[KCF Proposal] Growth Strategies for Klaytn with Swapscanner
November 1, 2023
Greetings from the Swapscanner team. Swapscanner is not just a leading service builder in the Klaytn ecosystem but also an esteemed member of the governance council.
Based on B2C users' trading preferences, Swapscanner represents a staggering 70% of the entire ecosystem's trading volume. Annually, we facilitate a substantial $2 billion worth of token trades.
To sustain and grow this service, we are seeking initial support from the KCF fund. In the following discourse, I'll outline the areas where Swapscanner can contribute significantly to the ecosystem.
Since the launch of its mainnet, the Klaytn chain has incorporated an array of innovative directions. Among these, the Decentralized Finance (DeFi) sector undoubtedly emerged as the hottest and most competitive segment within the Klaytn chain.
However, with the broader cryptocurrency market facing challenges over the past 1-2 years, the Total Value Locked (TVL) in the DeFi sector plummeted. As a result, enthusiasm and support for the DeFi sector within the Klaytn chain dwindled.
Still, it's worth noting that the cryptocurrency market is cyclical and bound to rebound. Even though the overall market's TVL and volume may have declined, the trading market share of DEXs compared to CEXs continues to grow year after year.
Given this trend, it's crucial for the Klaytn chain not to lose its competitive edge in the once-dominant DeFi sector due to short-term market contractions.
Examining data from leading chains with a deflationary structure reveals that most of their value comes from token trading.
We aspire for the Klaytn chain, in collaboration with Swapscanner, to become recognized as the "Premier Chain for Trading".
In reality, the Klaytn chain boasts some impressive attributes - it's the fastest, most accurate, and most cost-effective.
When combined with Swapscanner's trading service, which offers an experience closely resembling that of a CEX, the vision of becoming the "Best Chain for Trading" is well within reach.
Ultimately, this links directly to enhancing the value of KLAY.
The core idea is that maximizing on-chain transactions will lead to a larger scale of KLAY burn via transaction fees. Let's explore how, together with Swapscanner, we can maximize these on-chain token trades.
Token trading within the Klaytn ecosystem can broadly be bifurcated into "B2C" and "B2B" segments. While "B2C" refers to general retail users, "B2B" encompasses 3rd party trades, arbitrage, and institutional trading. Both sectors roughly contribute an equal 50% to the total trading volume.
It's imperative to stimulate trading activity across both these segments, and specific strategies must be devised for each.
Before the emergence of Swapscanner, the experience of token trading on the Klaytn chain was far from ideal.
The liquidity, scattered among various DEXes in the ecosystem, wasn't sufficient, leading to significant challenges for users. To address this, Swapscanner launched an aggregator service, pooling all available liquidity from the ecosystem.
While DEXes typically feature tokenomics optimized for securing their own liquidity, Swapscanner's design is laser-focused exclusively on token trading.
With the introduction of Swapscanner, users on Klaytn can confidently trade tokens at the best rates without any hassles. As a testament to our impact, 70% of B2C users on Klaytn utilize Swapscanner.
Additionally, from Klaytn chain's perspective, this goes beyond merely boosting trade activities; it leads to maximized gas fees. The aggregator engine processes swaps through multiple routes, ensuring users get the best rates while generating significantly higher gas fees than trades via a single DEX.
Cryptocurrency traders are predominantly familiar with trading via CEXes. However, the experience of tracking real-time charts while trading tokens was something traditional DEXes lacked.
Thanks to Swapscanner's aggregator engine, which links all liquidity pools, we offer the ecosystem's most "accurate" token prices. This capability enabled us to craft a top-tier chart service.
Leveraging the features of the Klaytn chain, we provide a charting service that operates in "real-time" just like CEXes. This distinctive trading experience, available only through the Klaytn chain and Swapscanner, has the potential to stimulate trading volume across the entire chain.
One of blockchain's key advantages is its immutable record. While everything is recorded on the chain, easy accessibility to these records is a different challenge. Before Swapscanner, there was no dashboard that showcased the entire ecosystem's on-chain trading records.
Swapscanner, the aggregator service connecting the entire ecosystem's liquidity, introduced a dashboard that provides insights into the complete trade landscape of the Klaytn chain.
Moreover, we are the only ones offering a real-time snapshot of token trades every second, similar to CEX main displays. This feature has set a benchmark in the ecosystem, elevating the trading experience on the Klaytn chain.
Our strategy for activating B2B trading revolves around the utilization of Swapscanner's Swap API for 3rd party trade activation.
Our Swap API has already been integrated into the leading wallet services within the ecosystem, enabling a significant number of users to conveniently engage in token trading.
Transactions via the Swap API account for a remarkable 40% of Swapscanner's total trades, signifying its immense contribution to boosting token trading on the Klaytn chain. This share is expected to grow even further.
The next strategy targets arbitrage trade activation and amplifying the ecosystem's TVL (Total Value Locked).
Across CEXes and various other chains including Klaytn, trades driven by arbitrage form a significant chunk of all transaction activity. Roughly 50% of trades on Klaytn's DEXes arise from arbitrage, with Swapscanner's share standing at around 20%.
To further boost this, Swapscanner plans to develop a public utility DEX for the Klaytn ecosystem and offer it privately for B2B. Traditional DEXes, with their tokenomics, have often been constrained by myriad stakeholder interests, making it challenging to attract adequate liquidity.
Swapscanner's strategy involves offering a private pool that returns 100% of the transaction fees to liquidity providers. This non-governance token-centric, neutral, public DEX (LP) has the potential to attract diverse neutral funds to the market. This could lead to an increase in the ecosystem's TVL, heightened trade activity, and the use of the fees to augment the value of KLAY.
Additionally, with direct swap requests available via the liquidity pool, we can also activate various arbitrage trades that were previously unattainable through the Swapscanner API.
Building a dApp ecosystem is a paramount endeavor on any mainnet. While the cryptocurrency market has faced some contraction, the Klaytn ecosystem is distinctly witnessing a rapid decline in dApps.
To address this, we propose a strategy centered around the concept of being the "Premier Chain for Building Services". We believe this can be realized in partnership with Swapscanner.
In fact, as Swapscanner actively builds and operates services atop the Klaytn chain, we can confidently assert that the Klaytn chain possesses inherent features, making it highly conducive for builders.
By leveraging Swapscanner's diverse infrastructure optimized for the Klaytn chain, it indeed stands out as the most advantageous chain for builders to develop on.
We envision this as a pathway leading directly to the appreciation of the value of KLAY.
Ultimately, for the chain's ecosystem to thrive, it needs a multitude of dApps that can boost token trading activities, subsequently increasing the demand and the burning rate of KLAY.
Let's delve deeper into how the expansion of the dApp ecosystem can be maximized in collaboration with Swapscanner.
When we consider the expansion of the dApp ecosystem, our strategies primarily revolve around two significant pillars: Building our Super App and Supporting Builders.
Building our Super App represents Swapscanner's initiatives to bring additional user traffic to the ecosystem beyond just trading functionalities. On the other hand, Supporting Builders denotes the avenues through which Swapscanner can assist other dApp builders in their development and activation.
The first service Swapscanner plans to offer within our Super App is a Portfolio Management Service.
Currently, services that can generate daily recurring traffic, apart from token trading and gaming, are quite limited. We believe that a service allowing cryptocurrency investors to manage their assets and analyze others' is fundamental.
Swapscanner integrates with every service in the ecosystem that allows holding and staking to provide the most accurate asset management service. Beyond mere asset viewing, this service will empower users with V3 staking management and interest collection. Furthermore, we're not just focusing on wallet asset analysis; we also facilitate comprehensive ecosystem transaction analysis.
By moving beyond the "search-type analysis" that many on-chain data analytics services offer, we emphasize "discovery-type analysis", which can trigger a more proactive influx of traffic.
All these functionalities aim to enhance the Klaytn ecosystem in terms of Acquisition, Activation, and Retention of user traffic.
The second notable feature is the Official KLAY Staking Service and the On-Chain Community Service based on Wallet Authentication.
As a member of the Governance Council that operates the Klaytn chain and being the eighth largest GC holding a vast amount of staked KLAY in our nodes, Swapscanner is laying foundational groundwork in the ecosystem by offering this staking service in the form of LSD (Liquid Staking Derivatives). The over 68 million staked KLAY, predominantly held by regular community members, plays a significant role in shielding the market from potential downward pressure on KLAY's value by ensuring it's fully locked up.
By integrating this with our portfolio management feature, we're building an on-chain community service that will bolster the competitiveness of Klaytn's on-chain governance.
Our third initiative is the development of a Mobile Application.
The shift from desktop to mobile for Web3 users is happening rapidly. From our observations, within a year, the percentage of Swapscanner's mobile users has jumped from 20% to 64%.
This comprehensive mobile application encompasses all of Swapscanner's trading functionalities and Super App features. Mobile applications naturally trump web browsers in terms of speed and user experience. The most powerful addition is the integration of Push Notifications. When combined with the diverse functionalities that Swapscanner offers, we foresee an explosive surge in traffic for the Klaytn ecosystem.
This app isn't just a Swapscanner app; it's envisioned as an inclusive application that links the entire Klaytn ecosystem. Through this, even when compared to CEXs, the Klaytn chain can provide a user experience that's second to none.
Introducing our strategy for supporting builders through integration with Swapscanner, the premier super-app.
The aggregator model presents a solid foundation to prevent the monopolization of a single DEX in the market. This ensures an even growth opportunity for all DEXs within the ecosystem.
By connecting intricate pathways, the aggregator model guarantees the best price for token trades. And given the low gas fees and rapid speed of the Klaytn chain, this model is further optimized.
Interestingly, Klaytn is the only chain where aggregators dominate most of the B2C trades. This unique characteristic offers a competitive edge to energize the Klaytn ecosystem.
Let's delve into the current integration status of Swapscanner.
All the DEXs in the Klaytn ecosystem are seamlessly integrated with Swapscanner's aggregator engine. Based on B2C trade metrics, Swapscanner directs 80% of the total trades to KlaySwap, the top DEX provider, while for other DEXs, this figure is at a staggering 99%.
It might appear that the role of an aggregator is diminishing, given the current liquidity contraction in the crypto market. However, when the market rebounds or when significant liquidity is infused into the ecosystem through mechanisms like the KCF, it's imperative to have an established aggregator. Without this, the ecosystem might become inaccessible to incoming builders.
With all services interconnected to Swapscanner's asset management feature, both new and existing services can thrive without being sidelined, thus nurturing a flourishing Klaytn ecosystem.
The active and assured integration of a super-app can act as a strong catalyst, providing an enticing incentive for numerous builders to contribute to the ecosystem.
Lastly, we turn our focus to supporting builders through APIs.
Until now, the Klaytn ecosystem has seen many services with similar functionalities come and go. For market growth, it's time to shift the focus from building foundational features to creating distinct and competitive functionalities.
Swapscanner offers a diverse range of functionalities through APIs, including swapping, charts, price checking, community engagement, asset tracking, and staking. These can immensely elevate the quality of individual dApps.
At present, Swapscanner is privately providing its key APIs to 17 distinct entities. This extends support beyond the DeFi sector, directly aiding growth in the realms of wallets, NFTs, communities, and gaming.
With the provision of high-quality functional APIs, Klaytn positions itself as a compelling mainnet for builders.
Thus far, we have proposed various strategies to foster the growth of Klaytn and elevate the value of KLAY.
Through Swapscanner, the Klaytn ecosystem has witnessed significant advancements, and we firmly believe that, moving forward, Swapscanner will continue to contribute to even greater progression within the ecosystem.
However, should Swapscanner cease to exist— and here I don't just mean fade away, but rather face the harsh reality of shutting down our operations due to the challenges we confront— the Klaytn ecosystem could lose the tremendous competitive edge it currently possesses.
At present, Swapscanner is navigating through short-term challenges.
The strategic investments we previously secured from principal members of the Klaytn GC have been largely tied up in the ecosystem. As a result, we've faced a decline in asset value exceeding 10%.
We acknowledge our responsibility in asset management, yet our commitment was to reduce selling pressure, aligning with the ecosystem's broader vision.
With this backdrop, we humbly and earnestly request the support of the GC members to leverage the Klaytn Community Fund (KCF) to ensure that Swapscanner can continue making its significant contributions to the Klaytn ecosystem.
We, the Swapscanner team, are confident that this proposal will be both a fitting utilization of the KCF and a stellar example for future endeavors.
For this grant, we are seeking 6.8 million KLAY. Funds received will not be instantly utilized for operational costs but will be allocated for KLAY staking to maintain our GC eligibility and for liquidity provision in LSD.
We've earmarked our own assets to cater to operational costs, ensuring service continuity for at least a year. Upon receiving the grant, we will activate Swapscanner's revenue model, providing the service's fiscal health and continuing operations without further assistance.
Should the grant be approved, we are committed to implementing all the strategies we've highlighted for ecosystem activation.
This includes the continuous improvement and scaling of existing services that contribute to the ecosystem, as well as the development & launch of the new services we've proposed.
For the sake of the Klaytn ecosystem, it is imperative that Swapscanner's services do not falter. We sincerely request the GC members to consider our proposal with a positive lens.
”The premier chain for trading”,
”The ultimate chain for building”,
With Swapscanner, this is achievable.
Thank you.