- DeFi protocol SnowSwap is a multi-chain automated market maker (AMM).
- SnowSwap’s multichain functionality could help aggregate cross-chain liquidity.
- Also, SnowSwap’s $SNOW utility token offers exceptional functionality and tokenomics.
SnowSwap is a multi-platform decentralized exchange (DEX) that offers the next-generation of DeFi multi-chain AMM for traders. The DEX aims to solve problems faced by current DEXs with regard to functionality.
For instance, presently DEXs are failing to scale and adequately compete with central exchanges (CEX). This is partly because most DEXs are limited to one platform. On the other hand, CEXs support multi-platform trading.
CEX vs DEX
Also, CEXs are exceptionally easy to use and generally provide a good user experience.
In addition, these exchanges enable easy crypto onboarding as they support fiat to crypto purchases. However, their centralized nature goes against the ideology behind blockchain and cryptocurrency.
Along with this, most CEXs require complex KYC and AML which negates users’ anonymity.
Also, CEXs are vulnerable to attacks, hacks, and scams. This is especially problematic taking into consideration that most CEX does not support non-custodial trading.
In fact, DeFi has recently been riddled with an increasing number of scams and rug pulls. For example, DeFi protocol WhaleFarm plunged 99% after its founders pulled a rug pull. The protocol was offering a staggering 7,217,848 % annual percentage yield (APY). Such a ridiculously high APV was a sure red flag. However, after only operating for a month, WhaleFarm had accumulated about $2.3 million in assets.
On the other hand, DEXs support non-custodial trading. In addition, DEXs are run by an automated protocol as compared to a centralized authority. Best of all, DEX protocols allow users to retain control of their assets, offer enhanced security, and do not require KYC. As such, DEXs support the spirit of decentralization and anonymity which are central to blockchain and crypto.
However, current DEXs are complex and are not idle for new users. In addition, they do not support fiat transactions and are often crippled by liquidity challenges. Notably, DeFi platforms and projects require high levels of liquidity to function optimally. This is where SnowSwap comes in.
How SnowSwap is the Next generation of DeFi
The platform’s multi-chain functionality enables new possibilities for both traders and decentralized finance (DeFi) as a whole. For instance, SnowSwap’s multi-chain functionally helps to aggregate fragmented liquidity from different automated market makers (AMMs). Also, SnowSwap has several features like decentralized yield farming and smart lock and release mechanisms that are greatly beneficial to liquidity providers.
Also, SnowSwap traders can benefit from low transaction fees, higher transaction rates, and the ease of trading cross-chain tokens. In addition, the platform enables DeFi projects to expand their token ecosystems, thus increasing their token utility.
Of note, SnowSwap will be on the Binance Smart Chain (BSC). As a result, the DEX will be able to benefit from the thriving BSC ecosystem and its unique benefits. However, based on the project’s roadmap, the DEX will later expand to other chains like Polygon, Solana, and Fantom.
$SNOW Utility and Tokenomics
Integral to the SnowSwap ecosystem is its utility token $SNOW. The token provides long-term farmers, stakers, liquidity providers, and holders many great benefits due to its unique tokenomics.
For instance, 60% of the platform’s transaction fees will be split between $SNOW holders and liquidity providers. Meaning, SnowSwap enables its users to earn a sustainable passive income. In addition, the platform has a 5% selling fee aimed at encouraging holders to hold their tokens long-term thus sustaining liquidity.
The platform tokenomics also utilizes token burning to keep the $SNOW token deflationary. To achieve this, SnowSwap will periodically burn a specified percentage of tokens with every transaction. As a result, the token supply will decrease over time which in turn should cause the remaining supply to increase in value.
Apart from yield farming and staking, $SNOW can also be used for additional functions like lottery games, predictions, and SnowSwap collectibleS in the form of NFTs. With such high utility, $SNOW underpins the entire SnowSwap ecosystem. Notably, $SNOW maximum supply is capped at 1 billion.
Finally, despite its glaring limitations, DeFi has boomed over the past year. Since May 2020, the total value locked (TVL) in DeFi has grown from under $1 billion to over $90 billion, at the time of writing. In fact, top-ranking DEX Uniswap even surpassed Coinbase exchange, becoming the fourth largest crypto exchange by market cap.
However, despite these advances, CEXs still dominate crypto trading with over 50% in market dominance. As such, the advent of SnowSwap could usher in the next generation of DeFi.