In brief

  • SwapX is launching a DeFi reward program for staking liquidity provider tokens on other decentralized exchanges.
  • The SwapX decentralized exchange also introduces a governance token to control the fate of individual liquidity pools.
  • The new staking features launch tomorrow, September 17.

SwapX, a new decentralized exchange, is offering a rewards system for providing liquidity across the DeFi ecosystem. That’s right: It's giving away a governance token. Well, two, actually.

SwapX announced today the imminent launch of liquidity provider token staking, allowing liquidity providers to earn the SwapX governance token SWP as a reward for staking LP tokens on other decentralized exchanges (DEX), such as Uniswap and Balancer. LP token staking is expected to launch in the coming days.

As part of the announcement, SwapX introduced a SWP/USDT liquidity pool. When people use that liquidity pool, they get additional governance tokens specific to the pool, called Pair Tokens. 

The starting point is liquidity provider (LP) tokens, which can be obtained from decentralized exchanges like Uniswap and Balancer in return for providing liquidity to different token swap liquidity pools. They serve as proof that a user has committed funds to those protocol’s pools and are issued in amounts proportional to the funds provided for a given pool. Those are the LP tokens SwapX is offering staking rewards for, in an effort to unify the scattered DEX community into a more cohesive entity.

“SWP is the platform governance token of SwapX, and Pair Tokens are governance tokens of individual liquidity pools,” a SwapX representative clarified to Decrypt. “The biggest innovation is that no other DEX has yet designed a governance token for individual liquidity pools.” 

Holders of the Pair Tokens can ostensibly use them to adjust token ratios and reward rates, but SwapX also sees Pair as another form of income on top of the transaction fees and SWP tokens its users might already be earning.

The SwapX decentralized exchange platform was launched by an anonymous team on September 10 as a clone of Uniswap, though it modified governance and reward distribution to accommodate Pair Tokens and SWP rewards. 

“The SWP governance token is mainly used for liquidity incentives, SwapX community voting, payment of pool certification fees, and more,” SwapX told Decrypt. “Pair Tokens for each pool are distributed 85% to liquidity providers and 15% to a liquidity reserve for pool management, including a risk reserve and operating expenses.”

Both types of governance token can be traded on the open market.

As with other decentralized exchanges, SwapX will reward liquidity providers with exchange fees from traders using the platform to swap between token pairs.

SwapX is just the latest example of rapidly emerging projects adding more layers of incentives to the DeFi ecosystem. It could be a trend that powers the world of crypto to new heights, at least until people swap DeFi for something else.

Editor's Note: The SwapX staking launch was originally slated for September 17. The article has updated to state that it is expected to go live in the next few days.


The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.