If 2020 was the year that DeFi found its feet, then 2021 is shaping up to be the year that DeFi is spreading its wings across the blockchain ecosystem and finding its place beyond the boundaries of Ethereum. It was somewhat inevitable, given that Ethereum’s eye-wateringly high gas fees continue to price many smaller investors out of the market.
In recent months, Polygon (formerly known as Matic Network) has been gaining significant traction. A layer 2 scaling solution for Ethereum, Polygon is popular among Ethereum loyalists and dApp developers who seek higher throughput and lower fees without compromising ETH compatibility or threatening DeFi’s beloved reigning monarch. Polygon’s DEXes – with QuickSwap at the forefront – are also gaining powerful momentum with total value locked increasing rapidly.
QuickSwap is a fork of the Uniswap exchange, and as such, it offers many of the same benefits and features as its Ethereum-based counterpart. However, where Uniswap’s mascot is a unicorn, QuickSwap is represented by a dragon. Additionally, because Polygon is compatible with the Ethereum network, users can easily move their ERC20 tokens or ETH across the bridge onto Polygon for use on QuickSwap.
As Polygon’s leading DEX, QuickSwap ensures the deepest liquidity and highest volume on layer 2. To motivate projects and users to come over from Ethereum, QuickSwap offers generous APYs for liquidity providers who stake in its incentivized pools. According to one of QuickSwap’s recent tweets, APYs are as high as 216% for the ETH/MATIC pair, 306% for the ETH/USDC pair, and 251% for the DAI/ETH pair, representing some of the best returns in the business of yield farming.
Moreover, providing liquidity for QuickSwap’s pools allows users to benefit from the low fees on the Polygon network, so swapping funds between different pools doesn’t come with the trade-off of Uniswap’s high fees. Users are free to make as many transactions as they wish without worrying about incurring high costs.
Dare You Enter the Dragon’s Lair?
The project also operates its own token and staking rewards. In the Dragon’s Lair, QUICK holders can stake their QUICK to earn more of it. Interested parties can learn everything they need to know about how QUICK staking works on the DEX’s blog, here.
QuickSwap charges a 0.3% fee on transactions. From this fee, 0.04% is allocated to the Dragon’s Lair rewards program. The project uses these funds to market buy QUICK tokens for distribution to stakers. According to QuickSwap, staking QUICK yields an APY that fluctuates between 25% and 40%.
Integration with Aave
QuickSwap is far from the only DeFi project to spot the potential of Polygon. Flagship DeFi app Aave announced at the end of March that it would also be expanding to Polygon. For its part, Polygon put up one percent of its total MATIC token supply, some $40 million, as liquidity mining rewards to help drive Aave users to the Polygon implementation.
QuickSwap joined the effort, offering additional QUICK rewards called an “Aave rewards boost” for liquidity providers on pairs that Aave’s layer 2 implementation supports. Over $3.3 billion in liquidity is locked into Aave’s Polygon application at the time of writing.
DeFi’s expansion to more blockchain platforms is a net positive for the ecosystem as a whole. It provides more choices for users, as well as lowering fees, helping to attract those users who are priced out of Ethereum. Including the long tail of investors means more liquidity in the system, which in turn attracts more users, more funding, and more development.