Switcheo, a Singapore-based decentralized exchange that offers trading markets on the NEO, Ethereum, and EOS blockchains, recently released details of its upcoming standalone blockchain, Switcheo Chain. Key new design features for the Switcheo Chain include a token staking model to distribute revenue and a Tendermint consensus algorithm. Tendermint has been described as a “Byzantine Fault Tolerance-based Proof of Stake” consensus mechanism.
Switcheo Chain is designed as an “order-matching side-chain” with a primary purpose of moving the Switcheo Exchange matching engine away from a centralized server, and onto its more decentralized network of validating nodes. However, Switcheo’s markets and orders will still be hosted and filled directly in the smart contracts of the main chains (NEO, ETH, and EOS).
After looking back at the performance of its current token-burning (deflationary) economic model, Switcheo announced certain specifications of its upcoming Switcheo Chain, and explained the reasoning behind some of its design decisions.
One of the most important decisions is the move to a standalone blockchain, previously covered by NEO News Today in September 2018; at the time, Switcheo concluded that a specialized blockchain with a native token would be necessary for operating “a truly decentralized and trustless cross-chain exchange.” The team went on to design the upcoming Switcheo Chain with validating nodes, each of which will be required to stake Switcheo tokens as a bond. These bonded tokens can be revoked and burned if front-running trade activity or improper order matching is discovered.
Switcheo also noted that although it would prefer to keep its SWTH token on the NEO blockchain, “a token swap to the side-chain may be required” for more complete decentralization. According to Switcheo, a token swap to the standalone Switcheo Chain ensures that the validator nodes’ bonded tokens can be burned if necessary.
Switcheo also stated that its tokens will be used for “automated listings.” This functionality would allow a project seeking to list its token on Switcheo to do so by burning Switcheo Chain tokens, and depositing a liquidity pool for the trading pair, so that automated market makers can offer Uniswap-style algorithmic pricing.
Switcheo also notes that tokens burned as listing fees will maintain a deflationary component to its token economics, despite the fact that SWTH trading fees will no longer be burned.
Switcheo has announced that it is actively working on a major whitepaper update. This second version of the Switcheo whitepaper aims to offer a more complete introduction to Switcheo Chain and the Switcheo Token.
SWH to SWTH Token Swap
Finally, Switcheo announced that its May 2018 SWH to SWTH token swap will close at the end of July 2019. Ivan Poon, Switcheo CEO, noted that “the swap has already been running for more than a year,” and added, “We will have to stop allowing swaps by the end of July to ensure any potential swap to a side-chain can be done as smoothly as possible. All unclaimed tokens will be burnt.”
Switcheo Chain’s full article, “The Switcheo Token”, can be viewed at the following link: