Please describe your proposed solution.
MultiSwap is a smart routing multi-chain aggregator and cross-chain swapping platform that solves the problem of fragmented liquidity by routing fractionalized transactions toward optimal arbitrage opportunities across multiple DEXs.
<u>Problems with the existing infrastructure and why MultiSwap is needed</u>
MultiSwap does not utilize a “lock/burn and mint” protocol. These are the most commonly used mechanisms in the space currently to bridge or swap assets across networks. These types of protocols are also the same ones that have been the targets for many of the cross-chain exploits that have plagued the industry in recent months. By removing the ‘lock/burn and mint’ mechanism involved in standard bridges and reinventing the architecture behind the way assets are bridged, our objective is to improve the security, efficiency, efficacy, and experience for end users. These architectural advantages that MultiSwap provides are extremely important to understand when determining the problem that we are addressing and how it is different from existing solutions.
<u>Benefits of MultiSwap</u>
1.) Given the fact that Ferrum uses a 2 way bridge LP system as opposed to the aforementioned “lock/burn and mint”, our product lends itself very well to interoperability with eUTXO compatible network
2.) As a result of the aforementioned architectural advantages, projects building on Cardano would not need to worry about losing nuances embedded in their token contracts such as reflection (RFI), dividend, or burn mechanism
3.) These architectural advantages also play a major role in the security of the product. This article references the security measures taken along with a copy of the audit that passed with flying colors and high praises from the founder of Zokyo. In short, the fact that our product never has control over the token contract of any asset using the protocol, means that exploits involving upgradeable mint functions or large amounts of liquidity being held on the protocol cannot be carried out.
4.) Our 2 way bridge LP system also allows for not only cross chain bridging of Token A on Network A for Token A on Network B but also allows for the cross chain swapping of Token A on Network A for Token B on Network B. MultiSwap a multi-chain swapping protocol that uses the APIs from DEXs and taps into DEX liquidity to support the volume being transacted across the protocol. This will not only make assets on Cardano more composable but it will also encourage an immense amount of TVL and liquidity on protocols such as SundaeSwap and others.
5.) Wrapped tokens are subject to the same tax regulations as other cryptocurrencies. One of the main advantages of multi-chain infrastructure as opposed to cross-chain is the tax compliant nature of maintaining record of an asset's native state across networks. By removing the wrapper function inherent in most “burn/lock and mint” protocols, MultiSwap creates a less stressful experience for end users by reducing friction from a taxation and compliance perspective.
6.) Finally, no other interoperability protocol on the market adds utility to the token that is being bridged or swapped. With our unique "bridge swap fee" mechanism, projects who list on our aggregator can set customizable fees that are charged in their native token. Some projects choose to burn those fees thus making their asset deflationary, others choose to use it for rewards to incentivize staking or adding liquidity, others simply use it as a revenue source. These fees can be distributed via bulk multisender to as many wallets as desired.
Please describe how your proposed solution will address the Challenge that you have submitted it in.
We use an iterative and lean approach toward integration and development in general. We focus heavily on quicker deployments internally to incorporate feedback, then start detailed usability, security, functionality and reliability testing to capture any gaps in our initial approach. We quickly implement this feedback and then get the product in the hands of our customers when it passes our standards for performance and security.
Once the product is in the customer’s hands, we utilize an effective feedback loop to continuously improve our product by prioritizing the feature enhancements and bug fixes based on the priority of the feedback we are receiving.
In order to integrate with Cardano we’ll be utilizing the same principles. We will first scope out the integration, then start with a shell app version of the deployment that will explore the possibilities of the functional integration. Based on the results of this initial effort, we’ll identify high traction and demand areas to prioritize and build further into a production ready product. We will then proceed to develop and deploy the integration through our deployment cycle. Dev -> QA -> UAT -> Staging -> Launch.
We will repeat this process to integrate the rest of our product suite and future products as well.
Research and Development
TARGET MARKET
The first iteration of MultiSwap is used by a global audience who is interested in the "multi-chain future" that Vitalik speaks of. We believe that the next iteration will be used by anyone who uses decentralized protocols as it creates a seamless user experience thus effortlessly bringing value to the Stellar ecosystem.
Not only does MultiSwap appeal to end users but it appeals to projects and companies building dApps and smart contracts across a variety of sectors within the blockchain space. Any and every project can benefit immensely from MultiSwap.
REVENUE MODEL
Revenue is generated on a per swap basis. The way that Ferrum benefits from this is by adding utility to the FRM token. FRM will be used as a routing token. This will encourage projects to add liquidity to any DEX that they are live on using FRM as the paired token. This will reduce fees for their users.
On top of that, a small transaction fee will be charged, in FRM, to those who utilize the protocol. This will likely be less than 1% and will be distributed through a tax distributor to Ferrum.
If projects wish to have their own bridge pool, it will drastically reduce fees for their community. They may do so but this requires technical debt from Ferrum's side and will come with a price tag of around 20k. However, projects who deploy their own bridge pools will have the ability to share in the swap fees that occur in their token.
PRICING STRATEGY
We will go to market with the pricing structure outlined above. However, these models are subject to change iteratively after collecting and analyzing data as it pertains to volume, users, maintenance, and project clients.
For example, we originally started with a 2% transaction fee with the first iteration of MultiSwap, the Ferrum Cross Chain Token Bridge. That fee seemed to be too high for users so we reduced it to 0.5%. From that point on, usage on the bridge spiked drastically. Most of the $139 million in transacted volume occurred after this change was made. Since the launch of our first product in 2018 we have found success with the iterative approach to implementing a pricing, revenue, and feature development strategy. We closely follow the principle of the “build measure feedback” loop and realize that the first strategy may not be the right one. We are quick to adapt to change and always value data driven feedback from users.
The main goal here is to remain as the most inexpensive option for users as other multi-chain aggregators start to deploy.
SALES FORECAST
With over 200 paying B2B clients, Ferrum has had unparalleled success with our products to date. The first iteration of MultiSwap already has over a dozen dApps each of whom paid $30k to be featured on the protocol. Networks pay upwards of 300k USD to be integrated.
We anticipate transaction fees to reach well into 6 figures annually. This revenue goes toward Ferrum reserves and can be allocated to community members in the form of rewards thus increasing the utility of FRM.
Additionally, we anticipate that the revenue generated from dApps and networks to integrate will be well into 7 figures. This revenue is meant to increase the effectiveness and overall reach of MultiSwap.
INDUSTRY AND MARKET RESEARCH
As of October 2021, the Total Value Locked (TVL) in cross-chain bridging contracts exceeded 22 billion. This number was an increase of over 48% in just that month alone. Its important to note that this number is only reflective of bridges - the ability to bridge asset A on chain X for asset A on chain Y. When bridges evolve to multi-chain aggregators like MultiSwap, and the ability to swap asset A on chain X for asset B on chain Y, we anticipate the TVL of multi-chain protocols to increase dramatically when this functionality becomes reality.
Explain the total size and trends of your industry (is it growing or shrinking?), and target market (what share is realistic for you to obtain?), either through primary market research (information you gather yourself) and/or secondary market research (information from sources such as trade organizations and journals, magazines and newspapers, Census data and demographic profiles).
OPPORTUNITIES
Wrapped tokens are subject to the same tax regulations as other cryptocurrencies. While this can be one of the biggest threats to other interoperability protocols on the market one of the main opportunities for us as multi-chain infrastructure as opposed to cross-chain is the tax compliant nature of maintaining record of an asset's native state across networks. By removing the wrapper function inherent in most “burn/lock and mint” protocols, MultiSwap creates a less stressful experience for end users by reducing friction from a taxation and compliance perspective.
COMPETITION
Router Protocol - Router is one of the leading competitors when it comes to cross-chain aggregators. While their architecture isn’t as sound as Ferrum’s, they have received funding from Coinbase Ventures and other tier 1 VCs.
MultiChain - Multichain, previously AnySwap, is a pioneer in bridging technology. While they do not have swapping functionality, it seems to be on their radar. Regardless, they have a strong presence in the bridging sector that we’d like to take market share from as well.
Celr - Celr is similar to AnySwap in regards to ease of use and market share. They also have an incredible team capable of implementing multi-chain aggregation.
Rango Exchange - Rango is a project to keep an eye on. They raised just a small amount of funding but they are quite ambitious as they share the same goals of pushing beyond bridging and enabling cross-chain swapping. That being said, they do not offer eUTXO compatible support as of yet.
RESOURCES AND RELATIONSHIPS
Ferrum boasts a robust network of partners, clients and incubated projects across a wide array of sectors within the blockchain industry. These various entities make up the Ferrum Ecosystem – also known as the Iron Alliance!
Here you’ll find testimonials and a long list of high caliber projects who have been by Ferrum’s side throughout our journey.
We’ve never seen so much widespread attention being paid by all the major L1s to a single product. This alone is extremely validating that we’re on the right track to achieve Interoperability 2.0. With relationships and support from the likes of Avalanche, Polygon, Algorand, Harmony, Pocket Network, Moonriver, Casper, Shiden, Velas, Fuse and others, MultiSwap is poised to become the most interoperable protocol on the market and will surely add value to any network who decides to integrate with it.
What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?
Risks
The main risks that any interoperability protocol faces are that of security breaches. We will implement architectural and OpSec security measures to ensure the security of the protocol.
This includes: Node architecture and related infrastructure updates that can be found here. For example, the signing of withdrawals is often centralized to favor speed and security. Ferrum Network has updated our Node Signing Architecture and related Infrastructure (v2.0.0) to enable decentralized Node signing. This major update has provided additional security and reliability layers while allowing stakeholders like Cardano to run Generator and Validator nodes for withdrawals. The ability for more stakeholders to run Generator and Validator nodes brings state-of-the-art decentralization to MultiSwap. This major upgrade will be pivotal in improving MultiSwap's architectural security without compromising speed and maintaining the protocols reliability.
Another threat that Ferrum’s MultiSwap faces is somebody replicating the idea of 2 way Bridge pools as opposed to the default mechanism most prevalent in the market currently - the “Lock and Mint” protocol.