Terranova Picks: Smoothy, Fixing the DEX Cost Problem

Leila Stein
·3 min read

Although stablecoins were already seeing strength before the decentralized finance season, they came to be seen as an investment highlight during the boom of DeFi.

After all, it was precisely in this area that stable assets started to make profits for their holders. As a result of Ethereum being the main token creation blockchain in the market, most of these assets are in its network.

Undoubtedly, the stablecoin market will continue to grow. However, for a decentralized exchange today, the DEX project did not fully consider the parity of the tokens.

As a result of the lapse, DEX users experience unnecessarily high costs. Therefore, the market needs a well-designed product in this area. For that purpose, Smoothy has emerged.

Get to know Smoothy

Smoothy is an exchange solution for assets backed by the same underlying asset, for example, stablecoins. Smoothy uses only one pool consisting of a set of interoperable protocol smart contracts deployed on Ethereum-compatible blockchains.

The platform solves the problems of the existing protocols by offering a pool to exchange all tokens backed by real-world assets, such as USDT and USDC.

Smoothy implements a simple and efficient swap that supports a long list of assets in the pool. For each token in the pool, it has two swap parameters:

  • Soft weight – the highest percentage of the token until it becomes unbalanced (imposing penalty)

  • Hard weight – the percentage of a token should never exceed, which should be equal to or greater than soft weight.

One of the great rivals of the Smoothy platform is Curve.fi, which to calculate the number of tokens returned, needs to calculate the invariant together using the percentage data of all tokens. As a result, Curve.fi presents more gas rates in data and computing.

These factors are not seen in Smoothy, as it uses soft/hard weights and a bonding curve. This makes the protocol save computational costs since the exchange of two tokens will only need to perform calculations on two tokens, including the penalty.

In addition, the gas cost of the swapping will not increase as the token list in the pool grow longer.

Smoothy Key Features

  • Simple and smooth swap

  • Extremely low gas fee

  • Flexibility to add/remove any tokens backed by the same asset into the pool

  • Better liquidity/lower slippage

  • Better LP token incentives

SMTY Token Functionality

The native digital cryptographically-secured utility token of Smoothy (SMTY) is a transferable representation of attributed functions specified in the protocol/code of Smoothy. It is designed to be used solely as an interoperable utility token on the network.

SMTY is a non-refundable functional utility token. It is the economic incentive that encourages users to contribute and maintain the ecosystem on Smoothy. Thereby creating a win-win system where every participant receives fair compensation for their efforts.

Token Utility

Governance token of SMTY:

  • Voting on increasing soft weight of a stablecoin.

  • Voting to add new stablecoins and for providing collateral to LPs.

  • Governance voting for swap fee (collected by LPs with initial value 0.04%) and withdraw fee (buyback SMTY with initial value 0.04%).

  • The incentive of the bootstrapping of asset liquidity via liquidity mining.

Smoothy identified a concern for DEX users and addressed it. By considering the parity of tokens, the platform aims to relieve the pain points and make using their exchange a viable option.