Geneva, Switzerland, February 10th, 2024, Chainwire
In the dynamic landscape of cryptocurrency transactions, Rabbit Swap introduces a novel swap approach aimed at enhancing the efficiency and potential benefits of cross-chain swaps for users.
At the heart of Rabbit Swap's strategy is its commitment to managing a vast network of liquidity sources. This approach guarantees the most competitive swap rates based on selected pairs and amounts and eliminates swap limits altogether.
Solving the Liquidity Challenge for Crypto Exchanges
The main challenge for most crypto exchanges lies in finding and managing liquidity so that each time somebody wants to swap some asset, the exchanger should be able to buy it for another asset and preferably cover all possible amounts – from very small to very large.
Crypto developers have three possible liquidity sources:
- Maintaining its own or third-party centralized liquidity;
- Relying on traditional trading platforms' APIs;
- Developing a decentralized algorithm that allows the community to provide their liquidity.
Each method has its pros and cons.
Maintaining its own or third-party centralized liquidity involves developing an advanced Automated Market Maker (AMM) system. Traditional trading platforms rely on a classic order book model, where buy and sell orders are matched based on price and time. In contrast, AMMs automate the process, using algorithms to set prices in a liquidity pool, eliminating the need for order books. This model facilitates continuous and automatic rebalancing of asset ratios, ensuring liquidity even without direct buyers and sellers.
Relying on traditional trading platforms' APIs compromises the variety of available swap pairs. While finding platforms that support mainstream pairs like BTC/USDT is straightforward, the real challenge comes with less common pairs such as SHIB/DOGE.
Creating a decentralized algorithm enabling community members to contribute their liquidity is attractive. It's decentralized, driven by community engagement, and offers mutual benefits. However, the complexity lies in crafting an algorithm sophisticated enough to balance all assets securely and equitably. A significant hurdle is incorporating highly volatile assets, as their inherent unpredictability makes it difficult to offset volatility with swapping fees alone.
To address every possible need, ensure limitless swaps, and maintain the most competitive rates, the Rabbit team has designed a solution that combines various methods into one seamless and user-friendly service. By inputting a swap pair and amount, Rabbit Swap instantly calculates the best option for the swap, similar to how Google Maps determines the most efficient route. It selects the ideal liquidity source for each swap, guaranteeing users the best rates available. Although the project is currently in an early stage, offering around 50 assets for swapping, it will add over 3000 assets in the coming weeks.
Rabbit.io, the open-source, self-custodial Rabbit Wallet developer, advocates for reducing reliance on centralized exchanges and traditional financial systems. Through Rabbit Swap, Rabbit.io is committed to facilitating seamless integration between the evolving cryptocurrency sector and established financial practices. This initiative allows users to conduct transactions, including purchases, sales, and swaps of cryptocurrency, with full control retained within secure, self-custodial wallets, marking a step towards a more open and decentralized financial future.