StellaSwap is among the biggest DeFi applications and the top DEX on Polkadot, providing low-slippage trading along with a comprehensive range of DeFi features such as yield farming, liquid staking, one-click crosschain swaps, and more.
StellaSwap is among the biggest decentralized finance (DeFi) platforms on the Moonbeam parachain network within Polkadot. As per the project’s claims, StellaSwap has achieved a total volume of $1.7 billion, with a total value locked (TVL) of $4.7 million according to DefiLlama’s data at the time of this writing. The significance of StellaSwap for both the Polkadot and Moonbeam ecosystems hasn’t gone unnoticed; Polkadot recently granted 1 million DOT in liquidity incentives (around USD$7 million) to StellaSwap to drive the growth of Polkadot, while Moonbeam also provided 1.35 million GLMR to StellaSwap as liquidity incentives.
How StellaSwap Works
Similar to other decentralized exchanges that utilize automated market makers (AMMs), StellaSwap operates with non-custodial liquidity pools to maintain a collection of supported assets, which it uses to fulfill user trade requests. Anyone can step in as a liquidity provider by adding their assets to a liquidity pool, and in return, they will receive a portion of the trading fees proportional to their contributions.
With its V3 upgrade, It rolled out concentrated liquidity, a decentralized exchange model that was first implemented by the Ethereum-based DEX Uniswap. Concentrated liquidity is regarded as the most effective model for trading assets on AMM DEXs.
StellaSwap has officially secured a license for a type of concentrated liquidity AMM from Algebra, the team behind Uniswap V3’s codebase. Thanks to Algebra’s dynamic fee model, yield optimization is integrated into the staking process, meaning users don’t have to constantly shift their liquidity between pools to maximize their rewards.
Now, let’s dive deeper into how concentrated liquidity operates on StellaSwap and how it minimizes slippage and impermanent loss, all while enhancing capital efficiency.
STELLA Tokenomics
The STELLA token was introduced through a fair launch as part of the project. They minted a total of 500,000,000 tokens on the Moonbeam network. Out of this, 70% is set aside for protocol emissions. Each day, around 35,000 STELLA tokens are given out as incentives for providing liquidity. Additionally, 10% of the total supply is designated for the project’s treasury, ecosystem growth, and development. The distribution of tokens is planned to continue for 3 years. Currently, STELLA is only available for trading on StellaSwap.
Conclusion
StellaSwap opens the door to the Polkadot ecosystem, the Moonbeam network, and other networks as well. As a DeFi platform, it provides a crucial service to users within the Polkadot and Moonbeam ecosystems by facilitating low-slippage swaps and bridging to other platforms. Plus, since Moonbeam is EVM-compatible, users can easily bridge into StellaSwap using its cross-chain swap feature. StellaSwap has also teamed up with other top protocols like Beefy, which helps their users streamline and automate the staking process.
While StellaSwap is a robust tool for users looking to take advantage of DeFi opportunities, it’s important for users to understand the risks involved, such as the possibility of impermanent loss. Always conduct your own research before putting any money in, and never invest more than you can afford to lose. This article is meant for educational and informational purposes only and should not be considered financial advice.