Minswap Dex Accelerates Cardano's DeFi TVL Doubles
MinSwap has successfully executed its liquidity bootstrapping phases. Its success has catapulted it to 2nd place alongside SundaeSwap. The latter's dominance is down from 98.25% to around 53.66%. MinSwap is projected to overtake SundaeSwap's TVL in a few days if not hours.
Current DefiLlama metrics show MinSwap has 95.36 million USD locked in against SundaeSwap's 112.42 million USD. MuesliSwap is a distant 3rd with 1.62 million USD. Adax Pro is still struggling to onboard any sort of meaningful liquidity.
Although these numbers are in line with our prediction on Twitter in February, MinSwap has surpassed our expectations. Still, anyone who has been following the project closely knew that MinSwap was going to make heads turn.
@MinswapDEX is a force just about to be released on the mainnet. To reiterate what we stated here, Minswap has probably the best UI among cardano DEXs. The other component remaining to make UX on it unrivaled is adequate liquidity. ~ @satoshiscountry
Why MinSwap will flip SundaeSwap TVL spot
DEXs fail or succeed depending on how well they can attract liquidity. To achieve this success, it's important for a DEX to onboard as much liquidity as possible at launch. Both MinSwap and SundaeSwap have been successful in that regard. Having achieved that, the DEXs have to consistently attract more liquidity over time.
Both projects used their online communities to attract ADA holders onto their DEX. It's obviously an incentives game. As far as a DEX goes, users are concerned with only two major incentives.
- Will the DEX help me maximize my gains?
- How good is the user experience on the DEX?
The first incentive explains why both SundaeSwap and MinSwap included yield farming opportunities just a few days after their launch dates. Yield farming rewards help liquidity providers gain interest on their locked ADA, while simultaneously neutralizing any potential impermanent loss risks.
This is how MinSwap and SundaeSwap Yield farms compare
MinSwaps Yield Farms
|MinSwap Yield Farm||daily MIN rewards||Pools||maximum APY|
|🦁 Lion Farm||1,000,000||MIN/ADA||170% (375% boosted)|
|🐯 Tiger Farm||140,000||PAVIA/ADA, LQ/ADA, MELD/ADA, WMT/ADA, DANA/ADA||311%|
|😺 Cat Farm||110,000||CNETA/ADA||305%|
|🐱 Kitty Farm||60,000||AADA/ADA, CLAP/ADA, VYFI/ADA||360%|
|🐶 Dog Farm||10,000||HOSKY/ADA, ADA/COPI||240%|
SundaeSwap's Yield Farms
|SundaeSwap Yield Farm||daily SUNDAE rewards||Pools||maximum APY|
|General||500,000 SUNDAE||SUNDAE/ADA, LQ/ADA, WMT/ADA, CARDS/ADA||75.19%|
From the APY percentages above, it's obvious that SundaeSwap's yield farms rewards have reduced over time since its launch day. MinSwap just got started and ADA holders will be flocking to the DEX to take advantage of the higher percentage yields. That is, of course, until MinSwap's yield farming rewards decrease too. However, by that time MinSwap TVL will have surpassed SundaeSwap's considering MinSwap's current momentum.
Why MinSwap's Superior UI matters
As we have stated before, MinSwap's user interface is unrivaled. Granted, its direct competitors i.e SundaeSwap's & MuesliSwap have good if not great UIs too. However, they lack the continuity, organization & feedback signals that MinSwap has. It is at this margins of user experience that MinSwap is likely to attract and retain loyal users.
Happy users are likely to keep their liquidity locked in the DEX of their choice. Sure, there will be savvy users who will hop from DEX to DEX looking for gains, but most users are likely to keep using one DEX as long as it serves their needs well.
SundaeSwap & MuesliSwap proves this assumption seeing that they both have barely bled their existing locked-in value against MinSwap.
As other anticipated Cardano DEXs e.g Maladex launch, they will not affect MinSwap's TVL. At the same time, even if SundaeSwap makes improvements, it will be a difficult tasks to recapture its position once it's lost to MinSwap.
Cardano TVL chart from DefiLlama, March 16th, 2022
The overall growth of Cardano's TVL
Cardano DEXs have propelled DeFi TVL from 4 digits to over 212.15 million USD. This growth is great to see especially given that DeFi is in its infant days on Cardano.
200 million is still a small number compared to Ethereum's, Binance Smart Chain, Solana, or Polkadot's. These chains have billions of TVL. In that sense, Cardano has a large gap to bridge to be on the same level as its direct competitors.
However, Cardano has several key factors that will catapult its TVL to comparable or greater TVL numbers:
Djed is just about to launch.
All the TVL on Cardano has been achieved without stablecoin in its chain. Djed, which entered testnet this month, will fill this gap. COTI has been busy making partnerships with dozens of Cardano projects. When Djed launches, TVL on Cardano will 'escape velocity' and reach billions of dollars.
Cardano's Vasil HFC
IOG has scheduled a hardfork event in June ie. Vasil Hardfork. This upgrade will increase Cardano's throughput and speed. This way, more Cardano dApps will launch with more advanced capabilities
What most also don’t understand is that many Cardano DApps are waiting for the Vasil hard fork in June to launch to benefit from pipelining. So it seems we ain’t seen nothing yet on TVL ~ Charles Hoskinson
In mid-October 2022, Coingecko started listing tokens that are traded over MinSwap DEX. MinSwap and CoinMarketCap had arrived at a similar arrangement back in July.
Both of these crypto listing platforms track the price action of these tokens in fiat terms or compared to primary coins. In the case of CoinGecko, the primary coins are BTC (including SATS), ETH, LTC, BCH, BNB, EOS, XRP, XLM, LINK, DOT, and YFI.
price of PAVIA token tracked in BNB on CoinGecko
This listing announcement adds to the list of efforts the MinSwap team has been working on behind the scenes. The team has been focused on the platform development, almost to a fault.
Just recently, the team announced the introduction of its new dynamic emission rate for its MIN token. Following this adjustment, the daily emission rate of Minswap's governance token dropped to 782,166 MIN daily; down from 1.3 million MIN daily in August. In its $MINomics Research article, the MinSwap team explains the rationale behind this adjustment in detail.
MIN token daily emission rate on MinSwap's yield farming page
Whether this improvement will help contain the selling pressure on MIN tokens remains to be seen. Since its LBE, the MIN token has shed over 90% of its value due to constant sell-off & the prevailing bear market conditions.
In mid-September, MinSwap announced trading discounts to all its MIN and MIN/ADA LP holders. MinSwap users in this group are eligible for up to 25% in fee discounts. There are 9 discount tiers as follows:
|MIN||MIN/ADA LP tokens||Discount||Effective Batcher Fee (ADA)|
|2,000||200 mil||1.0%||₳ 1.98|
|5,000||500 mil||2.5%||₳ 1.95|
|10,000||1 billion||5.0%||₳ 1.90|
|15,000||1.5 billion||7.5%||₳ 1.85|
|20,000||2 billion||10.0%||₳ 1.80|
|25,000||2.5 billion||12.5%||₳ 1.75|
|30,000||3 billion||15.0%||₳ 1.70|
|40,000||4 billion||20.0%||₳ 1.60|
|50,000||5 billion||25.0%||₳ 1.50|
First published on Mar 16, 2022