Blueshift has a novel approach to swapping tokens, specifically across different chains. Let’s break down the main points:
Key Features of Blueshift Swap:
- Cross-Chain Swap: This mechanism allows users to swap tokens between different chains. The process involves three stages:
- Execution of the swap on the source network.
- Execution of the swap within Blueshift.
- Sending the tokens to the destination network.
- Local Swap: If the swap only involves tokens on the same chain (and only local portfolios), it’s executed in a single stage.
- Preference for Local Swap: By default, Blueshift recommends routes that avoid cross-chain portfolios, even if that means the user might not get the most price-efficient swap. This preference can be changed in the settings.
- Use of Portfolios: Instead of traditional token pairs (like in most exchanges), Blueshift uses portfolios. Within each portfolio, virtual pairs of tokens are defined which dictate the exchange rate.
- Price Impact: The actual price a user gets when swapping is slightly less favourable than the current market price. This difference is called “price impact.” Two factors influence this:
- The swap amount: Larger swaps have a greater price impact.
- Token pair liquidity: Pairs with more liquidity have a lower price impact.
- Virtual Pairs: Unlike traditional token pairs that are backed by actual reserves, virtual pairs in Blueshift portfolios are based on total liquidity. This allows for more efficient liquidity usage, resulting in lower price impacts for the same amount of total liquidity.
- Smart Router: Blueshift employs a smart routing system to determine the most price-efficient path for swaps. This can include multi-hop swaps, where a token is swapped through multiple intermediary tokens before reaching its final destination. This feature can also be turned off by the user.
- Increased Efficiency: By pooling liquidity into portfolios and using virtual pairs, Blueshift can offer better rates and lower price impacts compared to traditional token pair-based swaps.
- Cross-chain Functionality: Users aren’t limited to swapping within a single chain, which can be especially beneficial as the blockchain ecosystem continues to grow and diversify.
- Flexibility: Users can adjust settings to prioritize local swaps, or even avoid multi-hop swaps if they prefer a more straightforward transaction path.
Blueshift provides a solution to one of the challenges in the decentralized finance (DeFi) space: cross-chain token swaps. Using portfolios and virtual pairs, ensures better liquidity usage, reduced price impact, and increased flexibility for users. Whether for seasoned traders or newcomers, understanding the dynamics of such platforms can provide more efficient trading and potential benefits in the DeFi space.