KuCoin AMA With Liquidswap (LSD) — The First AMM Platform for Enhancing Decentralized Token Swap Efficiency

Dear KuCoin Users,

Time: July 25, 2024, 01:00 PM - 02:11 PM (UTC)

KuCoin hosted an AMA (Ask-Me-Anything) session featuring the CGO at Liquidswap, Alejo Pinto, in the KuCoin Exchange Group.

Official Website: https://liquidswap.com/#/
Whitepaper: https://docs.liquidswap.com/

Follow Liquidswap on X, Telegram and Discord

Q: Which other projects and tokens were you inspired by when developing LSD?

Alejo: Our major inspiration were the bluechip DeFi protocols on Ethereum. We looked to protocols such as Uniswap, Curve, AAVE, and MKR, as they have not pioneered the space but also made many mistakes that we can avoid. We are grateful to build on the shoulders of giants to implement iterative improvements over existing models. For example, we are excited to implement voting escrow (ve) in novel ways to push the space forward in this area of active research which is game theory using token dynamics.

What gets implemented will ultimately be up to the DAO of LSD token holders However, we like to propose, for instance, non-linear time decay for voting.

The standard for CRV, Velodrome, and similar plarforms is linear voting power decay (a 2-year lock provides 2x voting power compared to a 1-year lock).

We want to experiment with different curves, potentially even tying it to an oracle for price variability. These are the innovations we aim to pioneer and phase out slowly in order to maintain stability and security for the protocol.

We are excited to do this together with the community!

Q: How will the community be incentivized to hold LSD and participate in governance?

Alejo: The community will be incentivized not only through staking rewards but also by having voting power over the treasury of accrued fees held by the Liquidswap protocol. With over $1 billion in total trading volume just on Aptos, Liquidswap is building a healthy fee treasury.

As Liquidswap continues to expand to other Move ecosystem projects, such as Movement, Initia and Lumio, we expect the trading volume to continue to grow and for Liquidswap to be able to go up against incumbents like Uniswap.

The incentivization model will thus be similar to existing Uniswap and Curve.

Q: How has the community responded to LSD so far?

Alejo: So far we've received very positive responses from the community.

Liquidswap is one of the most, if not the most anticipated launch in the Move ecosystem date.

As we released our announcements, the community actively engaged with us, providing valuable feedback on how we could improve components like the airdrop distribution. We have taken this feedback to heart and are implementing the suggested changes.

It was encouraging to see so many intelligent and thoughtful responses from the community about why we should implement certain features and avoid others. This gives me confidence the community will remain strong over the long term, implementing decisions together.

Q: Why does Pontem feel it’s important to further decentralize Liquidswap and introduce community governance?

Alejo: The reason we are building— and in my opinion, why everyone should be building— is to follow in Satoshi's footsteps.

Their vision is to have a money protocol that can't be controlled or taken down by any single individual or entity including large state actors like governments.

The goal is sovereignty and freedom for money.

Decentralizing the protocol through a governance token that sets parameters and influences the development is a step in this direction. However, there is a lot of decentralization posturing projects claiming to be decentralized but not truly achieving it. Over time, only those that are the most decentralized will stand the test of time.

Decentralization is a spectrum, and navigating through that spectrum should occur gradually and safely. There are risks such, as governance attacks or the inclusion of malicious code in protocol upgrades. Mechanisms like security councils, vetoes, and auditor attestations, are good practices when implementing decentralized autonomous protocols.

Over time, we will see these practices get perfected and I believe that the future is bright for DAOs. Theoretically, they have the potential to scale beyond existing centralized organizations.

Ask yourself, what is more scalable: Coinbase, FTX, Binance etc., or an AMM like Uniswap, Liquidswap, or Curve. The one with less dependencies and intermediaries can probably grow more over time. Current challenges are technological, I'm confident that smart people are working on these and they will eventually resolve them.

Q: What governance initiatives can LSD holders expect to participate in?

Alejo: LSD holders will be able to vote on setting protocol parameters including fees, pools, whitelisting assets, farm, and staking emissions. They will also be able to influence developments such as new smart contracts that can be integrated into the existing Liquidswap protocol.

A community treasury is also available for distributing grants and other initiatives, and we expect this process to be done democratically through the DAO. We also encourage creative uses of the governance layer, inviting open proposals from the community. It means that the community members can submit proposals for the entire community to vote on and go after.

Q: What type of activities were early adopters rewarded for at TGE?

Alejo: Early users of the platform who traded or added liquidity will be rewarded with an initial airdrop. Other qualifications include having Pontem NFTs, community meme coins, being a product tester or ambassador, and participating in the Lumio testnet. We will soon share a detailed post outlining all airdrop qualifications and provide a page where users can check how many tokens are eligible to claim.

Q: Why was this the right moment for Liquidswap to launch a community token?

Alejo: The Liquidswap protocol has been live for almost two years and has found product-market fit with a growing user community. We believe after this product market fit, it is a good time to further decentralize it with a token. With the recent broad adoption of Bitcoin and cryptocurrencie, it is a good time to launch the community token.

Q: What other developments can we look forward to with Liquidswap?

Alejo: On the horizon, you can expect:

1. Staking for the coin: This will go live with the governance proposals for voting.

2. Expansion into the broader Move ecosystem: We plan to deploy on platforms such as Movement, Lumio, Initia, and others as the ecosystem continues to grow.

3. Future upgrades to the protocol: These will aim to enhance the AMM user experience. We believe the incumbents like Uniswap can be disrupted

Q: How does Liquidswap's formal verification process ensure the security and integrity of the platform?

Alejo: Liquidswap is natively built with Move. The Move VM has embedded a prover for formal verification of code, such as the math of trading pools.

This provides the Liquidswap protocol with an added layer of security compared to other AMMs built with EVM or different VMs.

You can check the formal verification specs in our documentation.

Q: Each project has an inspiring story behind its creation. Could you share the story or experiences that motivated you to build and develop a groundbreaking project like yours?

Alejo: The Pontem team has been working with the Move VM for several years, even before Aptos and Sui. This extensive experience makes us well positioned to grow and dominate the Move ecosystem. Our deep expertise will propel us forward as we continue to develop Liquidswap and other Move VM products.

Q: Who is the ideal consumer of your product, and how have you incorporated community feedback and requests into the development process of Liquidswap? Failing to understand the target audience and clients can often lead to project failures.

Alejo: We aim to reach not only crypto-native users, but also a broader audience. In order for us to achieve this, we are researching how to simplify the UI of the product and making private key management more user-friendly.

Q: Back in the days when you were preparing to launch on Polkadot, there was a referral campaign that brought in many early users. Will the referral campaign from the parachains be honored?

Alejo: The node runners for Polkadot are included in the airdrop. We can take a look at this referral campaign as well for future rewards. It might be too late to include these users in this one.

Q: Does Lumio have any plans to connect with other VMs besides SVM, MoveVM, and EVM in the future?

Alejo: Lumio is built as a platform-agnostic to the specific VM. Either the Lumio team and the community have the capability to integrate new VMs, such as WASM and the others.

Currently, Move, EVM, and SVM are among the most popular ones. With Liquidswap deployed on Lumio, it means that it can interoperate with SVM and EVM protocols wherever Lumio is used.

🎁 Participate in the Liquidswap AMA quiz now for a chance to win $10 in LSD.

The form will remain open for five days from publishing this AMA recap.

KuCoin and Liquidswap have prepared a total of $2,000 in LSD to give away to AMA participants.

1. Pre-AMA activity: $800 in LSD

2. Free-ask section: $50 in LSD

3. Flash mini-game: $400 in LSD

4. Post-AMA quiz: $750 in LSD

Sign up for a KuCoin account if you haven’t done so yet, and ensure you complete your KYC verification to be eligible for the rewards.

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