With the increasing variety of new chains and the growth of NFT+GameFi+DeFi projects and assets, its become difficult for investors both small and large to optimize their profits – there’s just too many data points to handle all at once. This has created fresh wave of demand for cross-chain exchange aggregators to help distill the data, improve profit-taking and reduce risk. XY Finance is one such product that has seen a great deal of backing from investors across the space.
XY Finance is an ergonomic and efficient cross-chain swap for DeFi & Metaverse, offering single-token liquidity provision services through its X Swap and Y Pool. X Swap in particular aims to fulfill cross-chain swap needs between multiple chains, and the Y Pool reimburses swapping fees and token rewards for liquidity providers. It closed a $12 million funding round from Infinity Ventures Crypto, Mechanism Capital, Morningstar Ventures, YGG (Yield Guild Games), Animoca Brands and Circle (Circle Internet Financial), and more.
The Operating Model
Through a combination of two unique components, X Swap and Y Pool, XY Finance has a unique advantage over traditional cross-chain aggregators. Its operating model allows for its two main constituent parts to specialize in very specific services, allowing for users to pick and choose a service tailored to their needs.
X Swap provides cross-chain swapping services and Y Pool incentivizes liquidity providers with governance token rewards and a share of swapping fees.
X Swap works to search for the optimal cross-chain and transaction path for users, supporting cross-chain swaps between any assets, and allowing users to swap assets on one specific chain or transfer/swap across two different chains and Y Pool incentivizes liquidity providers with governance token rewards and a share of swapping fees.
Although seemingly complicated, X Swap only requires the user to initiate a transaction on the first chain, and the subsequent swap and cross-chain processes are automatically executed by the protocol, thus greatly simplifying the user’s transaction operation process.
For example, if you wish to swap UNI on Ethereum to BUSD on BSC, you will first swap UNI to bridgeable assets (such as USDC, USDT etc.) on Ethereum, and move to BSC through Y Pool or bridge partners (O3 Swap, Multichain.xyz and AnySwap) before you finally convert to BUSD.
X Swap currently supports cross-chain swaps across Polygon, Ethereum, Fanton and Binance Smart Chain and Y Pool has recently opened up its liquidity provision services.
As of now, X Swap is largely reliant on liquidity from DEXes like SushiSwap, 1inch and Uniswap, with only X Pool working directly on XY Finance, offering users the ability to provide liquidity on XY in exchange for XY token rewards and swapping fee earnings.
Y Pools biggest leg up is the convenience of being able to use one pool to manage the liquidity of similar assets across many chains. For example, the USDT Y Pool can receive USDT assets across a variety of chains (receiving BEP-20 USDT, Polygon USDT, ERC-20 USDT, etc) which provide liquidity for X Swap. Furthermore, XY Finance is currently working on an incentive mechanism that will give XY Tokens to users who help rebalance assets on different chains.
80% of swapping fees from X Swap goes to liquidity providers in the Y Pool with the remaining 20% into the DAO vault. The DAO vault also will receive royalys from GalaXY Kats (an XY Finance NFT GameFi project), and use 60% of its total funds to repurchase XY Tokens from the secondary market, burning half of the repurchased XY Tokens.
There will be a total of 100 million tokens, 35% of which will be allocated for GameFi rewards and liquidity mining funds, 24% for seed, private and strategic investors, 15% for the team and advisors, 5% for insurance and 6% for bounties and marketing. The XY Token will be offered on each chain that is supported by the protocol. On December 9, XY Finance will conduct an IDO on the Copper platform.
Upon locking up XY in the staking pool, XY holders will gain governance power to vote and propose changes to system specifications in real time, including starting up a new Y Pool. Plus, a portion of swap fees will be allocated to XY Finance and the XY DAO as a security fund.
Further Down the Roadmap
In future, XY Holders can expect plans to support Avalanche, Arbitrum, Cronos, Ronin and to debut an NFT liquidity aggregator named “NFT Satellite” by end of year 2021. It will also support other network chains like Solana, Polkadot and Flow by the beginning of 2022 along with the NFT marketplace. XY Finance will also launch NFT “Sweeper”, NFT Wrapper and allow limit order swaps.
All in all, XY Finance is a critical piece of infrastructure in the creation of an efficient, user-friendly cross-chain swap aggregator. It holds with it the potential push forward single-token liquidity provision and cross-chain aggregation into GameFi, NFTs and the Metaverse. It will be worth it to see if XY turns out to be the dark horse of the cross-chain swap sector.
XY Finance Official Channels