The burgeoning DeFi space has garnered significant attention over the last few months. Let’s dive into one of the most popular platforms in the decentralized finance world that’s been making quite a buzz. Yes, we’re talking about JustSwap.
Since its launch in 2018, Tron has counted many milestones. Tron is a blockchain-based smart contract platform for driving decentralized applications [DApps], as well as competing with its rivals such as Ethereum, Tezos, Cardano, and EOS. In its newest venture, the Tron ecosystem has jumped into the DeFi bandwagon and rolled out a decentralized trading protocol – Just Swap.
JustSwap is based on Tron for automated liquidity provision, which happens to be an open financial market accessible to all. It is also the first exchange protocol on Tron for exchanges between TRC20 tokens. Here, the conversion between two TRC20 tokens can seamlessly happen based on the price determined by the system. With the primary focus being decentralization, the trading fees collected are directed to the Liquidity Providers as a protocol incentive.
How is the price determined?
It is the number of tokens in each pool that determines the price.
The smart contract maintains a constant function: x*y=k, in which x = token1, y = token2, k = a constant number. With each swap, some of the tokens get replaced with a certain number of the other token. Since ‘k’ remains unchanged, balances of the tokens will be updated accordingly, which leads to changes in prices.
How can users access JustSwap?
Users can enter JustSwap through APP following which they will be connected to their current TronLink account. There is no need to register an account for using JustSwap. Users can use a decentralized wallet to log in and access JustSwap. Currently, the protocol supports TronLink.
How to Swap?
For the purpose of swapping, the users need to click on ‘Swap‘ on the top left of the navigation bar. Users can choose the token they hold and the token they want to swap it for. All that needs to be done is for the user to enter the amount of tokens that the user wants to sell. The system will then automatically calculate the estimated amount of the corresponding token by its price.
Slippage and Deadline can be set on “Advanced Setting“. In the case of Slippage, a transaction will revert if the price changes unfavorably by more than the percentage the user sets. Transactions that are kept pending beyond the set Deadline will be voided. Users can then confirm the details of the swap in the confirmation window by clicking “Confirm Swap”.
The swap requires confirmation from the user wallet and hence by clicking “Accept” in the “Request Signature” pop up window. Once a confirmation message stating “Confirmed” appears on the upper right corner of the page, the swap is completed.
Conversion between two TRC20 tokens and between TRX and TRC20 token is currently supported.
How to Add/ Remove Liquidity on JustSwap
Anyone who deposits two TRC20 tokens into the liquidity pool within a pair can be a liquidity provider. If a user happens to be the first liquidity provider then the ratio of the tokens that the user adds will set the price of the pool. If a user wishes to provide liquidity for a trading pair that already exists, then an equivalent value of two TRC20 tokens needs to be added into the liquidity pool within a pair.
By adding liquidity, users can earn pool token representing their position. These tokens automatically earn fees proportional to the user’s share of the pool and can be redeemed at any given point in time.
A user can choose a fund pool and click “Add Liquidity“, or choose the liquidity that the user has already added from Pool ->Your Liquidity and click on “Add”. Two tokens need to be selected and one of them has to be TRX. After entering the funds that the user wishes to add, the system will add the corresponding amount of the other token based on the relative price of the token pair in that pool. Once this step is done, the user can click “Supply”.
In the confirmation window, the user needs to click “Confirm to supply“. Similar to the last steps of Swapping which requires confirmation from your wallet, the user has to click “Accept” in the “Request Signature” pop-up window in the case of adding liquidity as well. The pop-up box will then show that the transaction for adding liquidity has been submitted.
When removing pool tokens, the user’s position will be converted back to the current price of the underlying asset based on the pool share. The amount received by the user will already include transaction fees. When a user adds liquidity, pool tokens are given which essentially represents its position. Pool tokens are based on the user’s percentage out of the total pool. When the user removes liquidity, pool tokens convert the position back into underlying tokens at the current price.
For this, a user needs to select “Pool“, then click “Your Liquidity” and then after finding the trading pair pool that needs to be removed from the liquidity pool, then select “Remove”. After the user chooses the amount of liquidity that needs to be removed, the confirmation steps can be executed in a similar manner as stated above.
Uniswap Vs JustSwap
Ethereum has been one of the largest contenders in the current DeFi race. For the most part, it was Uniswap that has been stealing the DeFi swap protocols. But the concerted push by Tron Foundation to bolster its DeFi initiatives came with the launch of JustSwap, TRON’s alternative to Ethereum’s success Uniswap.
The Tron-affiliated platform recently emerged as the second-largest DEX on CoinGecko’s website.
JustSwap enables swap and trading between TRC-20 tokens contrary to Uniswap that is between ERC-20. In addition, as mentioned above, the trading fee on the platform goes back to the liquidity providers, unlike Uniswap that shares the fees between the liquidity providers and the protocol.
Anyone to create trading pairs and provide liquidity without paying any listing fee among other features such as simple user interface. Interestingly, the launch of JustSwap comes at a time when Ethereum gas fees have skyrocketed due to the DeFi boom on the network. Tron’s DeFi protocol is expected to offer competitive fees which may be significantly lower than the current ETH gas fees.