InfinitySwap is the largest decentralized exchange coming to the Internet Computer. A decentralized exchange, commonly called a “DEX,” is a fully on-chain cryptocurrency exchange. This means no centralized companies are involved, and users are entirely in charge of their money at all times. With InfinitySwap, you have an open network of computers that make up the Internet Computer, which then can be used to trade cryptocurrencies between each other.
There are many reasons why you would want to use a DEX and many things you can do with a DEX. Beyond obviously swapping tokens, you may be able to get tokens explicitly related to projects on the Internet Computer, provide liquidity, and earn interest on your assets. You can also create your own tokens. While these are all ultimately simple tasks, there are many reasons why you may want to do them and many goals you can accomplish through them. Let’s take a look at some of what you can achieve through InfinitySwap once it goes live.
Swapping for governance tokens
Governance tokens are those that represent voting power on a protocol. This means that the more tokens you hold, the louder your voice can be when it comes time to vote for proposals. Proposals can take the form of anything when it comes to defi. Proposals are the general term for ideas that can be implemented within a given protocol or application to improve it. Sometimes these proposals will change something as small as listing a new token to swap for on a DEX. Other times, they can be as large as changing the core business model of a protocol. Once InfinitySwap goes live and projects launch tokens, you will be able to swap assets for those tokens to engage in voting.
Voting is an integral part of the decentralized finance ecosystem because it allows users to influence what happens next. This is especially important when developing blockchain projects that have not yet made a solid foothold in the market. Token holders typically will try and vote for the best decisions that will lead to the appreciation in the price of the tokens they hold.
Aside from voting, you can also create proposals yourself! If you hold tokens of a project, you may have an idea that you think would improve the protocol’s operations and lead to more revenue or a better user experience. If this is the case, you can use your tokens to put up a proposal of your own for users to vote on. If you have a great idea, put it to vote, and see what other token holders think!
Swapping for tokens that accrue value
While there is overlap between tokens that accrue value and those that can be used for governance and voting, they are not at all the same. Many tokens will accrue value but cannot vote, and many governance tokens do not receive any cash flow from their protocols.
For example, consider a token that provides access to a protocol that offers decentralized storage. The token is required to use the protocol, but it does not allow users to vote or contribute to the development of the protocol. In this example, the token would accrue value from people using the protocol but does not have any voting power.
On the other hand, if you own a token in another protocol and it represents voting rights for the protocol but does not capture revenue, then you are entitled to voting rights, but there is no guarantee that the price of the token would appreciate even if the protocol is successful.
With this knowledge in hand, you will be able to swap for tokens on InfinitySwap that capture revenue or other value from their underlying protocols. If you do not want to engage in governance but want to receive cash flow, then these types of tokens would be a good idea to swap to when InfinitySwap goes live.
You will also be able to provide liquidity on InfinitySwap once it goes live. When you trade tokens on a decentralized exchange, those tokens you get need to come from somewhere, and the ones you get rid of also need to go somewhere. That somewhere is to the liquidity providers. When you provide liquidity on InfinitySwap, the tokens you provide go into the pool that other traders can trade against. For example, on a pool that is ICP-ETH, InfinitySwap users will be able to trade from ICP to ETH and from ETH to ICP. If you choose to provide liquidity to this pool, you will put in half ETH and half BTC in terms of dollar value and help users trade between them.
You will receive a share of swap fees and potentially token rewards for doing this. Whenever someone swaps against the pool, they will get the asset they swapped for minus a tiny fee, usually 0.3%. That fee is kept in the pool and distributed among all liquidity providers. So if you choose to provide liquidity for a pool, you can earn more of your assets over time as a reward! Additionally, many DEXs provide further rewards for their liquidity providers in the form of tokens. You may receive even more rewards for providing liquidity if InfinitySwap rewards your pool with tokens. These InfinitySwap tokens could then be held to vote on InfinitySwap governance.
Vote on InfinitySwap governance
Similar to the above section on governance tokens, InfinitySwap will also likely, at some point, have their own governance module. This means that holders of the InfinitySwap token will be able to create and vote for proposals that improve the InfintySwap protocol. One example of a change you might vote for is to increase or reduce swap fees on certain pools. Another proposal you could vote for is to increase or reduce the amount of token rewards provided to various pools. There are many decisions to be made when running a protocol, so holding onto your InfinitySwap tokens could give you a voice in swaying those decisions.
Create new tokens
InfinitySwap will also come with a feature not frequently seen on DEXs, the ability to launch your own token without any code. This means that you can create a new token and do whatever you want with it through InfinitySwap. This is a fascinating feature because it gives everyone access to token creation tools that were previously only reserved for advanced programmers.
InfinitySwap will be a very powerful platform when it launches. It will allow many users across the Internet Computer to engage in trading that was previously not possible on the IC. Additionally, it will serve as the foundation for decentralized finance on the IC. Most platforms will flock to InfinitySwap to create liquidity for the token and allow new users to buy and sell it. Others will choose to provide liquidity for their favorite tokens and earn an excellent interest rate. Once InfinitySwap launches, it will be a very exciting platform to use and earn on, so make sure you follow the Twitter account for the latest updates!
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*Disclaimer: While every effort is made on this website to provide accurate information, any opinions expressed or information disseminated do not necessarily reflect the views of InfinitySwap itself.