A developer team building on the Avalanche blockchain has introduced a trading tool that lets users swap up to 300 different tokens in the same transaction.
Multiswap, by the team at CavalRe, has recorded the highest number of token swaps in a testing period at 340 different tokens, developers said during a panel in Seoul last week.
Decentralized exchange (DEX) liquidity pools usually let traders swap one token type for another. Multiswap’s code creates a liquidity pool containing many different tokens that can be easily traded with each other, enabling multiple trades to occur in a single transaction.
A liquidity pool is a pile of cryptocurrency locked in a smart contract. This results in creating liquidity for faster transactions. Users supplying tokens to the pools are referred to as liquidity providers (LPs).
The new tool allows users to set up more complex trading strategies, such as those that involve various tokens and must be conducted quickly at low fees.
“Think of it like a new kind of decentralized ETF,” said CavalRe founder Eric Forgy in a message to CoinDesk. “On testnet, we have a pool with over 500 tokens representing a mockup of the S&P 500 for demo purposes, which represents over 125K trading pairs with zero fragmentation of liquidity.”
“The entire liquidity for each token is available for trading against any other token in the pool. You would need 125K separate pools to replicate this on Uniswap, which just splinters any available liquidity,” Forgy said.
Nevertheless, security risks due to the inherent nature of sophisticated blockchain-based applications remain and users must be wary, Forgy said.
“No piece of software whether on blockchain or not could ever claim to be free of security risks. For example, there was a recent exploit due to certain contracts being written in an older version of Vyper, a Python derivative, due to a bug in the compiler. These things are very difficult to defend against,” Forgy told CoinDesk.
“We feel confident about Solidity and the security of the Ethereum Virtual Machine (EVM) used by Avalanche's C-chain where we have deployed initially,” he said. Solidity is the programming language used to write smart contracts on the Ethereum blockchain.
In the coming months, Multiswap will explore expansion possibilities in the form of tokenized foreign currencies, commodities and equities.