Using Oswap.io DEX in Obyte: Swap, Leverage, Pools, and Staking

Launched in 2020, Oswap.io has become the main decentralized exchange (DEX) available to trade different tokens in the Obyte ecosystem. Inspired by Uniswap and Vitalik Buterin's ideas, this platform utilizes a "constant product market maker" mechanism, eliminating the need for an order book. Oswap.io's Automated Market Makers (AMM) model relies on liquidity reserves held by Autonomous Agents (AAs) —the “vending machines” of the Obyte ecosystem.

This way, transactions are executed directly against these reserves, and prices are automatically set to maintain equilibrium. As in other AMM-based decentralized exchanges, liquidity providers across the network can contribute their own holdings in different tokens, earning a proportional share of transaction fees.

Currently, Oswap.io offers 32 pools (shared liquidity reservoirs), including the pairs GBYTE-ETH, GBYTE-WBTC, GBYTE-USDC, GBYTE-BNB, GBYTE-MATIC, and more. Obyte users can be liquidity providers and invest their holdings in one of these pools to receive rewards or simply exchange different coins using the available liquidity and paying between 0.1% and 0.5% per transaction (depending on assets and pool).

It’s important to note that Oswap.io only handles Obyte-based tokens, though. Therefore, if you want to use ETH, WBTC, USDC, or any other external cryptocurrency, you should first import them to your Obyte wallet using the Counterstake Bridge. This is a user-friendly platform to make your holdings in other chains compatible with Obyte and vice versa.

Once you have the desired coins in your Obyte Wallet, you can start trading in Oswap.io. Now, we can explore its menus and features to learn more.

Swap

This is the first interface you’ll see when entering the website. Swap is just another way to say “exchange,” so you can exchange your coins here. The menu is divided into three sections: Input (max XYZ) – [Asset], Output – [Asset], and “Bounce if the price increases.” The first one refers to the amount of coins you want to trade and the asset/token involved. The second one is the amount you’ll receive for it, and the third one is about the slippage tolerance percentage.

Slippage refers to the difference between the expected price of a trade and the price at which the trade is executed. To account for potential price changes, users might set a slippage tolerance percentage. If the price moves beyond this percentage between the time of transaction initiation and confirmation, the transaction might be bounced (canceled) to prevent undesirable outcomes.

In Oswap.io, you can set the slippage tolerance percentage in “exact prediction” (of the price), 0.1% increased price, 1% increase, 5% increase, or “don’t bounce.” This will depend on the amount of risk you want to take with the transaction. Below these sections, and after filling all spaces, you can press the “Swap” button.

A message to open your Obyte wallet will appear. The transaction must be confirmed from there. You should check the involved details and then press “Send.” The trade must be successful in a few minutes, which means the Oswap.io AA will send the solicited coins to your wallet, and you can check the operation on the DAG Explorer.

Leverage

This process refers to the ability to amplify the size of a trade by borrowing funds. It enables traders to control larger positions than their existing capital. In Oswap.io, leverage is provided by different liquidity pools. You can pick any of the available pairs to get leverage (lending) at the expense of interest (10% or more). When closing the leveraged position, you would have to pay a profit tax (25% of the profit) or a token tax (10% of the price).

However, you can’t borrow funds from nothing. You must have a certain amount available for deposit, and then select to get leverage (multiply) that amount 2x, 5x, 10x, 20x, 50x, or 100x. In this Oswap.io tab, you should first select the pool (asset pair), the input (amount) and asset you have available for deposit and want to invest, and the leverage type.

There are two leverage types in Oswap.io: leveraged position (non-fungible), and leveraged tokens (fungible). In the first one, the tokens can’t be freely traded like any other asset. Instead, they are unique contracts tied to a specific user's position. For example, if a trader wants 2x leverage on a particular asset, they might enter into a non-fungible leveraged position that magnifies the price movements of that asset by 2x.

On the other hand, leveraged tokens are fungible coins that represent leveraged exposure to an underlying asset and can be traded freely. For instance, a 2x leveraged token would aim to provide returns that are twice the percentage change in the underlying asset's price. These tokens automatically borrow more or partially repay the loan to maintain their leveraged exposure.

Pools

As we mentioned above, Oswap.io counts with a wide variety of liquidity pools. In this tab, you can select to add liquidity, remove liquidity, or simply explore the available pools and their details. Currently, every seven days, 100 GBYTES are distributed to liquidity providers on this DEX. Each pool has its own percentages, fees, and other settings, which you can view by clicking “Show all details:”

• Swap fee: a percentage per traded amount.

• Exit fee: applied to liquidity providers. It’s a percentage fee for withdrawals.

• Arbitrageur tax: this is an additional fee applied, assuming people buy an asset in the pool specifically to sell it elsewhere (or vice versa) and make a profit from that trade.

• Leverage profit tax: a percentage taken from profits made from leverage.

• Leverage token tax: a percentage of the redeemed amount charged when redeeming a leveraged token.

• Base interest rate: applied to leveraged positions, it’s the minimal cost of borrowing those funds.

• Utilization ratio: the share of the pool’s capacity available used for borrowing.

• Actual interest rate: a percentage of the total fees paid by borrowers. It is equal to the base interest rate when utilization is 0 and grows with growing utilization.

• Borrowed amounts: the total amounts in every token borrowed by traders.

• Return on capital from lending alone: estimated earnings for providing funds to the borrowers in that pool.

• Token weights: it’s the proportion of each token in the pool.

• Pool leverage: it's a measure of how much capital is available for trading relative to the value of the assets held in the pool.

• Price range: it refers to the range of prices at which assets can be traded within the pool.

• LP shares symbol: LP shares represent ownership of certain assets in the liquidity pool. This is their abbreviation or symbol.

  
  

All these parameters can be changed through governance by the community of the corresponding LP Token holders. Other data offered by the pool are prices of the involved assets, pool size, and annual percentage yield (APY), a percentage of estimated profits offered to liquidity providers. \

OSWAP Token + Staking

This is the governance token of Oswap.io, which means that it is designed to provide additional rewards to liquidity providers and governance participants in this DEX. Launched in April 2023, it’s also the first-ever DEX token issued on a bonding curve.

That is a mathematical formula that links the amount of OSWAP tokens issued and the amount of the reserve currency (GBYTE) sent to issuing them. This ensures always available liquidity for all traders. The price will also be gradually increased at a rate that depends on the current Total Value Locked (TVL) of all Oswap.io pools. Greater TVL yields a faster appreciation rate, so it's designed to increase its price as more users arrive on the platform.

Additionally, users can stake their holdings to get long-term rewards and deposit their LP tokens to receive a share of OSWAP emissions. By locking any amount of OSWAP tokens between 14 days and 4 years, anyone will be entitled to receive emissions of new OSWAP tokens (0.125%% per year) and vote for changes in the platform.

The OSWAP Token has its own website where investors can buy and sell, access more liquidity pools, and stake their tokens. Transaction fees start at 0.3%, but they can be changed by governance. Besides, it’s planned that the OSWAP supply will increase by 0.25% per year to incentivize liquidity provision and governance participation in Oswap.io.

Finally, we can say that Oswap.io ensures efficient and automated trading against liquidity reserves. Whether engaging in swaps, leveraging positions, or exploring diverse liquidity pools, users can navigate an ecosystem designed for flexibility and profitability. As this DEX continues to evolve, its innovative features and community-driven governance promise a dynamic and rewarding decentralized trading experience.

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