Do you remember our recent blog post on the Conceptual Development Map?
Today, we'll delve deeper into the Digital Asset area and explore MetalSwap's efforts to bring more RWAs to the dApp. In this article, we will start showing what MetalSwap has already done here and in the second part we will try to understand the challenges that the team is trying to overcome in order to bring more RWAs into the dApp.

So, get ready for this - let's go!

I recall that the green boxes represent solutions that are already running on the MetalSwap dApp, while the yellow boxes represent solutions that are not yet implemented but the team is working to integrate them.

What was already implement

Let us start with the Chainlink Oracles box, this is the solution that made it possible to include native digital assets within MetalSwap, i.e. assets that already exist within the cryptocurrency world such as ETH and WBTC. Chainlink is currently the leader in the field of decentralized oracles in DeFi, and thanks to its data feed system, the first assets have been successfully integrated into the dApp. Currently, there are two native digital assets available, but as you can see, there is already a yellow OP box that we will discuss later, and many other assets will be added in the future. Op token will be implemented if Dao will vote positively to the Official MIP-3.

Moving on to the RWA section, which stands for Real World Asset, meaning all those assets that originate outside of the blockchain, as you can see in green, we have the collateralized asset box. These are assets that have been brought onto the blockchain through a collateralization system made by other DeFi players. Currently, we have two RWAs in this category: USDT, which is the Stablecoin issued by Tether, and WPAXG, which is the Wrapped version of the PAXG token representing an ounce of gold.

What's coming up in this area?

Returning to the native digital assets, as mentioned earlier, we have a yellow box labelled OP. This is the name of the token on the Optimism blockchain and could potentially be the next asset added to the dApp. Optimism could be a good solution for bringing Hedging Swaps to make them more scalable and after the Grant won by MetalSwap. The addition of OP among the available assets in our dApp will allow all token holders to protect themselves from the volatility of this asset. If you would like to share your thoughts write it down on the Official Forum. As mentioned before the Dao will decide on this topic from the 17th of May, to the 20th of May after that the DeFi Foundation had published the Official Proposal.

Continuing, in the top right of the map, we have the Chainlink Automation box. This is a solution that is still under research and development, recently released by Chainlink, which would make automatic interactions with MetalSwap's smart contracts possible. If applied, this solution could have an impact on the current liquidation system of the dApp and directly reduce the premium required  for open an Hedging Swap on MetalSwap.

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Now let's move on to perhaps the most interesting topic, which is how MetalSwap is looking for solutions to integrate other RWAs into the dApp. As you can see, the RWA box is immediately divided into 2 parts. On one hand, the solution is being sought through Synthetic assets. RWAs synthetics can be created in two ways. Synthetix V3 creates synthetic assets supported by another underlying asset, such as SNX or ETH, using the price feed from Chainlink. 

Another option under research and development to bring synthetics into the dApp is the algorithmic solution, but after the Terra/Luna experience it is clear all the difficulty of implementation of this solution .

Another yellow box under research and development is DCP, which stands for the creation of RWAs without using tokens but through collateralization of dollar positions and cash flow calculations that represent a certain asset. The biggest challenge here lies in compensating the pools in case of extreme volatility of the assets taken as a reference, which can put the protocol's liquidity pools in crisis. This is an extremely complex solution, particularly from a mathematical perspective, regarding over-collateralization and capital efficiency, on which the team is working.

Lastly, but not least, there's the box related to Currency Hedging Swap, which is the idea of bringing different traditional world currencies such as EUR, CHF, and GBP to MetalSwap. Currently, in the DeFi world, there are already representations of these assets, both synthetically and over-collateralized, and their implementation would open up MetalSwap to another long list of use cases.

Conclusion

As you have seen, the research and development behind the dApp are important and ongoing. MetalSwap, as a pioneer in the Hedging Swap sector within the DeFi world, is facing all these challenges first by trying to bring this financial derivative into the decentralized world for the first time. As previously indicated, the team encourages discussion within the forum to discuss the future of the protocol. Join this revolution!

Goodbye Volatility

To the MetalSwap!
… and beyond
-The DeFi Foundation

⚠️Warning⚠️

❗ METALSWAP ‘s admins or moderators will NEVER contact you directly on any social under any kind of circumstances.

❗ Everything concerning $XMT ‘s smart contracts and addresses is shared by our official channels (list below), do not trust any different info from any different source.

✎ What is MetalSwap?

With MetalSwap we enable hedging swap transactions through the use of Smart Contracts, AMM style.