ShadeSwap: StableSwap For The Cosmos

In this article, learn about ShadeSwap - an IBC enabled stableswap and DEX built by Shade Protocol.

ShadeSwap: StableSwap For The Cosmos

Greetings community,

After months of research in 2022, the ShadeSwap stableswap whitepaper is officially released - unveiling a novel asymmetric AMM curve known as SilkSwap. This research empowers Shade Protocol to launch ShadeSwap: a privacy-preserving DEX built with IBC compatibility, powered by Secret Network.

SilkSwap Whitepaper

Cosmos StableSwap Features

ShadeSwap On Testnet

The following is a list of ShadeSwap key features:

  • Asymmetric stableswap invariant
  • Improved gas computation (compared to CURVE)
  • IBC connectivity
  • Tradeable private tokens
  • Fast (~6 second transaction times)
  • Cheap (~0.04% stablecoin trading fees)
  • Self-Arbitrage
  • Native stablecoin (SILK)

User Story

ShadeSwap On Testnet

As a user, you will be able to seamlessly bridge stablecoins (USDC, DAI, FRAX, etc.) and other crypto assets (ATOM, OSMO, etc.) onto the Shade App using the ShadeBridge. This UI/UX is powered by Axelar and IBC.

Once you've bridged your stablecoins in, you will be able to trade for other stablecoins with fees as low as 0.04%!  Compare this to other Cosmos AMMs such as Osmosis where trading fees for stablecoin to stablecoin trades are as high as ~0.40%.

Stablecoin trading on ShadeSwap using the SilkSwap invariant will be ~10x cheaper than the cost to trade stablecoins on other Constant Product Market Makers (CPMMs).

Osmosis trading fee of ~0.40% for stablecoin to stablecoin trade.

ShadeSwap Asymmetric Invariant

Shade Protocol is releasing a novel, never before implemented curve for trading that improves the computational efficiency of Curve, while also introducing novel capital protections and controls on trades that diverge from where liquidity is focused on the curve.

Below is an example of ShadeSwap's asymmetric curve design compared to CPMM & CSMM invariants.

Scaled SilkSwap Invariant 

ShadeSwap Computation Efficiency

In addition to controls over the design of each curve (controlling both the shapes of the tails as well as the length of flatness) ShadeSwap optimizes and improves the numerical implementation known as the Newton Method while using the Bisect Method as a fallback.

IBC Enabled DEX

Shade Protocol is built on Secret Network - a blockchain built using the CosmosSDK. Secret Network enabled IBC in September of 2022, empowering tokens on Secret Network (such as SILK & SHD) to be bridged in and out of Secret Network.

Due to IBC connectivity, ShadeSwap will seamlessly onboard other Cosmos L1 assets such as $ATOM, $OSMO, $JUNO, and more. In the future, ShadeSwap as an app may be deployed to multiple blockchains.

Shockwave Delta Mainnet Upgrade is Complete! | Secret Network Blog
The Shockwave Delta mainnet upgrade has successfully completed! Included: CosmWasm v1, IBC-transferable SNIP20 tokens, privacy-as-a-service, and more.

Tradeable Private Tokens

All tokens on ShadeSwap use the SNIP token standard of Secret Network, which have the following key features:

  • Private token balances
  • Private token transactions

SNIP tokens ensure that users have privacy by default - ensuring that the amount of tokens sent and where to remains encrypted.

Self Arbitrage

Simple Arbitrage Example

One of the most coveted features of ShadeSwap is self-arbitrage: the ability for users to automatically arbitrage their own price impact across ShadeSwap and external DEX pools. Fundamentally, arbitrage is typically performed by third party entities, extracting floating value in return for improving the overall pricing of assets across various markets. Using self arbitrage, ShadeSwap users are able to earn revenue that is typically extracted by external entities by having ShadeSwap integrated arbitrage performed by the same transaction that is creating the trade. This is the first time a DEX has ever integrated self-arbitrage into the trading experience.

More details will be released on Self Arbitrage as we approach the mainnet launch of ShadeSwap. Be sure to follow Shade Protocol on twitter to learn more about this powerful feature.    

SILK

Private. Global. Stable.

SILK is a privacy-preserving stablecoin pegged to a basket of global currencies and commodities. SILK is the flagship product of Shade Protocol, leveraging overcollateralization. SILK will be the primary pairing on both the stableswap as well as the CPMM pairs - increasing the utility of SILK while also deepening available liquidity for users to automatically route across.

Conclusion

https://shadeprotocol.io/

Shade Protocol is an ambitious array of application-layer products focused on a simple end user experience that involves the incorporation of privacy by default. These interconnected privacy-preserving DeFi products built on Secret Network will change DeFi as we know it — empowering the next generation of value creation and exchange. Shade Protocol is launching Silk: a privacy-preserving collateralized, reflexive stablecoin built on Secret Network.

Without privacy, DeFi is incomplete. Traditional financial markets offer a degree of privacy for users, and as a result offer up greater protections in some capacity than existing DeFi markets. Shade Protocol will be the world’s first truly cohesive decentralized and privacy-preserving financial applications — ushering in a golden era for Web3. Shade Protocol will always push for privacy by default, privacy as an expectation, and privacy as the key to unlocking the full value of a decentralized future.

But we can’t do this without community. We need you to join our community and help make Silk and Shade Protocol a reality.

Join The Shade Protocol Community

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