LuaSwap (SYMBOL: LUA) is a multi-chain liquidity protocol for emerging cryptocurrencies with no seed investment, founder’s fees, or pre-mining. LuaSwap is inspired by previous AMM-based swap protocols such as Uniswap and SushiSwap.^[1]
The protocol is audited by the TomoChain (TOMO) group and The Arcadia Group. It launched in late September 2020.

Protocol

LuaSwap aims to support smaller pools of emerging tokens instead of fighting for liquidity within the top liquidity pools. Furthermore, LUA’s token economics is re-designed with a vesting schedule to not only reward early adopters but also incentivize them to stay and participate in governance for a longer period of time. The protocol had a fair launch with no seed investment, founder’s fees, or pre-mine.^[2]

LUA Token

The $LUA token will be given to Liquidity Providers (LPs) to incentivize them to stay with the protocol. Holding the LUA token means holding a share in the governance of the protocol. All LUA token holders can decide the subsequent chains to implement LuaSwap on, how much LUA to distribute to LPs in the new chain, which new token projects LuaSwap should support, etc.^[3]

Token Distribution

$LUA hard-cap is at 500 million LUA. The base reward is 10 LUA per block divided across all existing LuaSwap pools. LUA farming features a short-term hyper inflationary period of 8 weeks in which block rewards have a 128 times multiplier in the first two weeks, and are halved every week afterward. 25 percent of tokens farmed in this period will be released immediately, while the 75 percent remaining will have a one year vesting period starting approximately at 17th week. The vesting period ensures token farmers have incentives to stay with the protocol over the long-term.^[4]

Hyper Inflationary Period

• Duration: The First 8 Weeks
• Block rewards have a 128 times multiplier in the first two weeks, and are halved every week afterward
• 25 percent of tokens farmed during this period will unlock immediately
• The other 75 percent are fully locked for the first 16 weeks, then unlocked LINEARLY every block (appr 393,544 LUA/day) for a 1 year period, starting at week 17.

Initial Pools

• TOMOE*-USDC
• TOMOE-USDT
• TOMOE-ETH
• LUA-USDC (x2)

LUA token holders can exercise governance immediately by voting for the next pools in LuaSwap. Subsequently, new pools will be listed approximately every 3 days after staking starts using LP tokens from Uniswap and SushiSwap pools.

TOMOE

TOMOE is an ERC-20 token hosted on the Ethereum blockchain (Contract address: 0x05d3606d5c81eb9b7b18530995ec9b29da05faba) and backed by an equal amount of native TOMO (on the TomoChain blockchain). One TOMOE is worth the same as one native TOMO at any given moment. Users can convert back and forth between TOMO and TOMOE at any time via TomoBridge.

Liquidity Migration

Farming LUA on LuaSwap will start by staking Uniswap LP tokens from our Uniswap Pools. The swapping facility will be launched approximately 4 weeks afterward. When that happens, LuaSwap will run migration contracts that migrate staked pools from Uniswap and SushiSwap to LuaSwap automatically. Users and liquidity providers won’t need to do anything if they want to stay with LuaSwap.

Treasury Fund

An additional 10% of all LUA distributions will be set aside for the LUA treasury. The LUA treasury will be spent on auditing, development, rewarding contributors, and supporting new token projects by providing liquidity to LUA/new token pool. All spending proposals will be submitted via LUA governance platform. Similar to the Uniswap’s current setup, all the trading fees (0.3% of swap values) will be shared with the pool’s liquidity providers.
Later on, governance can trigger the smart contract to impose a withdrawal fee of 0.5% or a time decaying fee on liquidity provider withdrawals and direct that revenue to LUA token holders. This proposal will reward token holders at the expense of short-term liquidity providers while keeping the fee share of loyal liquidity providers relatively stable.

Protocol Development

LuaSwap will improve with several additions planned for implementation. The first one is to port LuaSwap to other low cost, more performant public chains which will increase brand awareness, number of users, and increase the cash-flow to the protocol. The second is to work on a version of the AMM swap that can support leveraged trading which will potentially collect a larger share of fees than spot trading. The third is to improve the constant function algorithm to support new features, such as having more than a single pair of coins in one pool, or reducing impermanent losses. There are also other DeFi features beside protocol development that can be added into the LuaSwap platform. New developments and respective budgets will be proposed via the LUA governance platform. The community can decide on the development priority to fund and to be implemented in LuaSwap.

Smart Contracts

• LuaToken: The LUA token contract. Implement token emission with vesting. Built-in voting with LUA token (Compound voting module)
• MasterFarmer: Deposit LP tokens to farm LUA with new allocation points

Governance, migration and swap contracts will be implemented in the later phases.All contracts written have reasonable test coverages and subject to internal auditing. The team will continue to do more testing, and invite professional third parties to audit the codes. Issues can be reported via Telegram (software).

See also

• ZuniSwap

About LuaSwap

LuaSwap is announced to be released as an improvisation of swap protocols such as Uniswap and SushiSwap. Being different from the rest of the AMM-based swap protocols, LuaSwap focuses on helping emerging tokens by supporting liquidity pools.
LuaSwap now operates independently on both the TomoChain & Ethereum Blockchains, taking advantage of each chain’s capabilities. On the TomoChain blockchain, LuaSwap allows you to purchase tokens nearly instantly, at near-zero gas fees without network congestion.