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# System prepended metadata

title: Swingby Strategy & Positioning
tags: [swingby, ' strategy']

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---
title: Swingby Strategy & Positioning 
tags: swingby, strategy
---

# [Public] Swingby Team Workshop: Strategy, Positioning, etc.

## 1. Problem Statement 
1. The multi-chain world today has **created the need for users, developers and liquidity to operate and move assets** between different chains
2. Current solutions are **not done trustlessly**, creating **great risks** as centralised points of failure in the DeFi ecosystem
3. Other alternatives are complicated for users to use

### Other Supporting Factors
* Bitcoin is still relatively untouched when it comes to DeFi adoption (only 1-2% of BTC on ETH)
> If BTC is untouched, how can we bridge more BTC to L1 DeFi? Need Bitcoin Maxis community. Can we work with ICP or STX, which are building on BTC? 

:::info
Discussion: While this narrative still holds true, how have we tried to incentivise BTC holders to look for yield? 
:::

**Greater movement of funds across chains**
* More L1s (e.g. Polygon, AVAX, FTM, SOL) are creating incentive programs and Dapps to attract users & liquidity
* Upcoming ETH L2s are attracting liquidity and Dapps within ETH L2s and Mainnet 
* This creates greater use of bridges for users to switch between different ecosystems (L1<>L1<>L2)


**Bridges getting hacked & potentially regulated**
* Bridges are increasingly becoming the target of hacks or regulation 
* Hacks of Poly Network, RUNE, etc. show that cross-chain bridges are areas of vulnerability and honeypots for hackers to attack 
* Centralised bridges such as Binance Bridge, or BitGo (issuer of Wrapped BTC) are coming under the scrutiny of regulators and may be shut down or compromised any time.
* More users moving from CEXes to DEXes should see an increased awareness of true ownership and preference to use decentralised products over centralised ones. 

Minor Factors 
* Increased withdrawals of BTC from consumer apps should see an increased in BTC users looking for yield on their assets

## 2. Vision 

The world we envision is a **multi-chain universe** where there is **free movement** of users, assets and liquidity between different worlds. This freedom can only be achieved when **the power to swap across chains** are **taken from the middlemen gatekeepers** and **returned to the common man**.

In this new world, swaps should be: 
* **Easy** or even **invisible**, such that anyone can do it by themselves
* **Non-custodial**, such that no one else ever has custody of your assets at any time 
* **Ubiquituous**, such that everyone can do whatever, wherever, however you want

## 3. User Segments 
Current Swingby users are people who 
* Want to **move assets across ecosystems**
* **Lean towards BTC** in their asset allocation
* Have a heavy emphasis on **privacy & anonymity** 


This is likely to broaden, given the following factors: 
* Increasingly **multi-chain world** and the need to move assets across chains 
* Swingby's product **roadmap** (i.e. are we going into other L1s? L2s?)
:::info
On roadmap, L2s might be considered moving forward (BTC, ETH). We need to understand who is our intended user & get feedback from the community (e.g. BTC Lightning vs ETH L2)
:::

Other important user segments are Swingby token holders and Metanode operators (mostly investors and OTC partners)

## 4. Solution 

### Current Solution - Skybridge
An easy-to-use cross-chain bridge that minimises trust on all levels 

* **Trustless**: Minimise trust in all aspects (key access, network incentives, token choices, audits)
    * Key access: TSS MPC ensures that no one entity ever controls your funds 
    * Network incentives: Network bonding disincentivises collusion & bad actors against your funds 
    * No new tokens: Instead of minting new tokens, we use the standard tokens (BTC, WBTC, BTCB) as much as possible 
    * Security audits: Binance audits   
* **Simple**: Swap in 1 click with any wallet
    * 1 click action: Just send BTC on one side & receive on the other - No need to mint
    * Any wallets can swap with Swingby 
* **Community-owned**: Revenues & profit flow back to the community 
    * Metanodes: 66% of 0.20% swap fees generated are earned Metanode operators instead of the project (remainder goes to LPs)
    * Fee Subsidy: When swapping into unbalanced assets, fees are not charged to incentivise balancing of the pools


> Product Features in Isolation 
>  * **TSS MPC**: Threshold signature-signing multi-party computation that makes it impossible for one party to control funds maliciously
>   * **Metanode Bonding**: Bonding & network economics for Metanode operators (signees to the TSS) that disincentivises bad actors
>   * **Layer 2 solution**: Minimal smart contracts interaction minimises surface area for hacks & creates a simple user experience 
>   * Swap fees generated goes back to the Metanode operators


<!--
Security: 
    * In comparison with centralised bridges, there are no centralised points of failure
    * TSS mechanism that was audited  
    * Network economics
    * Audits 
    * TSS / MPC vs centralised 
    * Comparison against competitors 
        * REN: Much more secure because of rumours of REN team holding keys to centralised wallets 
        * RUNE: Hard to compare (need more information) 
        * Centralised bridges: Decentralised over 50 metanodes, economics of the model disincentives metanode to steal the money. There can't be more in the LP than value locked in Swingby tokens 
    * Churn (Ever 1000 epochs, 12 hours but not fully implemented yet)
        * Resharing churn: Regenerating key shares but keeping the same private key (key rotation)
        * Full churn: Generating new address & sending funds to new address (privacy reasons)
    * Quite hard to say how we're more secure
    * No mint & burn token. Even without interacting with the bridge, the Bridge entity becomes a central issuer of the token and you're still affected 2
    * Audits: Smart contract related (anti-plagarism, but not full security) Red4Sec; no full audit of the mainnet yet; Binance's TSS audits 
Trustless
    * No one entity controls your assets 
    * Underlying asset is more 'trustworthy' than other BTC variants 
        * No mint & burn entity 
        * Collateralisation of the token - if you hold renBTC, there's a counter-party risk for REN having less than 1 BTC for 1 renBTC (over-collateralisation)
        * WBTC is bigger and more trusted 
Seamless & easy: Just send the tokens! 
    * Other chains rely on EVM (e.g. REN) - Need to interact with REN smart contract, then send a BTC and it gets confirmed. For Swingby, send amount (identifier) stores identity of transaction without having to interact with the smart contract. 
    * Significance: Interact with the Skybridge with any existing wallet. Doesn't have to be an existing wallet (Every wallet works)
    * From user POV, Swingby's fees are cheaper (just a send). ETH gas fees are paid by user in REN, but subsidised by Swingby and simple (release token vs minting)
Mechanic to maintain bridges' balance.
    * If you add funds to the side with lower funds, there are no Swingby Network fees.
    * Add liquidity to the bridge and earn APR instead of just mint & burn 
Current integration with BTC network enables BTC compatibility

> * Every Bridge has new set of MetaNodes (new shares) and Metanode is BTC & EVM chain.
> * Metanode acts as a party in the MPC signing to unlock swaps 
> * Metanode monitors the chain for incoming funds & outgoing funds 
> * Transaction flow: UI calls 1 Metanode (incoming swap) -> Metanode synchronise data stores -> Funds are sent to the TSS address + 2 confirmations -> Metanode observing the chain will match it & sign the function call to ETH Skybridge to release tokens 
> * LP re-balancing not there yet. Yield farming contract on farm.swingby.network. The more imbalanced the bridge, the less APR. sbBTC to be put into yield farming contract (LP token for SkyBridge)
--> 
### Upcoming Solution - SkyPools 
Beyond bridging BTC to/from BTC variants across chains, SkyPools extends the functionality by enabling users to swap their BTC into different ERC-20 tokens in 1 click
* **Access to entire DeFi ecosystem's liquidity via AMM aggregators**
    * Illustration: BTC -> ERC20 for Defi. Swap back to BTC after yields 
    * Phase 1: Paraswap integration + 1inch integration (what do we launch with)
        * Paraswap features - routing map to display on UI + better docs
    * Phase 2: Native AMM aggregator 
* **The same easy-to-use UI that gives you full control over your trades**
    * Slippage tolerance for AMM swaps 
    * Ability to eject WBTC before the swap 


<!--* Previously: BTC -> Binance Chain / BSC 
    * BSC didn't exist previously, only BEP2 which doesn't have smart contracts, hence no smart contract logic needed to work 
    * BEP20 overtook BEP2
    
* Skybridge to interact with other smart contract platforms 
    * BTC - WBTC (1:1 swaps) BUT Skybridge can interact with other smart contracts (e.g. Uniswap: BTC -> WBTC -> USDT)
    * General ability to interact with smart contracts. Edge case - monitoring incoming funds' lifecycle interacting with smart contracts 
    * 1 smart contract - ParaSwap 
    * Deploying on other chains - 
        * BTC -> EVM is easy. Orchestrating launch + metanodes. If other chains, might need to integrate 
        * Swapping out BTC would be difficult 
        * Might need to interact with another AMM aggregator
    * Slippage tolerance 
        * User can indicate (default: 0.1%, 0.5%, 1.0%)
        * If user don't want to do the trade, they can eject the WBTC. 
--> 

## 5. Competitor Positioning 

### Competitor Analysis

:::info
This competitor analysis is a high-level one, which is more for project positioning rather than to provide a definitive direction to product roadmap. That said, it's a good jumping-off point to inform our future roadmap decisions
:::

Current competitors can be split into 2 fronts: 
* **Level of Trust**: Less trust good, More trust bad
    * **Centralised**: Operated by a single centralised custodian & users trust it because of the entity's reputation 
    * **Distributed Trust**: Operated by a network of centralised custodian & users trust it because of the network's reputation
    * **Trustless**: Non-custodian solutions which users do not trust the entity, but the network and technology securing the solution
* **Swap Functionality**: More & updated use cases good, less & updated use cases bad
    * BTC between BTC and EVMs
    * Any asset between EVM Layer 1s
    * Any asset between EVM Layer 2s

|                   | BTC between BTC and EVMs | Any asset between EVM Layer 1s | Any asset between EVM Layer 2s | 
| ----------------- | ------------------------ | ------------------------------ | ------------------------------ |
| Trustless         | Swingby, REN, RUNE       | Synapse, Paraswap              | Hop, Synapse                   |
| Distributed Trust | WBTC, tBTC               | -                              | -                              |
| Centralised       | Exchanges                | Binance Bridge                 | -                              |

> Q: Where does Connext fit in? 

### Swingby vs Competitors

When it comes to Level of Trust, Swingby positions itself the **best in class**, by having **minimal trust in any entity within the Swingby ecosystem**. This beats Centralised bridges and Bridges with Distributed Trusts which are single or few honeypots that can easily be taken out by regulatory actions or hacks 

When it comes to Swap functionality, Swingby focuses primarily on BTC which is the biggest cryptoasset. However, this **swap functionality is limited compared to other bridges** doing EVM Layer 1 or Layer 2 swaps, which **reflect current user needs of moving between EVM chains or ETH L2s for DeFi**.

Moving forward (potentially after SkyPools), Swingby needs to **increase its swap functionalities to be more updated with current user needs**. We need to find the right community & get their feedback on the future directions, which could possibly be: 
1. Any asset swaps between **EVM L1s** 
2. Any asset swaps between **Ethereum L2s** 
3. Any asset swaps between **Bitcoin & its L2s**

## 6. Project One-Liner
(A) A trustless cross-chain bridge that empowers liquidity to move freely between Bitcoin and EVM chains

(B) Move liquidity freely & trustlessly between Bitcoin and EVM chains



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