DeFi Decrypted: QuickSwap and QUICK Explained

quickswap quick token aax

Since most blockchains, dApps, and coins in the cryptocurrency space are open-source, it is not unusual to witness multiple forks in leading projects.

From Bitcoin Cash, Bitcoin SV, and Ethereum Classic to Bitcoin Gold and Litecoin Cash, forks usually retain the majority of the original project’s source code, which developers combine with their own modifications and additions to tailor the solutions to their own needs.

In addition to the broader crypto space, forks have become even more popular in the decentralized finance space, where a small tweak at the right place can create additional value for users.

Of course, some projects take advantage of this to create copycat dApps with the sole purpose of making money by jumping on the DeFi train – without expanding on solutions or adding any additional features or functionalities. However, the latter case does not apply to the project we are introducing to you today. 

In this article, we will explore QuickSwap. This Uniswap fork operates an AMM, DEX, and yield farming protocol on Polygon to offer an enhanced user experience by leveraging the scalability solution’s low fees and fast transactions.

What Is QuickSwap and How Does it Work?

Launched in October 2020, QuickSwap is an automated market maker (AMM) protocol and decentralized exchange (DEX) running on Ethereum’s Polygon layer-two (L2) scalability solution.

Just like SushiSwap, PancakeSwap, and many other AMM projects, QuickSwap forked Uniswap‘s code to create its protocol.

In fact, its creators, Nick Mudge and Sameep Singhania, admitted that “QuickSwap is a fork of Uniswap with not even a single digit of code changed” – at least at the time of rolling out the DeFi solution. However, it didn’t take long for the project to prove that it could create good value for its users.

Like most DeFi projects, QuickSwap’s AMM is powered by its native QUICK token and its staked version, which is called dQUICK (more on this later).

While the protocol is managed by its users through community governance, the QuickSwap Foundation is responsible for expanding the decentralized finance solution’s customer base and ecosystem.

Harnessing Polygon’s Scalability

Since its release, QuickSwap has gained quite some traction by effectively harnessing Polygon‘s scalability to broaden the access to the DeFi space for many users.

Ethereum has been serving as the hotbed for decentralized finance, featuring a vast number of dApps on its mainnet. However, due to the smart contract blockchain’s limited scalability and massive on-chain activity, network congestions have caused fees and processing times to surge significantly.

While most users can cover these costs for simple ETH transfers, DeFi solutions are powered by smart contracts that utilize much higher amounts of gas, leading to as much as a tenfold increase in transaction fees (as of October 18, while it costs $6.72 to send ETH to another user, you have to pay $64.01 on average to swap two tokens on Uniswap).

For that reason, DeFi has become unviable on Ethereum for many, especially for those trading small amounts of coins. As a result, in addition to competitor smart contract blockchains like Binance Smart Chain and Solana, L2 scalability solutions such as Polygon, Optimism, and Arbitrum have become increasingly popular among crypto users lately.

Polygon was one of the first to launch its mainnet and gain traction, allowing the scalability protocol to feature a rapidly growing DeFi ecosystem where many popular dApps migrated from Ethereum’s mainnet. At the same time, native applications have leveraged Polygon’s fast and cost-efficient system to attract users to their platforms (it costs around $0.01 to swap two tokens via an AAM) .

One of the many DeFi applications benefitting from Polygon is QuickSwap. QuickSwap has remained the second-largest decentralized finance protocol on Polygon despite the fact that many “DeFi blue chips” like Aave, Curve, Balancer, and SushiSwap have completed their integrations with the layer-two scalability solution.

As a project that started out as a Uniswap fork, QuickSwap’s success proves that users appreciate the value created by reusing the source code of an established DeFi project to apply it to an L2 chain to benefit from its additional scalability.

AMM, DEX, and Limit Orders

Since it is a fork project, QuickSwap’s automated market maker functionality is (nearly) identical to Uniswap’s.

As a recap, AMM is a model widely utilized in the DeFi space to replace the central order books of crypto exchanges with smart contracts to achieve decentralized, automated, and intermediary-free token swaps between users. The lack of third parties in the trading process also means that automated market maker protocols like QuickSwap and Uniswap are self-custodial.

At the same time, while AMMs in their basic forms lack many of the advanced trading features offered by centralized exchanges (e.g., limit and stop-loss orders) and can be subject to increased slippage, they don’t struggle with the same liquidity problems as their predecessors (early forms of decentralized exchanges).

Automated market maker protocols source liquidity from pools in which market participants (called liquidity providers or LPs) contribute both tokens of a trading pair with a 50/50 ratio based on the actual exchange rate of the two coins (e.g., 1 QUICK and 422 USDC). In exchange for their service, liquidity providers receive the majority of the trading fees proportional to their share (represented by LP tokens). In QuickSwap’s case, a swap costs 0.3%, where 0.25% goes to LPs, 0.04% to single-asset QUICK stakers, and 0.01% to the QuickSwap Foundation.

As a result, just like in Uniswap’s case, DeFi users can seamlessly swap ERC-20 tokens via QuickSwap’s AMM. There is one major difference, though. As QuickSwap resides on Polygon, it features much lower transaction fees and faster processing times than AMM protocols based on Ethereum’s mainnet.

In addition to that, since its launch, QuickSwap’s developers have partnered with the DeFi automation protocol Gelato to introduce limit orders for the AMM’s customers. Users can leverage this feature to avoid slippage and ensure that their order is executed at their desired price.

Yield Farming and Staking

Of course, just like Uniswap and any other AMM, QuickSwap offers a multitude of yield farming opportunities for liquidity providers. While this allows them to maximize their potential rewards, the protocol can use the activity to secure more liquidity.

To do that, liquidity providers can deposit and stake their LP tokens in QuickSwap’s yield farming pools called “farms.” QuickSwap has four different types of farms, each featuring unique rewards for contributors:

  • Dragon’s Lair: With its name inspired by QuickSwap’s dragon mascot and a popular video game franchise from the 1980s-1990s, Dragon’s Lair is a single-token farm that rewards users for staking QUICK tokens. The earnings are distributed in Dragon’s Quick (dQUICK), which is basically the staked version of QUICK. It is worth more than QUICK (currently 1 dQUICK is worth 1.2792 QUICK) and is utilized to distribute nearly all yield farming rewards on the platform.
  • Standard LP mining pools: Standard LP mining pools are the same as on other AMMs. Here, you need to deposit your LP tokens for a specific trading pair to receive dQUICK in exchange.
  • Dual mining pools: Unlike standard farms, dual mining pools distribute rewards to liquidity providers in both Wrapped MATIC (WMATIC) and dQUICK.
  • Dragon’s Syrup: Dragon’s Syrup is a single-token staking pool, where you have to deposit dQUICK to earn the native token of partner projects along with some additional dQUICK rewards.

Unlike Uniswap, which only offers standard LP mining pools on its platform, QuickSwap enables users to access numerous types of farms to generate a passive income. Also, since Dragon’s Lair and Dragon’s Syrup are single-token pools powered by QUICK and dQUICK, you don’t necessarily have to become a liquidity provider to benefit from these opportunities.

What Is the QUICK Token?

Based on Ethereum’s ERC-20 standard – which is also the one utilized to issue coins on Polygon –, QUICK is QuickSwap’s native token. It features the following utilities:

  1. Participate in community governance decisions to shape the future of the project together with fellow QUICK holders
  2. Stake QUICK to receive dQUICK rewards, which you can then sell for a profit or use to access further passive income opportunities like Dragon’s Syrup pools
  3. Incentivize LPs to supply liquidity to QuickSwap pools by distributing rewards in dQUICK

According to the project, QUICK is a fair-launch token. Indeed, QuickSwap never sold the coin through ICOs, IEOs, IDOs, pre-sales, or any other forms of fundraising. Instead, the project allocated 96% of the QUICK supply to be distributed to the community:

  • 90% to be earned by LPs via liquidity mining
  • 5% airdropped to UNI token holders
  • 1% reserved for future airdrops

The remaining 4% is allocated to the team and advisors (3.25%) and marketing campaigns (0.75%).

QUICK has a maximum supply of 1 million, which is gradually released to the market throughout a period of four years (emissions will slow down over time). At the time of writing, 327,100 QUICK is in circulation, with the majority of the coins (672,900 QUICK) waiting to be distributed to the community.

Now, let’s take a look at what has happened to the cryptocurrency’s price since its launch. Since QUICK only hit the broader crypto market in late February 2021, the coin has been subject to increased volatility. After a short surge to $417 on February 24 to $587 on March 3, the digital asset experienced bearish moves, dropping down to $150 by April 23.

However, a few days later, QUICK entered into a short yet significant bull run, in which it increased its value to as high as $1,455 on April 20, from which it fell down to $218 by July 20 throughout a highly volatile period.

After recording big gains in August and hitting $865 on August 12, the QUICK token underwent a period of price discovery. Considering that the coin is trading at $403 as of October 18, QuickSwap’s native token nearly broke even, featuring a slightly negative year-to-date ROI (-3.36%) in 2021.

Trade QUICK With AAX

Despite sharing a very similar source code with Uniswap, QuickSwap solves problems many users have been experiencing on the prior platform.

Instead of struggling with Ethereum’s high gas fees, users can take advantage of fast and cost-efficient DeFi swaps on the Polygon-powered QuickSwap while retaining the security, features, and user experience of Uniswap.

In addition to that and a few other features like limit orders, QUICK’s tokenomics offer users access to numerous yield farming and staking activities to generate passive income.

All these factors combined allowed QuickSwap to “stay in business” and maintain the second spot on the Polygon DeFi market, even when multiple blue chip projects migrated there, and Uniswap on its end integrated the beta version of both the Arbitrum and Optimism L2 scalability solutions.

Looking to grab some QUICK?

The good news is that you can gain easy exposure to the token on AAX. To do that, sign in to your account and head to QUICK’s trading page to place an order.

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