Just like any decent history book, the story of DEX is not short of its dark pages. Glimmering with highly-promising Uniswap at the dawn of the liquidity pool era, it was then succeeded by SushiSwap, a Trojan horse exposing the lack of control behind the governance of decentralized exchanges. The natural wave of frustration and eroded trust followed, nearly putting in threat the existence of the whole enterprise. Nonetheless, to restore the lost reputation, DEX story culminated with PancakeSwap - the brainchild of Binance, one of the most reliable crypto exchanges in the space. Whatever be next, it is now clear that the new spiral in DEX development will be marked by an even more substantial change in the status quo.
Two of the biggest things the DeFi community can’t live without nowadays are swap and leverage trading. However, what happens if these two are combined? asked this question, and that’s how the idea of the platform was born: a community-owned protocol sprinkled out of the interest match between liquidity providers on one side and traders on the other – which yields into a creative blend of leverage trading and lending protocol embodied by WOWswap. Stepping beyond the capabilities of the ordinary swap, limited to the liquidity pool provision only, WOWswap enables borrowing extra capital from the liquidity pool, thus facilitating the trading option up to 5 times. Simplicity is key to getting hold of the new protocol – just as making a swap on Uniswap or Pancakeswap, WOWswap capital borrowing is only one click away. This way, WOWswap marks a new era of trading capabilities unprecedented in the DEX space before.
Seeing the scale of change brought by the platform, I was enthusiastic to arrange an interview with a co-founder of WOWswap.
To begin with: at the most fundamental level, what gave the reason for the existence of WOWswap?
To max out the possibilities of DeFi.
As you have said, the mainstream story of DEXes starts with Uniswap, but we wanted to go a step forward and give an opportunity to maximize returns with the help of leverage.
How often do you find a token you think will do well, but do not want to allocate significant capital? If you just bought this token on Uniswap for 100 USD and its price increased by 20% you just made 20 USD. Yet with WOWswap 5x leverage you would have been able to double your money with the same 20% spot price increase.
Next, in the highly competitive space of DEX, how does WOWswap position itself in?
We do not compete with DEXes like Uniswap, Pancakeswap, Pangolin etc., but we actually complement them. We acknowledge the fact that these exchanges are the most liquid, have the most tokens and users, therefore for WOWswap we decided to build a tool that uses the strengths of the existing DEXes.
WOWswap allows margin trading by borrowing extra capital from the community liquidity pools and routing the trades via the most liquid dex. The experience is simple: borrowing capital and routing the trade happens in just one trade.
This brings benefits to the existing dexes by increasing the trading volume. WOWswap benefits by getting access to a high number of liquid assets, and users also benefit by being able to trade tokens with leverage that are not available on any other exchange. Win-win-win.
Oh, and if you are bullish on a token but are risk-averse to leverage, you can simply lend it in our single-side lending pools.
Please describe the ideal user type whom your platform targets in the first place. Are there any necessary knowledge pre-requisites for operating on WOWswap?
WOWswap is as simple to use as your favourite DEX.
Opening a position requires simply moving a slider to choose your desired leverage. From a user perspective everything else is similar to a dex like Pancakeswap or Uniswap.
Therefore our user base is existing users on those DEXes. If you are bullish on a specific token, with WOWswap you have two more options that are not available on a DEX:
- Trade the token with leverage to maximize returns.
- Lend the token to earn passive income with no impermanent loss.
- One of the advantages for users using WOWswap is Hourly Interest Rate. How is it calculated?
Most of the protocols in DeFi denominate the interest rate in APY. Yet anyone who has experience using those protocols knows that the APY varies drastically day to day. It’s impossible to rely on those numbers if you want to forecast your actual returns.
Hourly Interest Rate is more appropriate to our target users, who want to buy promising tokens with 5X leverage, but do not care too much about the cost of capital, because they won’t keep their long positions for too long: maybe a few days, or even hours if the market is up.
What is also unique in WOWswap, is that the HIR is fixed when a trader opens a position, so the user always knows how much he is paying for the leverage.
I’ve heard that the possibilities of leveraged trading also embrace fractionalized NFTs. Could you say a few more words about this functionality?
We are the first to offer leverage trading for NFTs. The idea arose from our mission to max out the possibilities of DeFi.
Leverage trading for NFTs is possible thanks to a key innovation in DeFi: fractionalized NFTs. It works by dividing an NFT into fungible small fractions allowing a different number of people to claim ownership of the same NFT.
We do not handle the fractionalization itself, but integrated fractionalized NFTs by NFTx. After fractionalization on NFTx, the tokens are then listed on Sushiswap. Therefore we decided to launch WOWswap on Ethereum by integrating Sushiswap DEX and enabling trading for fractionalized NFTs with leverage.
We are still at an early stage for fractionalized NFTs: the liquidity is relatively low and high gas on Ethereum means that borrowing extra capital from the liquidity pool and then routing trades via Sushiswap is expensive.
Having said that, we are sure that leverage trading for fractionalized will pick up when these two issues are solved.
What are some of the most important past achievements of WOWswap you could highlight?
We are proud of our instant on-chain governance. WOW token holders can vote on 18 financial & economic parameters by staking WOW in the DAO, and receiving governance rewards in return. All the parameters, such as protocol fees, are adjusted instantly based on the WOW token holdings.
We believe that this model should be adopted by more DeFi protocols as it allows the protocol to self-govern without the need of a central authority.
We are also proud to have finally launched WOWswap Pro, Limit Orders and Alerts. Once again, these three functions give more options not just to WOWswap users, but also to the users of the DEXes that we have integrated, even if you do not want to use leverage. For example, a Pangolin DEX user can open a 1x spot position for Avax and set a Take Profit limit order to automatically sell the token when it reaches a specified price level.
Finally, we are happy that WOWswap has turned 1-year this week! Not many DeFi protocols reach this level of maturity.
As your next step, what are the efforts you are planning to undertake to enlarge the global community of WOWswap?
We have been hiring more people around the world to bring WOWswap to the masses. We are expanding to different markets, languages and regions, hoping that our mission will resonate to many people who are strong believers in DeFi.
Finally, what are your main plans for the future ahead?
Since we launched WOWswap a year ago, the market has changed dramatically. One of the biggest changes is the emergence of NFTs, GameFi, and growth of the metaverse.
DeFi is the epicentre of this new crypto ecosystem, and we will be bringing more functionalities, such as NFTs to make trading on WOWswap more engaging and rewarding. A lot is still at the planning stage, therefore we would appreciate your ideas so, please, join our Twitter (https://twitter.com/Wowswap_io) or Medium (https://wowswap-io.medium.com/) pages as well as in our Telegram (https://t.me/wowswap) and Discord (https://discord.com/invite/H4Z4fVNnFF) community channels
