Overview of QuickSwap
QuickSwap is in general a fork of Uniswap v2 on Matic Chain. Thanks to the advantage of the Matic network, transaction fees on the protocol are almost zero coupled with instant processing speed.
QuickSwap Operation Model & Products
QuickSwap focuses its development on a single product, AMM, and creates incentives to help retain and encourage users to stay on the protocol.
An overview of Quickswap products includes:
- Quickswap – AMM.
- Dragon’s lair – A place to help users staking QUICK.
- The liquidity mining program allows depositing LP tokens to receive yield.
We will analyze each component of QuickSwap in turn, about 3 main aspects:
- What is that ingredient?
- Their operating model.
- How to capture value for QUICK token.
First, let’s learn about AMM – the main product of the project.
In terms of design, Quickswap is identical to the model of Uniswap v2. You can review the operation model of Uniswap v2 to firmly grasp the knowledge for yourself.
For convenience, I will remind you through the flow of this model for you:
There will be 2 main components involved in QuickSwap:
- Liquidity Provider: This is the supply side, providing assets to create liquidity for the market.
- Users (users, traders): Users can trade any token on polygon, in return they have to pay 0.3% fee per transaction.
QuickSwap . Operation Model
Quickswap’s model will work in 3 main steps as follows:
(1) 1 Pool on QuickSwap will have 2 types of assets, for example, A and B, the liquidity provider (Liquidity Provider) will put 2 assets in a 1:1 ratio into it. Also receive LP token, this is a token representing ownership of a part of the assets in the Pool.
(2) Traders who want to exchange from A to B can put A in the Pool and receive B.
(3) Quickswap currently charges 0.3% per transaction, this fee will be distributed at the rate of 0.25% for LP, 0.04% for dQUICK holders (stake QUICK to receive dQUICK, I will explain below) and 0.01% for Quick Foundation.
Regarding deeper factors such as algorithms, the pool model is similar to Uniswap’s model, so I will not talk about it again in this article.
How Quickswap capture value for QUICK holder
The design of this model is quite harmonious and helps to balance the interests of the parties:
- With QUICK holders: QuickSwap distributes 0.04% transaction fees to those who stake QUICK thereby creating a lock-point for holders and buy demand for tokens.
- With liquidity provider (LP). In addition to the revenue sharing (0.25% transaction fee). Quick swap also has a liquidity mining program, which incentivizes LPs to provide more liquidity on QuickSwap.
- With users: Abundant liquidity, users will spend less Slippage when transacting, but the more users trade => The transaction fee that QUICK staker and LP will receive will also be more.
- With the development team: Sharing 0.01% transaction fee will be a great motivation for the development team to continuously improve so that the product generates more and more revenue.
QuickSwap is the main product of the project, but to attract such a large amount of liquidity today, Quick also has many components to retain and attract users. Now let’s learn about those ingredients.
Dragon’s Lair helps users stake QUICK to receive yield. When you stake QUICK, you will receive dQUICK, 0.04% of the transaction fee from the protocol will be shared with dQUICK holders.
Please note that the conversion ratio for QUICK and dQUICK is not 1:1. This ratio varies depending on the amount of QUICK staked in the contract. That is, the more people stake, the less the amount of shared fees will be shared and vice versa.
The value of dQUICK will increase over time due to the transaction fees generated. Users can unstake at any time, when you unstake, that amount of dQUICK will be burned and you will receive QUICK back at the same conversion rate.
Staking on QuickSwap
How Dragon’s Lair captures value for QUICK holders
Dragon’s Lair creates direct benefits for those who stake QUICK, the more transaction volume and revenue the project generates >> the more fees are shared >> Incentive users buy and stake QUICK in the protocol.
Over time, despite the volatility of the market and the change in QUICK price, the amount of QUICK being staked has steadily increased, proving that this is an attractive piece of cake for users.
However, the disadvantage of this model is that if the growth rate of QUICK staking is faster than the growth of trading volume >> Staker will share less fees >> generate Sell demand.
To encourage LP to provide more liquidity, Quickswap has a farming or liquidity mining program. Accordingly, users after providing liquidity and receiving LP tokens can stake them in pools to receive more QUICK. The amount of QUICK shared per pool is different and is changed by governance.
Farming on QuickSwap
How to farm capture value for QUICK holders
Liquidity is the lifeblood of the DeFi protocol, if there is an abundant amount of liquidity, it will help reduce price slippage, thereby encouraging more users to use the product, thereby generating revenue for the protocol.
With the above model to be able to maintain long-term and continuously encourage users to provide liquidity will need a large amount of tokens to use as incentives. Quickswap fulfills this condition through tokenomics which is largely allocated to liquidity mining.
90% is allocated for liquidity mining, this model creates a very good incentive for the early stage, ensures the project has a large amount of liquidity, the LPs after farming can continue staking QUICK and get more QUICK for yourself.
However, the downside is that in the future when the LP itself feels “enough”, it will create a large sell demand. Therefore Quick will need new games to maintain the “lock-point” for QUICK in the protocol. According to information from the project, the liquidity mining program will last for about 3 and a half years, and the amount of rewards will decrease over time.
The current QUICK use cases include: governance and staking. The fact that the amount of QUICK distribute is decided through governance and staking helps to bring direct value to token holders, so it can be said that use cases are a plus point for QUICK.
Overview of how Quickswap . works
After analyzing how Quickswap works and the components in the protocol, we have the following operating model:
Looking at the model, we can realize that Quick is focusing on vertical development: Focusing on developing a main product and supporting components for that product.
- QuickSwap: AMM, the main product of the protocol.
- Dragon’s Lair: A staking product, helping to retain holders and create buy demand for QUICK.
- Farm: The product helps incentivize LPs to maintain a liquidity supply.
Flywheel by QuickSwap: Farm helps create a stable amount of liquidity for Quickswap thereby indirectly helping Quick create more volumes >> generate a lot of revenue >> Dragon’s Lair becomes an attraction for users.
Opportunity to invest in QuickSwap
With Polygon being at the forefront of layer 2 solutions with a huge number of users and projects. QuickSwap is becoming one of the top dex today.
With the current trend, operating model and incentive, the chances are high that Quickswap will live well and be a good investment opportunity for many people.
In addition to investing in the project’s QUICK token, choosing the right pool farm is a good way for you to increase your assets.
Summary and conclusion
With the right timing, fast development, good community effect, QuickSwap has created a very good position for itself. The current operating model is and will likely continue to promote its advantages in the near future.
However, with many competitors gradually appearing, typically Sushi. Relying on incentives can also be a weakness if competitors have another incentive that is more appealing to users.
And with the current model, if you don’t create new games (eg Pancakeswap), or a highlight for yourself (eg Uniswap V3), there will come a time when this amount of incentive will make Quick…Quit.