What is Holdex Swap?
The intelligent Swap Holdex cokes it possible to directly trade one cryptocurrency for another, avoiding the need for the use of centralized middlemen such as DeFi exchanges. Atomic swaps may be carried out across the blockchains of various distinct cryptocurrencies outside the primary blockchain. This handy feature initially came to public attention in September 2017, after completing an atomic exchange between Decred and Litecoin.
Since then, other companies and decentralized exchanges have enabled consumers to use the same feature. One such use is off-chain swaps, which have been carried out by Lightning Labs, a company that makes use of bitcoin's lightning network for transaction processing.
This technology has also been integrated into cryptocurrencies and decentralized exchanges, such as 0x and Altcoin.io, among others. Holdex Finance will contribute to the further development of this swap mechanism.
Holdex Swap is a crypto-to-crypto swap that takes place inside the wallet, enabling users to quickly and conveniently swap one cryptocurrency for another without leaving their Wallets.
With Holdex Swap, investors may swap cryptocurrency stored in their Private Wallet or Trading Account for other cryptocurrencies. Swapping from its Private Wallet allows investors to take advantage of the non-custodial, on-chain transaction settlement. Swapping from one’s own Trading Account results in quicker settlement and eliminates the need to pay network costs.
Overall, the Holdex Swap allows investors to:
● Quickly swap into an asset that seems potentially profitable
● Quickly move from a volatile asset to Holdex stable coins
● Hedge against traditional assets
The DeFi industry is undergoing exponential growth in terms of the facilities it provides and its user base. The highly secure and inherently trustable architecture of blockchain technology has fueled the development of a wide range of financial instruments that are decentralized, highly accessible, and highly trusted. Its popularity is evident because the total value locked in DeFi as of February 18, 2021, has reached $42.18 billion, up from $1.077 billion a year before, massive growth in just one year period.
Technical Details of The Swap Mechanism
The Holdex Swap utilizes the Uniswap protocol of swapping cryptocurrencies. Uniswap is one of the most notable and widely used instruments for exchanging cryptocurrencies on the Ethereum blockchain. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts.
If Rα and Rβ represents the number of tokens in reserve, and k is a constant, then,
RαRβ = k
If, during a transaction involving ∆β amount of β and ∆α amount of α currencies, with a percentage fee of (1 − γ), it must satisfy the following equation:
(Rα − ∆α ) (Rβ + γ∆β ) = k
So, the reserves would be updated as:
Rα = Rα − ∆α Rβ = Rβ + ∆β, and k = (Rα − ∆α) (Rβ + ∆β)
Thus, using the constant product invariant unlocks a gas-efficient way of automated exchange on Ethereum.