The PipiSwap Protocol

Introducción

The PipiSwap protocol is a peer-to-peer system designed for the exchange of cryptocurrencies (ERC-20 Tokens) on the Ethereum blockchain. The protocol is implemented as a set of persistent, non-updatable smart contracts; designed to prioritize censorship resistance, security, self-custody, and to operate without trusted intermediaries that can selectively restrict access.

There are currently three versions of the PipiSwap protocol. V1 and V2 are open source and are under the GPL license. V3 is open source with slight modifications, which are visible here. Each version of PipiSwap, once deployed, will operate in perpetuity, with 100% uptime, as long as the Ethereum blockchain exists.

How does the PipiSwap protocol compare to a typical market? To understand how the PipiSwap protocol differs from a traditional exchange, it is useful to examine two topics: how the design of the Automated Market Maker deviates from traditional exchanges based on centralized order books, and how permissionless systems deviate from those. conventional systems with permission.

Book of Orders vs. AMM Most publicly accessible marketplaces use a centralized order book style of exchange, where buyers and sellers create orders organized by price level that fill progressively as demand changes. Anyone who has traded stocks through brokerage firms will be familiar with an order book system.

The PipiSwap protocol takes a different approach, using an Automated Market Maker (AMM), sometimes called a Constant Function Market Maker, instead of an order book.

At a very basic level, an AMM replaces buy and sell orders on an order book market with a liquidity pool of two assets, both valued relative to each other. As one asset is exchanged for the other, the relative prices of the two assets change and a new market rate is determined for both. In this dynamic, a buyer or seller trades directly with the pool, rather than with specific orders left by other parties. The advantages and disadvantages of Automated Market Makers versus their traditional order book counterparts are being actively investigated by a growing number of interested parties. We've compiled some notable examples on our research page.

Permissionless Systems The second departure from traditional markets is the permissionless and immutable design of the PipiSwap protocol. These design decisions were inspired by the founding principles of Ethereum and our commitment to the ideals of permissionless access and immutability as indispensable components of a future in which anyone in the world can access financial services without fear of discrimination or risk of counterpart.

The permissionless design means that the protocol's services are completely open for public use, with no ability to selectively restrict who can or cannot use them. Anyone can trade, provide liquidity, or create new markets at will. This differs from traditional financial services, which typically restrict access based on geography, wealth status and age.

The protocol is also immutable, that is, it is not upgradeable. Neither party can pause contracts, reverse the execution of trading operations, or in any way change the behavior of the protocol. It is worth noting that PipiSwap Governance has the right (but not the obligation) to divert a percentage of the swap fees in any pool to a specified address. However, this capacity is known to all participants in advance and, to avoid abuse, the percentage is limited between 10% and 25%.

Where can I find more information? To research the economics of MMAs, game theory, or optimization research, visit our research page. For new features implemented in V3 that extend and refine the AMM design, see the V3 Concepts page. Ethereum protocols are sometimes also called peer-to-contract systems. These are similar to peer-to-peer systems, but with immutable, persistent programs known as smart contracts taking the place of a peer.