMM (Automated Market Maker) infrastructure has changed in V2 and the team called it a ‘monumental effort’! Let us have a deep dive into SpiritSwap V2 to understand it properly.

New Stable AMM

SpiritSwap’s lending-borrowing network is hosted by Ola Finance. In V1, the lending-borrowing was being incentivized via treasury funds through the ‘rainmaker’ contract. The lack of liquidity was a key problem and V2 solves that with an additional AMM. This new AMM is a fork of Balancer and brings innovative ways to solve the liquidity issue of lending-borrowing. The AMM is based on the concept of the index fund and is very stable in nature. It collects fees from trading and rebalances the pool automatically through arbitrage opportunities. The stable nature of the AMM helps to restructure the incentives of the lending network. Suppose there is a pool called ‘X’ that is not earning enough trading fees. Pool ‘X’ can be used to feed the lending network. This solves two problems. The lending network gets incentivized by the AMM and the liquidity providers get returns from their ‘dormant liquidity’. The ROI on capital gets maximized.

Stableswap is in high demand nowadays. It is very relevant for SpiritSwap too. For example - inSPIRIT is the governance token of SpiritSwap that uses a vote locking model just like veCRV of Curve. It gives boosted SPIRIT farming rewards, voting power participation in bribe rewards and collects vote fees on gauges. But inSPIRIT is a non-transferable token and that is why wrapped inSPIRIT (winSPIRIT) tokens were created by autofarms like Grim Finance and Liquid Driver. These wrapped tokens (ginSPIRIT by Grim and linSPIRIT by Liquid Driver) are often preferred by the users although they have their own pros and cons. While these wrapped tokens make inSPIRIT liquid, the users often face problems getting stable value while swapping to SPIRIT or vice versa. The new stable AMM of SpiritSwap helps pairs like winSPIRIT-SPIRIT to achieve superior peg maintenance and bootstrap liquidity. The stable AMM works at 0.01% fees and gives a competitive edge in bridge aggregation too.


Liquidity adding provision to Classic, Stable & Weighted Pools in SpiritSwap V2  

Permissionless Farms (Ecosystem Farms)

Farming as a Service (FaaS) is an easy way for new projects to kickstart liquidity. SpiritSwap V2 ecosystem farms are permissionless in nature. It is a great opportunity to create demand for new tokens by exposing them to the vast user base of SpiritSwap. The desired liquidity pool can be created with a few clicks and the person, who opens and incentivizes the farm, receive 100% of the fee generated from the farm.


Different types of Farms - SpiritSwap V2

From Bridge to Bridge Aggregation

SpiritSwap V1 had a bridge powered by Multichain Network. V2 offers a swap service while people bridge tokens. Suppose, you want to swap BNB from Binance Smart Chain to FTM in Fantom Opera. With V1 it was not possible directly but V2 makes it possible due to SpiritiSwap’s partnership and integration with LI.FI. The easy cross-chain swap has the potential to bring enormous liquidity to SpiritSwap.

Improved Bribing

DeFi bribes are on the rise nowadays. With SpiritSwap’s rising popularity, more and more projects would want access to vote-locked SPIRIT (inSPIRIT) as it could be used to distribute more SPIRIT tokens to their gauges. The projects are able to readily tweak the bribes offered to adjust their exposure to SPIRIT emissions. Managing and setting up bribes is very easy for the developers of projects who have gauges with SpiritSwap now as they can do everything from inSPIRIT UI. The inSPIRIT holders, who want to take part in the bribing game, can collect bribes from the inSPIRIT page with a click.

Revamped UI

The new UI of SpiritSwap has been designed with a minimalistic approach after taking proper community feedback. The landing page offers a connected user experience and displays various options like portfolio, swap, farm, lending-borrowing, Ape mode (to be available as V2.1 upgrade) etc. The homepage shows your portfolio once you connect your wallet and the ‘portfolio first’ design approach is noteworthy. You can view your portfolio growth over time, no of tokens you are holding, your LP positions and active farms. All basic features of the UI are inherited from V1 without any terminology changes but every page has been redesigned to look more attractive and informative. The existing users of the project won’t find anything alien. The ‘Liquidity’ page now offers the option to add liquidity in classic and balanced AMM, supporting both weighted and stable pools. However, it should be noted that the weighted pools will be launched as a V2.1 iteration (likely 2 weeks after the public beta launch). The stable swap uses the Solidly model as of now but the Balancer style stable pool will be launched after two weeks. The good thing is that SpiritSwap users will have the luxury of two stable pool choices. The Balancer style pool will offer more capital efficiency but it will also be exposed to higher risk due presence of multiple contracts. The ‘Farms’ page also has got some feature updates due to the introduction of stable AMM. Now it shows multiple token positions if you have participated in a stable AMM pool. The ‘Ecosystem’ tab of the page displays permissionless farms. The boost factor in the ‘Farm’ section is represented graphically now. The inSPIRIT page has gone through a huge cosmetic change. The process of locking SPIRIT looks more understandable to a new user now. The voting system on Farms also looks easier with a lot of displayed stats.


The homepage of SpiritSwap V2 - shows your portfolio

As a new-generation DEX built on Fantom, SpiritSwap has already delivered many promises within a short time. The new UI of the project is mind-blowing from the design perspective. We can also see a lot of progressive features with the new version. Mixing two AMMs seems to be an amazing innovation to solve key issues. The trading fee has been reduced in the classic AMM from 0.3% to 0.18% and it will give an emulous advantage to the protocol. The stable AMM has great potential to bring liquidity as the fee is only 0.01% (Curve stable swap has a 0.04% fee). Fantom’s unmatched speed, security and low cost of the transaction will support the DEX further. The success of any DeFi project gets reflected in the market acceptance of the governance token and SpiritSwap V2 is dedicated to increasing the intrinsic value of SPIRIT. When taking both the base fee & vote fee into account, inSPIRIT holders are earning 75% trading fees now (in V1, it was 16.6%). The fast-changing DeFi space needs continuous upgrades but many projects make mistakes by making the protocol complex from the end-user perspective. SpiritSwap has done a fascinating job with V2 and built the codes from scratch to incorporate key protocol changes while providing a smooth and crisp user experience. The road ahead is going to be exciting for SpiritSwap!

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Note: The article was first published here

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Cypherpunk. Writing content which I love. Creeping on the blockchain. Twitter - @paragism_


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