SWAP Tokenomics

1. SWAP Value Proposition

  1. Platform staking of TLOS to REX (Resource Exchange).
  2. Issuance and distribution of SWAP through Network Fees.

How does the SWAP value increase?

  • T-Swaps V3 uses REX returns to augment the TLOS added to the TLOS:SWAP pair. With Telos REX current returns being approximately 13%, this augmentation will greatly enhance the liquidity and price on the TLOS:SWAP pair. It is not possible to estimate the impact of this price support mechanism, but it will be better for both liquidity providers and SWAP holders than the APR offered by Telos REX.
  • A portion of the Network Fee collected on every trade on T-Swaps is added to the TLOS side of the TLOS:SWAP pair. This ensures that there is always TLOS available to buy back SWAP issued.
  • On pools that support SWAP rewards, the ratio that is paid out in SWAP is equal to the TLOS fee paid. If the SWAP value goes up, the value of the rewards would exceed the fees that you pay.

2. Price Stability of SWAP

2.1 REX (Resource Exchange) Returns

  1. Telos offers substantial REX returns (in excess of 10% APR) when staking TLOS to REX.
  2. T-Swaps currently holds approximately 1 160 000 TLOS.
  3. Assuming 90% of this is added to REX and yields a 10% APR
  4. This will generate 104 400 TLOS per year (which is 8 700 TLOS per month)
  5. It is proposed that this TLOS be used for price support on the TLOS:SWAP pair. Currently the TLOS:SWAP pair holds a TLV of 74 411.3368 TLOS.
  6. The income from REX for price support on the TLOS:SWAP pair will concentrate the proceeds of REX income. The yield will be 11.6% per month or 140% APR based on the numbers provided above.

2.2 Network Fee

2.3 SWAP Use Cases

  • To pay the listing fee when listing a new pair.
  • To pay for new services which are being added to the platform.

3. Supply

  • Maximum supply : 250 000 000 SWAP
  • Total supply : 80 101 417 SWAP
  • Circulating: 476 457 SWAP
  • Reserved: 79 624 959 SWAP

3.1 Initial supply

  • Marketing — 30% (includes Airdrop tokens)
  • Product build — 20%
  • Liquidity — 20%
  • Strategic partners — 10%
  • Private and public sale — 12%
  • Team — 8%

3.2 Minting of new SWAP

4. T-Swaps Fee Model

  • Network (Protocol) fee: 0.25% of value swapped
  • Trade fee: 0.5%

4.1 Network fee (protocol fee)

  • SWAP token price support: 0.125% of value swapped is added to TLOS:SWAP pair for price support.
  • SWAP tokens issued to the trading account against this portion of the fees collected
  • Ongoing platform development: 0.125% of value swapped is used to fund maintenance and development of T-Swaps contracts and software.

4.2 Trade fee

  • This fee is used to reward liquidity providers for the liquidity they add to a pair.
  • The default trade fee can be adjusted up or down in the range 0% — 2.5%. Low trade fees provide little incentive to liquidity providers but offer low cost swaps. Higher fees offer better returns to liquidity providers at a higher cost to traders.

4.3 General notes on fees

  • Unlike EVM based swap platforms that have gas costs which need to be accounted for in the total cost of a trade, T-Swaps does not have any hidden costs. The fee charged on the trade is the only cost to the user.
  • Centralised exchanges may offer substantially lower fees than T-Swaps but in this case the bid/ask spread is a hidden “cost”. The fees on T-Swaps are effectively the same as having a 1.5% spread on orders in a traditional order book. This is substantially lower than what is available on most other Telos markets. The problem of bid/ask spread becomes even more pronounced with low liquidity pairs where it is not uncommon to see spreads in excess of 100%.

Conclusion

  • Gives an excellent incentive for users to hold SWAP
  • Highlights a fee model that rewards liquidity providers
  • Offers reasonable swap value for traders

Key Terms

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Telos Swaps

Telos Swaps

The first DeFi project on the Telos Blockchain offering token swaps, wrapped tokens and across chain bridge