Licensed Automated Market Making

AMM have key advantages:

  • Deploying AMMs is extremely simple: this means low complexity, low area for hacks, and low integration costs. Not to mention low gas costs.

  • AMMs are fully transparent / more secure: while centralized platforms are often opaque, AMMs benefit from full chain accountability, tamper-resistance, and customer self-reliance.

  • AMMs made liquidity provision conceivably easy: It is extremely easy to provide liquidity to AMMs with a one-click "set and forget" LP experience. This is much easier than getting active market makers to provide liquidity on an order book-based exchange.

  • AMMs create more efficient liquidity: liquidity efficiency is higher because there are fewer participants in the value chain and positive competition from competing marketplaces based on the trade-off between lower fees and less depth

There are different types of AMMs. The most popular are e.g. Uniswap, Balancer, Kyber Network and Curve Finance. We decided to base the first version of Swarm on the Balancer Protocol.

What Swarm adds

  • Increased confidence through compliance: because current DeFi and AMM transactions occur outside of licensed market activity and in the current form are not compatible for certain assets, users risk that they could incur certain liabilities or their assets could be negatively impacted as a result. For the vast majority of users, these are unintended consequences, so introducing a level of regulatory certainty into familiar AMM processes increases trust and leads to greater engagement.

  • Preserving self-custody: self-custody wallets are a key design benefit of DeFi, which alleviates concerns about centralized alternatives to misappropriation. We are committed to preserving this key design and users can transact with their wallets successfully linked to their passports.

  • Extensibility: because our comliance compatible protocol operates on the smart contract level, it can be applied to other solutions beyond AMM functionality and enables developers to build synthetic solutions on top of the protocol and assets contained therein.

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