Swim’s First Battle Test - A Review

Swim Protocol

May 19, 2022 • 4 min read

Swim’s alpha product, the native stablecoin hexapool, came to market on March 9th. In the following two months, we've brought seamless swapping to nearly 20k unique wallets over the Solana, BNB and Ethereum blockchains.

One can do all the preparing and testing over quiet periods, but the mark of any great product is its ability to withstand extreme periods of volatility like any other day in the office. In our world of crypto, these periods unfortunately come hand in hand with cascading liquidations and a desperate need to move capital efficiently and quickly around different blockchains.

Our wish is for Swim to be integrated with every user’s daily toolbox, making the whole space more resilient during periods of extreme movement and volatility. Our first true battle test came last week and showed us that we are well on the right path to accomplishing this goal. We would like to review the last week in terms of Swim’s performance through the lens of both our LPs and users swapping.

Record volume for Swim

During the last week, Swim remained fully functional, allowing users to seamlessly move native stablecoins across chains when they needed it most, fulfilling their requirements on various other protocols.

This led to our busiest day ever in facilitating cross-chain swaps, smashing our previous all-time high in daily volume.

Graph showing the volume swapped per day with Swim in USD

Graph showing the volume swapped per day with Swim as a % of TVL

Along with a record high in swap volume, we also hit a record in swap volume as a % of TVL, showing the resiliency of Swim through the tough conditions. This resilience is important as Swim grows- to become part of everyone’s arsenal we need to be dependent, especially when most needed.

How did this record volume affect our LPs?

Not only did we hit our record volume during this tumultuous period, our liquidity providers also gained from this, hitting a daily APR of over 5% from fees in the peak. As Swim continues to build out the features and gains more users, we are confident the baseline APR will continue to grow on top of this.

Graph showing the daily APR for our LP token holders

The daily APR was calculated by annualizing the daily return from the fees collected by the LP holders, showing a large spike in record APR as we had our record volume swapped on Swim.

Graph showing how the virtual price changed over time (in USD)

The virtual price is the price of $swimUSD, the LP token of our hexapool, adjusted for pool imbalances. This shows how the fees accrued through record volume swapped on Swim translates directly to value for the LP holders.

In other words, this shows the P&L graph for our stakeholders who provided liquidity to our stablecoin hexapool over this period.

What did this mean for users swapping through Swim?

With all eyes on $UST depegging over the last week, Tether ($USDT), a fully collateralized stablecoin, also experienced a slight deviation from the dollar at certain periods.

Swim didn’t have any metapools in place for $UST, but let’s look into how our $USDT price changed over this period, compared to FTX, a centralized exchange.

Graph showing how the composition of our hexapool changed over time (in USD)

Graph showing the $USDT/USD exchange rate on Swim vs FTX for 100,000 USD

We used FTX, one of the largest centralized exchanges, to compare our $USDT price with. Being one of the largest means that their prices (in theory) should be one of the most indicative in the market.

At FTX, $USDC and $BUSD are taken to be USD, so in our analysis we have taken the same, comparing $USDT across our 3 chains against our USD equivalents.

We can see above that although Swim lagged a little on the initial spike down for $USDT on May 12th, this quickly moved inline within a few hours and largely stayed in line throughout the rest of the period shown.

As Swim grows bigger, we expect this pricing to be more efficient as we have more and more users who help to keep pricing in line. However, this first battle test shows that Swim’s pricing during this period was fairly close to that of FTX.

(technical note: FTX price taken from open of 15-minute candles, Swim price taken from the median of 9 $USDT/USD exchange rates)

What’s next for Swim?

The only way is up as we continue building!

Next in the pipeline we have our metapools and chain expansion, first to Avalanche and Polygon, with the Propeller relayer coming soon!

Keep up with Swim’s latest developments and announcements: