Futureswap

Futureswap is a decentralized non-custodial perpetual protocol that combines an Automated Market Maker (AMM) with funding rate payments offering up to 30x leverage.^[1] In January 2021, Futureswap announced the launch of its Version 2.^[2]^[3]

FutureSwap is built on Arbitrum and Avalanche, Its decentralized leverage trading exchange focuses on being the best execution environment for trades. Futureswap is the premiere protocol for professional perpetual traders, liquidity providers seeking high-yield opportunities, and developers motivated to build innovative dapps.^[21]^[22]

Overview

Futureswap is a decentralized, AMM-based protocol enabling high leverage and capital-efficient trading. As a user-governed protocol and DEX, Futureswap is completely permissionless and composable, highly capital-efficient, and aims to offer best-in-class price execution.

Futureswap went live on Ethereum in April 2020. By the end of the first day, trade volume hit $2.1 million with over $500,000 of liquidity. Within three days, Futureswap’s 24-hour trading volume grew to $7.1 million and liquidity passed $1 million.^[4] At that time, Futureswap offered traders the ability to trade with up to 20x leverage and no slippage on any Ethereum-based asset, starting with an ETH–DAI trading pair.^[5]

A security audit for Futureswap was performed by OpenZeppelin.^[6]

In March 2020, before the Futureswap launch, Framework Ventures revealed that it had invested $400,000 in Futureswap. Framework Ventures confirmed that it would be offering liquidity to the Futureswap platform by adding digital assets to the initial liquidity pools.^[7]

In January 2021, Futureswap announced the launch of its V2 beta. V2 of Futureswap provides live pricing, more performant trading, and higher capital efficiency. Core features such as automated market maker style liquidity providing, incentivized usage, and community governance remain mostly unchanged.^[8] Derek Alia, the co-founder of Futureswap, explained the idea in an interview with CoinTelegraph:

“When you think of AMM people think of the constant-product like Uniswap. The main difference with ours is we took the AMM and didn't use the same formula. We designed it around the thesis that large trades should not be penalized for being large trades, which then will create a better ecosystem for what we call whale traders or massive arbitrageurs.”^[9]

Version 2 of the platform features a unique oracle design that allows increasing capital efficiency for large trades. Futureswap’s oracles are unique in that they allow capturing the small price fluctuations between two Ethereum blocks, which are spaced out by 15 seconds. It’s a similar mechanism to meta-transactions that allow others to pay for someone’s gas fee. With Futureswap trades, users will embed the oracle price data that they used to create that transaction, and the system guarantees that the value was valid when the transaction was created. By using the oracle price as an anchor, the platform can use much more aggressive bonding curves with lower slippage. ^[10]

Like other AMMs, Futureswap also has passive liquidity providers who receive a fee for each trade going through the platform. Traders interact with these liquidity pools, with the ability to enter both long and short positions with up to 10x leverage. ^[11]

Oracle Relayer Network (ORN)

One of the most notable improvements of Futureswap V2 is Oracle Relayer Network (ORN). This enables instant pricing and a real-time trading experience. The ORN can be thought of as a mesh between a price oracle and a meta transaction processor node. The ORN takes in a signed message, verifies that the message is valid, and puts the transaction on-chain with the current asset price.^[12]

To give users full control and ensure accurate and secure prices, the bounds for a trade’s price are set by the user. A transaction will fail if the ORN price is outside of these bounds. ^[13]

The ORN is being audited by Trail of Bits. ^[14]

FST Token

FST is Futureswap’s non-transferable governance token. Traders, liquidity providers, and referrers are rewarded in the system by receiving FST on weekly periods. The release schedule is subject to change by a community vote but currently, there is 108,000 FST issuable per week. To earn FST as a Liquidity Provider a user needs to be in before the week starts and still in after the weekends. FST is split up among network participants by participating volume: 65% for traders, 30% for liquidity providers, and 5% for referrals. ^[15]

Token Distribution

Futureswap Tokens will be distributed to four groups: Users, Developers, Investors, and Team. Futureswap has three core user groups: Traders, Liquidity Providers, and Referrers. ^[16]

30 million FST (30% of the total) will be allocated to the users of Futureswap to ensure they have a strong voice in governance. User incentives are issued over 3 years with an initial front load (as voted in by the community) in the initial weeks after launch. FST holders can vote to adjust the incentive distribution schedule, exchange weighting, and action weighting. ^[17]

A development fund will be issued tokens over 9 years to allocate voting power to groups/individuals who bring value to the Futureswap platform. There are a total of 18 million FST (18% of the total) reserved for the development fund. The fund will be controlled by token holders. There are many purposes for a development fund, but since FST is non-transferable the development fund acts to give more of a voice to those who receive grants.^[18]

34 million FST (34.4% of total) is reserved for current and future core team members which vest over 3 years. This will ensure that the team actively developing Futureswap will have a voice in its governance and can continue to drive important additions to the platform.^[19]

Investors hold 12.58 million FST (12.58% of total) with a 3-year vesting schedule, which started April 20, 2020. Futureswap reserved an additional 5 million FST (5% of the total) for a future round if needed. To attract investors with a long-term mindset all investors without exclusion have a 3-year vesting period. ^[20]

Trade Fees

Futureswap charges a configurable 0.05% trade fee. There is also a 0.05% Uniswap v3 trade fee that is factored into the execution price. The total trade fee combined will be just under 0.1% due to the ordering of when they are charged.^[23]