O3 Swap is a proprietary cross-chain aggregation protocol built by O3 Labs. The mission of O3 Swap is to provide consumers access to cryptocurrency-based, financial services, allowing them to exchange, or ‘swap’, various digital assets within their O3 Wallet. The benefits of this design can be attributed to the high level of safety and security that is inherent to the decentralized model of asset storage and protection. The platform also provides ‘cross-chain’ swaps to conduct exchange settlements without regard to the limitations of a typical isolated Blockchain network. The term ‘cross-chain’ derives itself from the fact that the exchange is executed after traveling across two or more separate blockchain networks. With a cross-chain swap, the initial asset and the target asset are deployed on two isolated Blockchains that otherwise are non-communicative. In light of the advanced development of decentralized financial protocols (DeFi) and the increasingly mature markets for lending, exchange, derivatives, etc., The O3 Swap protocol, in cooperation with its associated decentralized wallet software, provides a one-stop aggregation & exchange platform for consumers and offers developers access to an open, distributed, limitless, and secure — trading environment.
O3 Labs was established in Tokyo in 2017. We have worked tirelessly to contribute our efforts towards the advancement of the specialized development field of crypto-wallet. Our early development has led some industry experts to refer to the O3 Team as ‘pioneers’ of wallet technology. Since our launch, we have continued to learn and grow as an organization and our once small team has grown into a far-reaching and diverse group; at present we have Team members from nearly every continent. O3 Labs is committed to providing professional digital asset management tools and services for our community of 100,000+ users.
There are three milestones in the development history of O3 Labs. First, the release of the Neo light wallet — O3 wallet in Tokyo in 2017 and supported Ontology lately. Second, the support of fiat currencies (USD, Euro) and credit cards to purchase cryptocurrencies (including BTC, NEO, ETH). Last but not least, as a multi-asset wallet to support mainstream assets, such as Bitcoin, Ethereum, Neo, Ontology, Polkadot, Binance Smart Chain, and Huobi ECO Chain, and integrate dAPI of high-quality DeFi projects. O3 Labs is committed to providing better-decentralized management services so that every need for users’ encrypted assets can be met within O3 Wallet.
DeFi innovation has brought many practical applications to the industry and has promoted the development of open finance. The decentralized exchange (DEX) is a notable example that has gradually been recognized by the market following a surge of growth and consumer participation. The Ethereum DeFi projects’ total value of locked assets is over 60 billion USD (DeBank data). However, network congestion and poor scalability have caused unprecedentedly high network transaction fees. This problem is urgent and caused significant financial detriment for many. The problem lacks a proven solution with community consensus. With the emergence of various Layer2 solutions as well as the efforts of some centralized platforms such as BSC and HECO, there are now alternative choices for retail investors. However, transaction barriers between blockchains will continue to limit the usage of assets and O3 Swap helps counter these limitations.
In order to provide a more efficient and simple trading method, we compare different exchanges on the leading chains to find the most cost-effective rates for our users. Moreover, we implement a cross-chain protocol to connect different blockchain networks and allow users to freely exchange assets without regard to network isolation.
Permissionless, Anti-censorship: In any environment, anyone can access O3 Swap without permission and KYC review.
Liquidity Aggregation: Users can exchange assets at the lowest rate and via the most efficient trading route — this is achieved by connecting their own decentralized wallets.
Cross-chain Exchange: We implement all proven and possible cross-chain solutions onto the market with our aggregation protocol. With this, we can achieve cross-chain transactions. Users are able to freely exchange multi-chain assets with one-click.
Community Drive: Based on the O3 Swap Token's issuance and economic model, decentralized governance and community-driven development will be realized.
O3 Swap uses a four-layer structure to ensure the integrity and symmetry of the information in the liquid market. As a result, the consumer has a safe and efficient trading environment.
Network Layer: As the basis of the O3 Swap cross-chain protocol, we will aggregate high-quality public chains and ecological chain systems in the market. This includes Ethereum, Binance Smart Chain, Neo, Huobi ECO Chain, and creditworthy layer 2 projects, to provide cross-chain trading.
Market Liquidity: The aggregation of different liquidity sources through O3 Swap, allows the platform to identify and recommend the best exchange quote for users.
Settlement Layer: Based on the private key signature authorization, the transaction settlement is completed through the smart contract. Additionally, cross-chain protocols and cross-chain pools will help users complete cross-chain asset exchanges and settlements.
Application Layer: Provide developers with a complete service API to integrate into different applications, and providing users with a convenient and user-friendly operating platform.
System roles are divided into the following categories:
Users: Users connect to O3 Swap for transacting with their crypto wallet.
O3 Relayer: The agent of the user and the contract on the chain. Depending on the different users’ needs, O3 relayer can find the best exchange rate through O3 Swap.
Swap: As the core exchange mechanism of the system, it receives users’ requests from the relayer and achieves liquidity settlement by smart contracts.
Aggregator: Aggregate liquidity sources on the market and determine the best trading rates and routes for users
Cross-chain Pool: The cross-chain asset transaction pool built based on the PolyNetwork protocol realizes the free exchange of assets across chains.
Liquidity Providers: Mainly including the following liquidity sources:
Automated market makers of on-chain algorithms from different DEXs.
Lp market maker who provides liquidity for Cross-chain Pool.
The main functional modules of O3 Swap include the exchange aggregator (O3 Aggregator), cross-chain pool (Pool), and asset management center (Dashboard). O3 Aggregators help users find the most effective trading rates and routes in the corresponding network. Pool provides users with cross-chain transaction services and supports users to add liquidity by a single token from different chains to earn income from cross-chain transaction fees and O3 rewards. Dashboard supports users logging in through their own wallet to manage assets and data. The Dashboard displays: total amount of assets, claimable assets, added liquidity, stake, and revenue management.
O3 Swap Token (O3) is an application token issued by O3 Swap. It is an important mediator to promote the development of the O3 Swap network. Based on the economic model of O3 Swap, all participants and developers are encouraged to invest in the maintenance of the overall ecological network through the community governance of tokens.
In the economic model of O3 Swap, there are three ways to earn O3. Firstly, users can receive airdrops through early participation in product testing and community contributions. Secondly, they can receive trade mining rewards by using O3 Swap. Thirdly, they can provide liquidity to cross-chain pools to obtain O3 rewards. O3 is in a locked state when obtained in the above three ways. Users are required to provide liquidity with O3 trading pairs to main DEXs to unlock the O3 in the account. There are three primary benefits for the unlocked O3:
Member rights: Stake O3 to obtain interest and transaction discounts allocated by the O3 Swap treasury.
Community governance: Users can participate in community governance by staking O3 to initiate proposals, participate in voting, etc.
LP staking: Users can use O3 to synthesize liquidity equity proof (LP), which can be used for unlocking and mining.
On the other hand, all transaction fees from O3 Swap will regularly be used to buyback O3 in open markets, and distributed to O3 stakers and development committees in proportion.
Users: Consumers who use O3 Swap for trading.
O3 Holders: Community members who hold O3 to participate in community governance and stake O3 to obtain related rights and interests.
Liquidity Providers: The partners/users who provide liquidity to main DEXs and cross-chain pool.
Treasury: Responsible for receiving, managing, distributing token, and publishing financial data to the community on a regular basis.
Development Committee: In the early stage, it is composed of O3 Labs, community contributors, and representatives who obtained a majority of votes. In the later stage, the committee will be elected by the community.
All revenue from the O3 Swap platform will be used to buy back O3 on public exchanges and be deposited in O3 Swap Treasury for redistribution.
O3 holders will be able to participate in community governance, trading discounts and other member rights by staking O3. According to the amount of staking, the staker can get a certain percentage of the staking reward, which comes from O3 Swap Treasury. The following formula is used to issue:
The initial proportion defaults to 70%, which means that for every token that is repurchased or bought back, 0.7 of O3 will be distributed to the O3 Staker. The distribution percentage is determined by DAO proposal voting in late period.
Users will receive O3 as a reward after trading on O3 Swap. According to the amount of O3 purchased each time, O3 will be distributed for trade mining rewards according to the initial default 1:1. The time of rewards settled and distributed depends on the block time period. The formula for trade mining is as follows:
The initial ratio defaults to 100%, meaning that when buyback every O3, the system releases one O3 for trade mining. The distribution percentage is determined by DAO proposal voting in the late period.
Users can use a single token from multiple chains to add liquidity and generate Lp. Staking Lp will receive O3 as the rewards. The first stage of supported blockchain networks include Ethereum, BSC, Neo, Heco, OKexchain, Solana and other mainstream blockchains.
Locked O3: Users can obtain locked O3, (which is not yet able to participate in the full function of O3 Swap) through the initial platform airdrop, trade mining, and yield farming. Users can log in to the O3 Swap dashboard via connecting to their crypto wallet and unlock it with one click.
Unlocked O3: By providing liquidity with O3 trading pairs to main DEXs, users can participate in the full function of O3 Swap (refer to economic model). The speed of providing liquidity to unlock O3 by the following formula:
Treasury is O3's revenue reserve pool and is responsible for receiving, managing, distributing, and regularly publishing financial data to the community. The income of O3 Swap will be used to buyback O3 in the open market within a regular block period and deposit in the treasury. In order to promote the development of O3 Swap, during the first stage of governance period (2021 Q1-Q2), 70% of the Treasury’s revenue is allocated to O3 stakers to incentivize community contributions; 30% is allocated to the Development Committee.
The Development Committee is mainly responsible for promoting the development of the project and the community construction. During the early stages, it will be composed of O3 Labs, community contributors, and representatives who have obtained the majority of votes. In the later stages, it will be completely elected by the community.
The total issuance limit of O3 is 100,000,000 pieces, which is divided into two distribution phases, the total amount of phase 0 is 10,000,000 pieces which includes the Genesis Incentive and the Community Feedback below; the total amount of phase 1 is 90,000,000 pieces.
O3 Swap Token
Used to motivate early contributors to participate in the first mining.
Used to reward community supporters, early users, and recommenders; need to provide liquidity to unlock.
Used to incentivize traders and liquidity providers. Decremental release in 2 years according to different stages.
2 years linear release.
Investment & Cooperation Institutions
2 years linear release.
Reserve for project development.
O3 Swap is committed to promoting decentralized governance and creating an open-source ecosystem where the community has full autonomy.. There are three development phases of decentralized governance.
O3 Labs builds V1 and related infrastructure and launches the O3 economic model.
Open governance channels such as community proposals and O3 voting. Select members of the first development committee and initiate community governance.
Decentralized governance and decision-making completely organized by the development committee.
Launch the official website.
Release the Neo swap module.
Publish the O3 Swap Litepaper.
Launch the bridge module. Provide cross-chain service.
Support ETH, BSC swap.
Release O3 Swap Token and economic model.
Launch trade mining and other community incentives.
Complete Layer 2 development and deployment.
Release V2. Support instant quote and pending order.
Launch cross-chain 2.0.
Release O3 network.
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Fernando Martinelli, Nikolai Mushegian. (2019). A non-custodial portfolio manager, liquidity provider, and price sensor. https://balancer.finance/whitepaper/
Messari Research (2020). Crypto Theses for 2020. https://messari.io/report/crypto-theses-for-2020
Michael Egorov. (2019). StableSwap - efficient mechanism for Stablecoin liquidity. https://curve.fi/files/stableswap-paper.pdf
PolyNetwork: An Interoperability Protocol for Heterogeneous Blockchains. (2020). https://www.poly.network/PolyNetwork-whitepaper.pdf
Satoshi Nakamoto (2008). “Bitcoin: A peer-to-peer electronic cash system”, Bitcoin, 2008, https://bitcoin.org/en/bitcoin-paper
Tokenlon Protocol Litepaper V1.0. (2020). https://tokenlon.im/files/Tokenlon-litepaper_en-us.pdf
This prefatory paper is for general information based on O3 Swap’s development proposal and experience. It should not be considered as professional financial investment advice and used in the evaluation of making any investment decision. This paper reflects the current opinions of the authors and is not made on behalf of Paradigm or its affiliates. Please refer to the announcements on the official website for the latest product updates.