Forward and Upward: Our Vision For 2021

Ivan Poon -

It’s been an incredible decade, topped by a crazy year. Mainstream interest in Bitcoin is booming. Cryptocurrencies appear primed for mainstream adoption, and markets are exuberant.

Nevertheless, many problems in the industry remain unsolved. We feel that DeFi, constrained by their own technicalities, are confined to serving a small number of power users. Legacy blockchains are still incapable of handling greater transaction volumes, and remain costly to use. At Switcheo, we’ve already been tackling these problems for years.

Reflecting on 2020

Switcheo began 2020 with a grand vision of achieving ultimate decentralization. We wanted to build something owned by the community, for the community. To do this, we began engineering something radical: a blockchain built solely for high-performance trading. We introduced the idea of Switcheo TradeHub, our own unique sidechain that would be able to power any financial market imaginable, and also adopt the best features of DeFi and CeFi.

Then COVID-19 struck. Our work arrangements were disrupted, and plans were overturned. Some of our employees were even unable to return from overseas. Still, we banded together to launch Switcheo Cares for the community. We joined the #cryptoCOVID19 Alliance and contributed our funds to 12 nonprofits during this difficult time.

On August 12 2020, after much blood and sweat, we minted the genesis block of Switcheo Tradehub. Since then, we have steadily produced 6.7 million blocks without any interruption. As the network grows and more validators participate, our chain has become increasingly secure. To date, over 900 million SWTH has been staked across the 22 active validators.

Switcheo’s contribution to decentralization undoubtedly captured the attention of investors and media around the world. We secured a $1.2m strategic investment from DeFiance Capital and 3 Arrows Capital, and shared our vision at events like REIMAGINE 2020 and the Singapore Fintech Festival.

Beyond that, we sought to bring decentralized finance to other blockchain ecosystems. We partnered with Zilliqa  to develop ZilSwap, allowing users to trade ZIL or XSGD tokens from their wallets for the first time. Zilswap now features 30 ZRC-2 tokens, with many more to come.

All these culminated in the soft-launch of Demex in December, our reference user interface that showcases the power of Switcheo TradeHub.

With the release of the AMM feature, Switcheo TradeHub quickly saw $10M locked up in it’s liquidity pools. Trading volume is growing day by day, hitting almost 1 million USD at its peak. That’s remarkable traction for our initial 9 spot markets. We expect traction to grow in 2021 with the launch of our futures markets. We also envision spot trading volumes to continue blooming if we can together also achieve the self-reinforcing effect many DeFi protocols are now experiencing - a stronger token price will lead to higher LP incentives and TLV, and finally trading volume due to higher liquidity and more arbitrage; This in turn reinforces the value of the protocol token. This year, we’ll like to explore more ideas with you to make this happen.

You brought us here.

The greatest heroes of the past year have undoubtedly been our community. The Switcheo Team appreciates every conversation, argument, and show of support we’ve had through times good and bad. In such a governance model, disagreement is normal — it is the aggregation of differing opinions that allows a decentralized ecosystem to survive, adapt, and thrive.

In September, we issued a call to action for people to start building projects. Many have responded with amazing initiatives. Some of these include, but are not limited to:

Just a few days back, the proposal to build an SWTH airdrop system, which received an SDF grant worth 100K SWTH, was passed. We are so excited to see what our community will build next!

Building Better this 2021

For Switcheo, this year is all about delivering our pièce de résistance, our final masterpiece. To do this, we have classified our objectives for 2021 into 4 distinct themes.

1. Improving Our Baseline

In the first month of this year, we ironed out issues on Switcheo TradeHub and polished the trading experience on Demex. We’ve activated Bitcoin and Ethereum price oracles in preparation for trading of futures. However, we, along with other validators have noticed creeping performance issues within the blockchain. Switcheo’s engineers have been on top of this, and the v1.12 release is now being tested. The upgrade will contain a significant performance boost to bring our blocktimes in line with our expectations. This release will also contain the promised AMM-CLOB quoting improvements, using locked liquidity to the fullest extent.

We’ve also been spending significant development effort in preparing for the Cosmos SDK  Stargate upgrade. The upgrade is a key requirement for Inter Blockchain Communication (IBC) support, and will also bring speed improvements to trading on Switcheo TradeHub. On top of that, we’re preparing to open source the codebase for Switcheo TradeHub and Demex. We hope to complete that by the end February, as it is a key aspect of our ecosystem strategy later in the year, as explained further below.

Transactions on Switcheo TradeHub now already eclipse that of our legacy smart contracts, and we need to give a better signal to the world regarding how the Switcheo ecosystem is performing. As such, we want to quickly sunset Switcheo Exchange and instead direct attention to Switcheo TradeHub and Demex. This should encourage a more accurate view on the value of the Switcheo Token. We’ll share a sunsetting / migration plan in the next few weeks.

The next major features we are developing for Switcheo TradeHub is allowing cross-margin trading (rather than only isolated margin), and allowing the use of assets other than the settlement currency as collateral in our derivatives markets. Combined with our CLOB + LP/AMM model, these two features will make Switcheo TradeHub the most advanced trading protocol in existence.

2. Taking Off for Global Adoption  

Once we have a solid baseline for derivative and spot trading, Switcheo TradeHub needs to focus on capturing the attention of traders.

On the user-facing end, we’ll be focusing our efforts on building up the shareability of Switcheo through our reference UI (Demex) and Switcheo TradeScan. We’re looking to include gamification mechanisms such as direct-to-twitter sharing of an account’s orders, positions and portfolios. Other supporting features such as leaderboards within Demex are already in the works.

We also realised that the creation of tokens & markets through Switcheo TradeHub may be too complex for non-power users. We’re looking to build (or commission) a simplified interface that lets the everyday user submit proposals, create markets, and bootstrap liquidity with ease. Our vision for Switcheo is to allow the community to rapidly list markets and tokens that may have extrinsic value, by acting as prediction markets, or by improving capital allocation.

Protocol-wise, we want trade mining to be a mechanism the community can elect to use. We’ve also forged a way to allow referral schemes to work even in a fully decentralized protocol such as ours. This will be launched as part of our self-hosted UI scheme (more later).

As IBC support is completed, more partnerships and integrations are possible. This allows us to quickly support the latest and hottest tokens from Cosmos-based chains, as well as accept incoming liquidity from other cross-chain gateways such as Thorchain.

In this phase, we’ll finally unveil the world’s first decentralized insurance fund that is incentivized to maintain its optimal size, rewarding first movers that take the downside risk. We foresee that this will capture the attention of both DeFi enthusiasts and everyday traders around the world!

3. Attaining Financial Sophistication

The final thrust for Switcheo this year will be bringing our protocol to a new level of sophistication, where it can represent a fully featured and complete financial ecosystem. As we are in a rapidly developing space, this is certain to change based on new findings, market dynamics, and of course, the direction charted by you, our community.

The most important protocol features we’re looking at as of now are:

  • Wrapped bonded tokens (allowing trading / collateralization of bonded SWTH, etc.)
  • More market types / instruments:
    • Options
    • Binary options
    • Leveraged spot markets
    • Physically settled markets
    • Tokenized stocks
  • More BTC gateways
  • Collateralized debt positions
  • Advanced order types (brackets, OCO, etc.)

4. Complete Decentralization

Switcheo Exchange Pte Ltd is a registered corporate entity in Singapore. True decentralization cannot occur if products are owned by any centralized institution. Hence, as Switcheo TradeHub and Demex become fully decentralized, Switcheo Exchange will be retired. In its place, we envision it being replaced by a community-built-and-hosted swap-based exchange powered by Switcheo TradeHub and targeted at everyday users, that is simpler and quicker to use than Demex. Work on this can begin when all code is open-sourced, but interested developers may reach out to begin discussions!

The company will then transition from being an exchange provider to a protocol and software development entity, rebranded as Switcheo Labs. This entity will continue work on maintaining the open-source codebase for Switcheo TradeHub. Switcheo Foundation will continue to guide the community to achieve vision of the protocol as a neutral advisor.

The ownership, hosting, and development of Demex must also be decentralized to the fullest extent. This means on top of Switcheo TradeHub nodes, our front-end user interface will also require community involvement.

We will first revisit the SDF and encourage the community to commission the development of purpose-built trading wallets for Switcheo TradeHub. With trusted wallets that both power users and newcomers alike can use, we can safely decentralize the UI by incentivizing the replication and hosting of API nodes and the Demex “dApp” on IPFS.

Just like in 2020, the Switcheo community must move as one in 2021. Not all of our ideas above can be developed solely by our small team of 20. As such we will need you.

Community developers can apply for grants via the Switcheo Development Fund. Formal governance proposals can also be issued to tweak Switcheo TradeHub’s protocol parameters.

Suggestions, ideas and features that can better Demex can be posted on the Demex Ideas Board, can be commissioned through the SDF by the community, or may be picked up by Switcheo Labs.

Going forward, we are certain that this is the best way for the ecosystem to thrive - by operating in a truly decentralized, censorship-resistant manner. With a power-packed protocol and a passionate and participative community, Switcheo will finally be unstoppable.

Forward and Upward

Once again, the team thanks all active participants in our ecosystem for bringing us to where we are today. The true test of our journey still lies ahead, and each of you are part of that test. Blockchain projects rise and fall on the strength of their communities. Every validator, developer, and delegator must play a part in bringing Switcheo to greater heights. This 2021, we will go forward, together.