SecretSwap Update: AMM Rewards + Governance Token
Secret's first AMM, SecretSwap, launches on mainnet February 17th. Learn more about rewards, a new native bridged governance token, and other details.
Hello to the community!
Today we’re excited to announce that SecretSwap, the first cross-chain and front-running resistant decentralized exchange, will be launched on Secret Network mainnet on February 17, 2021! SecretSwap, which uses the SNIP-20 secret token standard and Secret Ethereum bridge, creates a front-running resistant DEX for Secret Network and Ethereum assets. As our interoperability efforts around IBC and other networks mature, SecretSwap will become a cross-chain, privacy-first, front-running resistant liquidity hub.
Similar to Uniswap, SecretSwap will allow users to add liquidity and swap tokens in a decentralized manner. The advantage of SecretSwap lies in secret contracts and the SNIP-20 token standard. Since inputs to the swap contract are encrypted, no malicious actor or miner can front-run transactions waiting in the mempool at the expense of honest users. Network fees for interacting with SecretSwap are paid in SCRT (like all other secret contracts).
Launching SecretSwap is another key step in expanding the Secret DeFi universe, solidifying Secret Network’s position as a data privacy hub for all public blockchains and a critical piece of a decentralized global liquidity infrastructure. It joins other essential products like Secret Auctions, the first and only crypto auction platform with privacy by default that can also facilitate trust-minimized OTC.
This blog post includes some important new proposed details for SecretSwap, including more details on AMM rewards and a bridged governance token between Ethereum and Secret. Please note that everything below is subject to final changes and currently open to community feedback.
SecretSwap will be a community-led initiative, governed by a new native token on both Ethereum and Secret Network (currently referred to as GOV for the purposes of this post, but this naming will be changed). While the final details of this token are still in flux and any final spec dependent on community feedback, we are excited to share its main properties for the first time. This token will be distributed as a fair launch and have a tight connection with SCRT and Secret Network. Below we will share some details on GOV distribution as well as the initial proposed governance structure of SecretSwap.
In the spirit of shipping fast and iterating, SecretSwap will first be deployed without the governance token active. This will begin a mainnet testing period for the AMM. The GOV token is expected to be added to SecretSwap before the end of Q1 2021 (with a specific date to be announced in the future). LPs and traders who are active on SecretSwap before the launch of the GOV token are expected to be eligible for the initial distribution based on this activity.
Transaction fees on SecretSwap will be 0.3%. Inspired by SushiSwap, and pending a governance vote by GOV holders, the SecretSwap protocol can allocate 0.05% of the fees to purchase SCRT, helping to contribute to the security of the underlying network (Secret Network itself). The remaining 0.25% fee will be distributed to all liquidity providers for the pool.
GOV Token Details
There will be three main ways to earn GOV: launch distribution, rewards for liquidity providers and traders, and rewards for GOV stakers.
The GOV token will initially be distributed on both Ethereum and Secret Network. This also means that GOV will be included to the Secret Network Ethereum bridge and can be moved across the two networks. Initial distribution is expected to be as follows:
- Ethereum distribution (WGOV): ERC-20 GOV token will be distributed to Secret Ethereum Bridge liquidity providers for different assets and users of certain Ethereum DeFi platforms.
- Secret Network distribution (GOV): SNIP-20 GOV will be distributed to SCRT stakers / delegators and all users of SecretSwap before the launch of GOV tokens.
Usage based rewards
GOV will be distributed over 5 years to users of SecretSwap, mainly liquidity providers and traders. GOV will only be distributed to certain pools of SecretSwap and these pools will be subject to governance decisions.
- TVL based GOV rewards: GOV rewards allocated for TVL based contributions will be distributed each block based on the respective sizes of each pool. Different pools will have different weights and the rewards will be distributed according to these weights. i.e. if PoolA has weight 2 and PoolB has weight 1, PoolA will receive 2x GOV assuming both pools have the same TVL.
- Trading based GOV rewards: Since trading volume is an important metric for SecretSwap, we are introducing the concept of a Cashback Token. Users earn cashback tokens for trading on certain high impact pools. Cashback Tokens received from trading activity will later be redeemable for GOV tokens.
Governance based rewards
As a fairly-distributed governance token, the GOV token is planned to be used to govern the SecretSwap protocol, and potentially expand into governing other aspects of the cross-chain Secret DeFi ecosystem. In order to participate in governance, GOV holders will need to stake their GOV tokens. Staking tokens and actively participating in governance will unlock additional portions of the GOV token distribution.
To summarize the above, we expect the following groups to be the primary groups eligible to receive GOV when it is launched:
- SecretSwap LPs and traders
- SCRT stakers and delegators
- Users of Secret Bridges
- Users of certain Ethereum DeFi platforms
These may not be the only ways to become eligible for receiving GOV, so please stay tuned for further announcements and incentives!
One more note: we've previously announced that up to 2 million SCRT has been made available to resource and secure the launch of Secret DeFi. To date, we've only allocated 500,000 SCRT of this amount, primarily towards bridge mining rewards.
In addition to everything already mentioned above with respect to the launch of governance tokens, you can expect to see more announcements as to how these remaining SCRT rewards will be allocated. Keep an eye on the Secret Blog...
Interested in other opportunities to earn SCRT? Check out our recently announced Grant Program!
Onwards and upwards!
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