Liquidswap (LSD) news

What Is Liquidswap?

Liquidswap is the first AMM (Automated Market Maker) on the Aptos blockchain. Developed by the Pontem Network team, Liquidswap facilitates decentralized token swaps by leveraging smart contracts written in the Move language. These contracts, which are executed on the Aptos mainnet, aim to provide a secure, fast, and efficient platform for peer-to-peer digital asset trading.

Designed to support both uncorrelated token swaps and stable swaps for correlated assets, Liquidswap offers a range of features to enhance user experience and protocol functionality. These include a dynamic fee structure managed by a DAO treasury, high-speed transactions enabled by Aptos' parallel execution engine, and a robust security framework supported by multiple security audits.

How Liquidswap Works

Liquidswap operates as an Automated Market Maker, a type of decentralized exchange that allows users to trade tokens directly from liquidity pools rather than through traditional order books. In this system, users can create liquidity pools by depositing pairs of tokens (e.g., X and Y). The ratio of these tokens in the pool determines their relative price and forms a liquidity curve, which adjusts with each trade to ensure the pool is not drained.

Traders on Liquidswap interact with these pools to swap one token for another. Each swap transaction incurs a small fee, a portion of which is distributed to liquidity providers as an incentive for their participation. When liquidity providers deposit their tokens into a pool, they receive LP (Liquidity Provider) tokens representing their share of the pool. These LP tokens are required to withdraw their initial deposits plus any accrued fees.

For uncorrelated token swaps, Liquidswap uses the constant product formula introduced by Uniswap v2. This formula ensures that the product of the token amounts in the pool remains constant despite changes in token quantities due to trades. For stable swaps, which involve assets with closely related values like stablecoins, a more complex formula is employed to minimize slippage and maintain price stability even during large transactions.

Additionally, Liquidswap features an emergency brake mechanism that allows the protocol to halt all swaps and liquidity minting in case of a critical issue. This safety measure is managed by the Pontem team and can be transferred to a DAO for decentralized control once the protocol is fully tested and verified.

What Is LSD Token Used for?

LSD serves as the governance token for the Liquidswap protocol. It enables token holders to participate in decision-making processes regarding protocol parameters, community treasury management, and future developments. By staking LSD tokens through a vote escrow (ve) mechanism, users can gain voting power and receive boosted rewards, promoting active participation in the protocol's governance and sustainability.

Staking LSD tokens involves locking them for a predetermined period, with longer lock-ups granting more voting power and benefits. This system encourages long-term commitment from token holders and aligns their interests with the protocol's growth and success. Additionally, LSD token holders may receive a portion of the protocol's fees, further incentivizing their involvement in governance activities.

LSD has a total supply of 42 million tokens.

How to Participate in Liquidswap LSD Token Airdrop

Participating in the Liquidswap LSD token airdrop involves several steps designed to reward early adopters and active community members. The first LSD airdrop will distribute 5% of the total token supply, with a significant portion available at the token generation event (TGE) and the remainder vested over four months.

To qualify for the airdrop, users must meet specific criteria based on their activity before certain snapshot dates. Early adopters who traded or added liquidity to Liquidswap before April 7, 2024, and late users who did so between April 7 and July 10, 2024, are eligible. Additionally, community members holding specific NFTs or meme tokens, product testers, and ambassadors will receive a portion of the airdrop allocation.

A referral bonus system also allows users to increase their airdrop allocation by referring others to the platform. Bonus multipliers apply to trading volume and liquidity contributions, benefiting those with verified community involvement. To claim the airdrop tokens, eligible participants can visit the designated claim website, ensuring they meet the minimum activity thresholds to avoid exclusion from the distribution.

Related Articles about Liquidswap:

Liquidswap (LSD) Is Leading The Charge In Aptos' Decentralised Finance And More