In this article we will analyze Swim protocol by decomposing it into small simple pieces. Also, you’ll get answers to the questions:

• Is there anything better?

• How decentralized is it?

• How secure?

• What perspectives?

I don’t want to waste time, so let’s start step-by-step.

Contents

PART 1 – What and what’s for?
PART 2 – How does it work?
Diving deeper
Backstage magic
PART 3 – The exact “but”
Decentralization
Security
PART 4 – Comparing to competitors
deBridge
Rango Exchange
Zapper
Let’s sum-up a little bit
PART 5 – Endgame
PART 6 – Tokenomics
PART 7 – Final sum-up

PART 1 – What and what’s for?

Swim protocol — is AMM (Automated Market Maker) cross-chain bridge for stables*. Do you remember the time you were searching for the exact bridge to find the exact pair of chains and ending with thoughts “Maybe it’s cheaper to swap through Binance?”. Say no more! This protocol solves this problem once and forever – cheap, fast and easy, as you love. But it can’t be that good, can it? Let’s go into it.

*The team plans to supplement various uncommon cross-chain swap pairs, such as ETH/SOL.

PART 2 – How does it work?

Let’s start with basic ideas smoothly going to more detailed explanation.

If you get stuck with such terms as validators, smart contracts and others, check the previous article out.

As mentioned, the protocol is based on AMM smart contract with personal pool of stables called Hexapool. In other words – liquidity pool, which contains USDC, USDT & BUSD on various chains: BNB chain, Solana, Ethereum, Avalanche, Fantom, Aurora, Polygon and even Karura – impressed tbh. The list is gonna be extended.

Still, the main role plays Wormhole, above what Swim is actually built. It contains the most interesting and contradictory parts.

What’s Wormhole btw? Essentially, it’s a cross-chain SDK (Software Development Kit). In simple words – a ready-to-use set of tools for building multi-chain applications. Its goal is to provide accessibility to data, applications and tokens among large number of blockchains. And here is a point why I put tokens to the end of the sentence. Wormhole is not just a usual exchange, but fundament for building. I’m not gonna prescribe it in deep details, so if you’re interested, check this introduction and video. I just wanna mention Wormhole’s bridge called Portal. Its idea lies in collateral – native tokens are locked on the EVM chain, while wrapped tokens are proportionally minted on Solana. And vice versa – wrapped tokens are burnt while native tokens are unlocked.

Diving deeper

The Swim team has been repeatedly telling us about protocol’s specific – as a result of swap we get native tokens on the destination chain, instead of wrapped ones. The algorithm is pretty simple (example of BUSD BNB Chain ——> USDT Solana):

1. You send BUSD by approving transactions.

2. Swim’s smart contract sends the tokens to Wormhole which locks them on the initial chain (in this example BNB Chain) and, as a follow-on, wrapped tokens are minted on Solana.

3. The smart contract gets these wrapped tokens from Wormhole, assess the slippage and the price the swap performed with.

4. The last step – wrapped tokens are exchanged for the native tokens in Swim’s liquidity pool and sent to your wallet.

As a result, you get USDT on Solana.

As I said, pretty simple, huh? The secret is in simplicity! In the example above I prescribed a light-touch logic with the jammy selected swap pair. But do you still remember how many chains are supported? In practice there should be more approvals and swaps to be performed. It results in series of 8-12 actions which, I have to admit, is not so comfortable for a user. But at the end of the article you’ll find some good news about it.

Backstage magic

Due to the fact that the main computations and transactions are held on Solana, we get such low commissions and fast processing time. Even if we intend to send our stables from Polygon to BNB Chain (EVM —> EVM), it still uses Wormhole’s bridge and its wrapped tokens. As a consequence, you still need a Solana wallet to approve transactions and pay a fee. Check the example below:

PART 3 – The exact “but”

In this section we will talk about decentralization and security.

Decentralization

As Wormhole is a key component in Swim’s architecture, let’s talk about it in details.

Wormhole, in practice, is something between centralized and decentralized protocol. Data verification is carried out by the 19 public validators proudly called Guardians of the galaxy. Its consensus mechanism is called Proof-of-Authority (PoA). In simple words – these validators check that the tokens locked on the initial chain are equal to the tokens minted on the destination chain (wrapped tokens on Solana). It becomes possible because of the Wormhole’s Сore contracts written on each supported blockchain, which are used to lock tokens. Moreover, each validator has its own node on each blockchain, so they can work in parallel and verify each other. As long as more than 2/3 of the validators agree that the correlation is right, the data seems verified.

The best and most reputable validators were selected to become Guardians, as “Worm team” states. However, there is no any penalty system implemented, since they don’t stake any tokens to maintain the network. How decentralized it is – I leave you to decide.

Security

The second “but” and likely the last one.

Just straight – 93,750 ETH were stollen from Wormhole due to the hack. Honorable fund Jump Сrypto finally compensated the whole amount, but I guess there is still a trace. What changed since then, and how do both teams work on security? Firstly, they announced public bug bounty program with a price up to 10kk$ soon after the hack. Secondly, I asked several questions to the Swim team in order to figure it out:

– Let's imagine the situation where Wormhole got fully compromised or just shut off. What would you do? Do you have any plan in case of such emergency?

– We have a live heartbeat of the Wormhole’s Guardian network and a live scrapping of the collateral held vs the market cap of each Wormhole’s wrapped token. All this gives us the most up-to-date status of the Wormhole’s Guardian network. We are alerted for any irregularities and positioned to pause during an emergency.

– Since the featured hack of Wormhole in Feb, were there any additional measures taken to increase security?

– Yes, we have staged code pushes to prevent the exact lead time the hacker had. We can much stronger monitor any suspicious behavior. In particular, collateral backed vs market cap of Wormhole’s wrapped tokens would have triggered. And we have public bug bounties.

Fairly talking – each DeFi protocol can be hacked in theory. That’s the matter of probability. I guess that’s why we use minimum a couple of wallets, remove unnecessary approvals and don’t keep all eggs in the same basket. Right???

PART 4 – Comparing to competitors

In order to make this review more objective, let’s compare Swim to the other solutions. Below, I picked the most relevant bridges and aggregators:

deBridge

A cross-chain bridge with interesting architecture and own validators.

Advantages of deBridge:

– More decentralized solution
– Quite fast transactions

Disadvantages of deBridge:

– Small amount of supported chains (5 only)
– Absence of non-EVM chains
– Bigger commissions

Rango Exchange

Particularly, comparison with Rango Exchange is pretty valuable since it is an aggregator of various bridges with 40 supported chains. Some kind of 1inch but in cross-chain swaps.

Advantages of Rango Exchange:

– Large amount of supported chains
– More decentralized solutions, generally

Disadvantages of Rango Exchange:

– Bigger commissions with respect to the trading pair
– Slower transactions

Zapper

Bridge by Zapper – is an aggregator of various bridges, which sometimes provides pleasant conditions. Especially, due to integration of Biconomy’s bridge called Hyphen Bridge:

But sometimes not:

Advantages of Zapper:

– Convenient integrated bridge in great tracking DApp

Disadvantages of Zapper:

– Absence of non-EVM chains
– Bigger commissions with respect to the trading pair

Let’s sum-up a little bit

Here are analogues which, imho, outdo Swim in relation of decentralization. However, this protocol takes essential place among the bests in such category as cross-chain swaps because of EVM and non-EVM compatibility, fast transactions and low commissions.

PART 5 – Endgame

So, here is the cool concept, but what about making for a living? Remember the lessons of elders: “There should be a coherent income produced by the protocol for a sustainable liveness, otherwise you’re the income”. Extremely fast and easy excursus of Swim’s economical model:

Swap commissions – 0.04%; 0.03% goes to liquidity providers in Hexapool and 0.01% goes to $SWIM stakers. As simple as possible! The last step is to organize mass adoption of Swim and enlarge the daily trading volume, so everybody has enough money to burn.

Also, there is an NFT collection called Otter Tots which provides higher yield and other perks for true believers, in particular:

• Redeemability of the Otters, so you can burn the NFT and claim xSWIM tokens (staked $SWIM) it’s backed by (yeap, each NFT contains some xSWIM tokens inside);

• Receive emissions every day just by hodling your Otter in your wallet (passive income);

• Emission boost raffles every week, which will drastically increase the $SWIM emissions (increased passive income);

• Royalties from trading will be swapped into $SWIM tokens, so the staking rewards will be increased;

• Future collaborations with other NFT projects and DeFi protocols (whitelists and other perks for the hodlers).

PS: The collection is not released yet.

PART 6 – Tokenomics

I can’t tell you a lot at the moment, since there is a lack of information. Once additional info is released, I’ll update this section.

Don’t forget to subscribe my twitter btw!

For now, I’m just leaving a screenshoot from the official docs; it looks okay:

PS: The token is not released yet.

PART 7 – Final sum-up

Briefly:

• The cheapest and one of the most fastest cross-chain swaps;

• Significant amount of supported chains, which continuously increases;

• Adequate economical model;

• Small amount of relevant competitors;

• Ambiguity in sense of decentralization.

I guess nothing is missing, right? That’s to point the team doesn’t sit still and hardly works on its offspring. Recently the protocol supported only 4 chains.

That’s worthy to mention about Propeller Design too (remember I told you about good news?). Quote:

Long story short – this smart contract allows you to perform swaps in just a single click! However, there is no particular release date yet.

I have to admit, this review came into some complimentary stuff. Otherwise, you wouldn’t read it, since I’m willing to write about things I personally use or like. I hope many of you will find this solution as useful as I do. I’m waiting for any comments, suggestions and remarks. See ya soon! (≧◡≦) ♡

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