AnySwap is an entirely distributed protocol allowing the swapping of tokens from various decentralized platforms.
While early DeFi platforms targeted powering lending through liquidity pools, upcoming DeFi networks are shifting to enable swapping tokens across blockchains and facilitating distributed trading through decentralized exchanges (DEXs).
Among the recent entrants into the DeFi ecosystem to facilitate cross-chain token swaps and trading, is Anyswap. The platform is the first DeFi platform to support inter-blockchain transactions.
What is Anyswap?
Launched in July 2020, AnySwap is an entirely distributed protocol allowing the swapping of tokens from different decentralized platforms. The system’s strength comes from its ECDSA signature support. Note that 95 percent of active digital currencies such as Bitcoin (BTC), Tether (USDT), Litecoin (LTC), and Ripple (XRP) implement the scheme.
Additionally, the protocol is powered by Fusion’s Decentralized Control Rights Management (DCRM) technology, further boosting Anyswap’s ability to handle the movement of tokens between blockchains.
Notably, the Fusion network employs private key sharding to ensure the safety of assets. With sharding, the private key is divided into bits and handled by different nodes on the network. Therefore, for a transaction to go through, participating nodes must sign the transaction.
Most importantly, the bits of a private key are never assembled to enhance the security of the assets during a transfer or trading. Additionally, Fusion incorporates atomic swaps, where time is a key ingredient in time-sensitive financial applications.
By using Fusion, Anyswap can build atomic systems to cater to pricing and liquidity on the platform. Generally, the network’s architecture includes a decentralized exchange interface, decentralized applications (Dapps), cross-chain assets bridge, and nodes.
Notably, smart contracts on Anyswap are open source to improve security by allowing individual audits. Apart from transparency, open-source codes help prove the platform is truly decentralized. Despite being open-source, Anyswap has received a clean bill of health from Slow Mist, a reputable smart contract auditing firm.
The Protocol’s Key Features
- A distributed inter-blockchain bridge – It allows users to deposit any ECDSA-compliant token and receive wrapped tokens without the need for a third party.
- Inter-chain swaps – This enables Anyswap users to swap cryptocurrencies instantly.
- Programmed liquidity – The liquidity providers determine the liquidity levels on the platform. However, the network also uses available liquidity to alter prices accordingly.
Anyswap’s Native Currency (ANY) and Governance
AnySwap has a native token called ANY. The token follows standards on the Fusion platform and is used for governance purposes. ANY holders are entitled to vote for the working nodes on the AnySwap network.
The native currency also gives its holders the freedom to decide which coins are ideal to be listed on the AnySwap decentralized exchange (Anyswap DEX). Additionally, ANY tokens also allow holders to vote or propose changes to critical parameters on the system.
However, voting is supported for native tokens held on the Fusion blockchain. Apart from governance, ANY allows investors to earn rewards on the protocol.
ANY’s total supply is capped at 100 million tokens. However, the genesis block distribution included 15 million tokens, with 10 million of this supply going to the Anyswap community. In addition, the tokens are marked for growth. Five million of them from the initial distribution go to initial liquidity and the Anyswap team.
In the subsequent distribution, 85 million tokens are meant for block rewards. They are distributed among the DCRM node rewards (10 million), liquidity rewards (15 million), team rewards (15 million), Anyswap shareholders (20 million), and swapping/trading (25 million).
Fees, Charges, and Rewards on Anyswap
The network charges users for swapping tokens and rewards liquidity providers (LPs). For example, each token swap attracts a cost of 0.4 percent, LPs receive 0.3 percent of the fees, while 0.1 percent goes to the AnySwap Company.
As of 22 /12/2020, Fusion, Ethereum, Binance Smart Chain, Fantom, Huobi Chain, and ANY staking shared rewards for swapping and liquidity provision.
In addition, the system charges a 0.1 percent fee for interactions with the token bridge while working nodes share the fees.
Apart from liquidity providers and Anyswap Working Nodes (AWN), traders on the Anyswap DEX are directly rewarded. The rewards are released after every 100 blocks or after approximately 20 minutes.
Note that the rewards are based on a trader’s trading volume. Notably, if no user is eligible during this period, the rewards are automatically channeled to LPs and AWNs.
Operation of Liquidity Pools on Anyswap
Liquidity pools on Anyswap employ the CPMM (constant product market maker) approach to manage deposits and withdrawals within a pool. The model works on the basic approach that the tokens in a trading pair increase and decrease in equal measure during a trading session.
Observe that staking ANY is available on the Fusion network. The option is activated by clicking on the “Staking” option on the platform. Staking yields depend on the total staked ANY tokens and displayed to the stakers.
How to Use Anyswap
You can use Anyswap on different blockchains such as Binance Smart Chain, Fusion, or Fantom. Currently, Anyswap supports access through MetaMask and Ledger Wallet. Here, we will cover access through Fusion.
For a smooth experience, select Fusion on MetaMask and on the settings tab, ensure the details are as shown below.
From the details, note the addition of a custom RPC link. A custom RPC is needed when accessing Anyswap outside the Ethereum Anyswap trading platform.
Anyswap DEX supports Fusion’s Fuse token (FSN), Fantom (FTM), Binance Coin (BNB), and Ethereum (ETH) as the base coins. New additions to the list of coins available for trading include LINK, OMG, COMP, YFI, and DAI. Note that it’s possible for everyone to list coins on the exchanges, but the coins have to be subjected to a community vote before they become active.
To participate in voting, ANY holders have to go through the process of interfacing their MetaMask wallets to the Fusion blockchain. To connect the two:
- Head over to MetaMask and select the “Main Ethereum Network” under networks.
- Provide the necessary details to the Fusion protocol as provided above. This will make the Fusion network active on MetaMask and ready for use.
- For new users, it’s time to connect the MetaMask wallet with the wallet holding the ANY tokens. This is done by clicking on the circle on the right upper hand corner of the wallet and choosing “Import Account.” Provide the required details and hit “Import.”
- For Ledger users, use the inbuilt Ethereum app on the hardware wallet and toggle contract data to ON and display data to OFF.
- On MetaMask, click on “Connect Hardware Wallet.” Next, select Ledger>Connect. Attach the cold wallet to the computer, choose the address with your coins from the list and hit “Unlock.” If you’ve followed the steps, the wallet should be connected.
- Once connected, you are ready to vote.
AnySwap brings another dimension to the DeFi ecosystem. By rewarding traders, LPs, and working nodes, everyone on the ecosystem receives incentives for their contribution to the network. Notably, the system’s use of Fusion strengthens its position as the first DeFi platform to support cross-chain transactions. The protocol’s use of open-source smart contracts and community governance not only makes it more decentralized but also community-driven.
With all the competing DeFi-based systems in the crypto space, it’s hard to determine which one is here to stay and thrive. One thing that’s clear is that AnySwap is an undertaking that’s worth pursuing, at the very least.