Hashflow is an interoperable DEX powered by the native HFT token. It offers a bridgeless token swap feature for permissionless cross-chain trading. Interoperability helps Web3 platforms to scale without friction. The automated market maker (AMM) model is among the most popular mechanisms for cross-chain token swaps. However, several interoperable Web3 protocols rely on centralized services and custodians to facilitate cross-chain trades. Also, users commonly encounter impermanent loss and frontrunning on prominent AMM-based DEXs. Hashflow addresses these issues using an off-chain request-for-quote (RFQ) model to maximize capital efficiency. So, if you’re wondering, “what is Hashflow?” – read on!
In this article, we’ll dive deep into the Hashflow ecosystem. We’ll explore the gamified Hashverse DAO, the HFT governance token, and Hashflow’s bridgeless token swap mechanism. Also, we’ll discuss why interoperability is so important in Web3 and some of the issues associated with AMM-based DEXs that Hashflow aims to address.
What is Hashflow?
So, what is Hashflow? Hashflow is a highly-interoperable decentralized exchange (DEX). It connects to many of the leading blockchains and layer-2 networks and provides zero-slippage, MEV-protected trading with a low barrier to entry. Anyone can use the platform to trade assets on any blockchain with minimal friction by connecting a non-custodial crypto wallet like MetaMask. Many prominent DEXs use the automated market maker (AMM) model to facilitate peer-to-peer trading. However, Hashflow uses the novel request-for-quote (RFQ) model to optimize capital efficiency and protect users against impermanent loss and slippage.
Also, Hashflow’s RFQ model allows market makers to source liquidity using off-chain pricing functions secured by cryptographic signatures. In turn, this model allows market makers to implement advanced pricing mechanisms that reduce the risks associated with AMMs, like slippage, impermanent loss, and volatility. Furthermore, Hashflow’s off-chain pricing mechanism provides a higher level of accuracy for trade quotes and prevents frontrunning, which is problematic for AMM users. Moreover, Hashflow provides a trustless environment for cross-chain token swaps that enables users to swap assets between blockchains without using a centralized token bridge or custodial service.
Hashflow was founded in August 2021. It has quickly become a thriving DEX, with more than 170,000 unique wallet addresses interacting with it. Also, Hashflow has an average daily transaction volume of $25-30 million, contributing to the $1 billion in trading volume on Polygon and Avalanche in the first six months of operations. The platform has since formed partnerships with leading DEXs and DEX aggregators throughout the decentralized finance (DeFi) ecosystem.
What is the HFT Token?
The HFT token is the native governance token of the Hashflow ecosystem. It allows holders to participate in protocol governance by voting on proposals to make changes to the ecosystem via the Hashverse, Hashflow’s gamified DAO. Users who stake HFT tokens receive voting rights pertaining to protocol fees, ecosystem development, and marketing. Larger stakes for longer periods give users more voting power. Plus, staking HFT removes it from circulation, giving the perception of scarcity.
HFT is an Ethereum ERC-20 token. At the time of writing, the HFT token trades at $0.69 with a market cap of $122.5 million, according to CoinGecko. It has a circulating supply of 175.2 million out of a total of 1 billion.
HFT Token Allocation
According to the Hashflow whitepaper, 19.32% of the HFT token distribution will be allocated to the Hashflow core team. Early investors will receive a 25% allocation, and 2.5% is reserved for team expansion. The remaining 53.18% of tokens are reserved for ecosystem development, including partner programs, rewards, market maker loans, and a community treasury. 25% of team and investor tokens are vested for a year after the token launch, while the remaining 75% is subject to a linear monthly vesting schedule of 3-5 years.
Problems with AMMs
Automated market makers (AMMs) are an essential component of the DeFi landscape. AMMs allow traders to swap tokens without a centralized order book or intermediaries. Traditional crypto exchanges use centralized order books overseen by the company in charge of the exchange. However, AMMs facilitate peer-to-peer, trustless token swaps using liquidity pools and liquidity providers.
Liquidity providers can deposit an equal dollar value of two assets, known as a trading pair, into a liquidity pool. Any time someone trades against that pair, liquidity providers earn a share of the transaction fees generated. However, AMMs often face several challenges that impair the user experience, such as price slippage, impermanent loss, and high gas fees.
Price slippage occurs when the price you pay for a token swap exceeds the price quote a trader receives. This often happens when an AMM has low liquidity. Impermanent loss occurs when a liquidity provider’s deposit loses value after withdrawing their liquidity from a liquidity pool despite any transaction fee earnings.
Hashflow creates a stable environment for multi-chain trading that minimizes the effects of slippage, impermanent loss, and frontrunning. Resultantly, the platform lowers the barrier to entry for cross-chain DeFi and helps to minimize the risks associated with AMM-based DEXs.
The Hashverse is Hahflow’s narrative-based decentralized autonomous organization (DAO). HTF token holders that stake tokens in the Hashverse can earn staking rewards and participate in governance. Also, the Hashverse staking mechanism gives stakers a health score. Higher health scores allow stakers to earn better rewards.
Participants can select a character that represents their wallet address and position within the Hashverse community. Completing quests and challenges give Hashverse members greater voting power and helps to expand the ecosystem. Also, the Hashverse features various in-game items and non-fungible tokens (NFTs) that allow characters to evolve and increase their earnings.
Different realms and entities exist within the Hashverse. For example, the planet called Renova consists of forest woodlands, oceans, and sentient lifeforms. Renova is a hub of intergalactic trade and brimming with natural resources. On the other hand, Solus is the AI-generated ruling mechanism that keeps peace throughout the galaxies. Though the Hashverse is still in the early stages of its development, the platform offers a novel alternative to traditional governance models.
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Cross-Chain Token Swaps Without a Bridge
Many prominent cross-chain token swapping services rely on external bridges and escrow services for swapping crypto assets between blockchain networks. While token bridges provide a convenient solution for cross-chain asset transfer, they can cause vulnerabilities. Using intermediaries as custodians creates a single failure point that can put funds at risk. However, Hashflow addresses this issue by allowing users to swap assets between blockchain networks without third parties.
Hashflow’s bridgeless cross-chain token swaps are MEV and slippage-protected so that users can swap assets between any chain with high levels of price stability. Also, Hashflow’s cross-chain swaps rely on the RFQ mechanism for obtaining price quotes from the market makers. Market makers use cryptographic signatures that provide price stability, reduce slippage, and prevent front-running. Moreover, signature-based pricing and RFQs facilitate secure, frictionless, cross-chain token swaps, allowing users to bridge assets between blockchains easily.
The Hashflow ecosystem is still in the early stages of its development. However, the team has a comprehensive roadmap laid out for 2023. Throughout 2023 Hashflow will continue to improve and elaborate on its DEX offering. This year will also see the completion of the Hashverse narrative-driven, gamified DAO, a significant milestone in the Hashflow roadmap. Upon launch of the Hashverse, users will be able to stake HFT tokens, complete challenges, and earn unique NFTs.
Furthermore, Hashflow aims to complete non-EVM chain integration in the first half of 2023 and provide support for exchange traded funds (ETFs). Additionally, the platform will introduce a fiat on-ramp, a smart order routing (SOR) system, and cross0chain NFT support. Later in 2023, we can expect to see the introduction of limit orders and time-weighted average price (TWAP) trading features. TWAP trading prevents large trades from impacting other trades by spreading orders over a predefined period and targeting an average price. Hashflow will also implement volume-weighted average price (VWAP) trading to aid price stability.
Moreover, the Hashflow ecosystem will expand to incorporate several new chains, market makers, aggregators, incentives, order books without counterparty risk, infrastructure updates, and liquidity optimization mechanisms.
Why is Interoperability so Important in Web3?
When two blockchain protocols or decentralized applications (dapps are interoperable, it means they can communicate data without friction. Interoperability helps to connect the various communities throughout the Web3 ecosystem. In the past, blockchain networks were siloed. This created tribalism among blockchain development communities that stifled innovation. Now that blockchains are interoperable, development communities can expedite innovation by collaborating and sharing knowledge. Furthermore, cross-chain communication allows DeFi protocols to access better liquidity, which results in lower slippage for all users.
To understand why interoperability is so important in Web3, imagine if email providers only allowed you to communicate with email addresses from the same provider. Email would be an inefficient form of communication. Likewise, when Web3 protocols are solenoid and unable to communicate, it leaves a lot of value on the table for users. Many believe that interoperability is essential for the mass adoption of decentralized technologies. Creating a frictionless user experience requires developers to carve clear pathways between blockchain protocols in the same way that Web2 developers facilitate interoperability between email providers and external web applications.
Moreover, interoperability helps Web3 projects to reach broader markets and expand their user bases. Not only does it help to improve user experiences, but it also helps to promote innovation and collaboration throughout the industry.
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What is Hashflow and the HFT Token? – Summary
Frontrunning and high slippage can cause a significant barrier to entry for new DeFi investors. When price stability is difficult to achieve, many retail investors opt for centralized exchanges for predictable trade prices and fees. Hashflow addresses these issues using the novel RFQ pricing mechanism to prevent slippage and frontrunning on its cross-chain DEX. Also, Hashflows bridgeless token swaps provide a secure alternative to bridging services that rely on centralized custodial mechanisms.
Moreover, Hashflow offers an accessible platform for users of all experience levels to access secure cross-chain DeFi. The platform promotes interoperability. Plus, the gamified Hashverse DAO provides a novel alternative to traditional governance mechanisms, encouraging HFT token holders to have a say in the future direction of the project by participating in gaming scenarios in a metaverse-themed governance environment.
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