Picking up from our article on the Past, Present and Future of Swingby, we'd like to share a bit more about the future of Swingby today. Yes, you guessed it right - that would be SkyPools.
It was a few months back when we first teased SkyPools, but as the development team has been hard at work building SkyPools, we're pleased to share a bit more about SkyPools ahead of our Q4 testnet launch.
1. How SkyPools work
2. First application of SkyPools: Swapping BTC into ERC-20 tokens
3. SkyPools beyond swaps
How SkyPools works
As we should be familiar now, Swingby's SkyBridge is a trustless cross-chain bridge that empowers liquidity to move freely between Bitcoin and EVM chains. Despite bridging over $81M of Bitcoin to Defi, we believe that this is barely scratching the surface of DeFi and we want more to do.
For many users, the beauty of Defi lies in composability, where we can pick and choose any Defi legos we want in our investment strategies. Hence, it's very rare to do a single asset bridge (such as BTC to WBTC) and stop there. In reality, most users hop onto some other liquidity pool, farming or staking product after transporting their Bitcoin into Ethereum.
With that, bridging BTC variants is really only the first step in a multi-hop journey in the world of Defi. Hence, we thought to ourselves - Why limit ourselves to only the first step (aka a bridge)? What if you could bridge your BTC and immediately tap into the world of Defi legos in 1 transaction?
SkyPools is Swingby’s answer to the question. SkyPool is an upgrade to SkyBridge, giving the SkyBridge superpowers to interact with smart contracts after the bridging of Bitcoin is completed. At the heart of every Defi application is the smart contract - if you can interact with smart contracts, you unlock the power of these magical Defi legos.
Hence, by combining the best of both worlds, transactions made on SkyPools consist of 2 parts:
1. Bridge: Bridge Bitcoin from 1 chain to another trustlessly
2. Smart Contract Interaction: Interacting with smart contracts to do ANY Defi action you want
This enables us to interact with any smart contract, meaning that the possibilities are endless. Whatever Defi, NFT, Web3 application you can dream of, the SkyPools mechanism can make it happen.
To start, the first type of smart contract interaction we are launching is AMM swaps. AMM swaps are easily one of the first interactions any users have with Defi. Regardless if you are a trader, yield-farmer or just a liquidity-pool provider, AMM swaps are necessities that everyone uses. Hence, we decided to launch Skypools with AMM swaps first.
Swapping tokens via SkyPools
Using the Bridge + Smart Contract Interaction model, this is how you can swap BTC into any ERC-20 tokens via SkyPools.
Here, we wanted to create an experience that had the quintessential security of Swingby, coupled with the great user experience and liquidity of today’s Defi apps. Over the last year, AMMs like Uniswap and Sushi, as well as LP/AMM aggregators like 1inch and Anyswap, has created a high bar when it comes to swaps. Users have come to expect nothing less than quick and easy swaps, deep liquidity pools and low slippage.
Hence, to give you that great experience you expect, we will tap on the existing liquidity pools on Uniswap, Sushi and Balancer via AMM aggregators like Anyswap and 1inch. This should give you the best of both worlds - maximal trustlessness and deep liquidity for your swaps.
To give you control over slippage, our SkyPools UI will have slippage tolerance controls you are familiar with. Just like swapping on AMMs, if the slippage is beyond your tolerance level, the swap will not happen and you will have your funds back.
Furthermore, we are adding a feature where you can eject your WBTC from the swap if you changed your mind along the way. This is particularly useful if market conditions such as price has changed, causing you to prefer holding your assets in Bitcoin instead. You will be able to eject the WBTC from the swap and have your Bitcoin in wrapped form.
With swaps coming to SkyPools, we are stoked to see what kind of DeFi strategies you guys will come up with to leverage on your Bitcoin holdings. To illustrate the potential of SkyPool swaps and inspire you guys to degen fearlessly, let us run through a couple of scenarios below.
Use case 1: Swapping your Bitcoin into any tokens
Let's say, I am Bob - someone that loves my Bitcoins but have been feeling some FOMO being left out of the DeFi season. I want to look for higher yields as well as high-potential projects to invest in. Perhaps, Bob thinks highly of ETH and wants to buy some ETH.
Swapping Bitcoin into ETH without SkyPools
Previously, in order to invest in ETH, Bob needs to first bridge his BTC into WBTC via Swingby SkyBridge. Bob uses Swingby Skybridge instead of centralised bridges as it is trustless and non-custodial
Next, he goes to Uniswap to swap WBTC into ETH. Here, Bob would need to first approve the WBTC spend and then swap WBTC to ETH. This process is troublesome as Bob needs to hop around and manage different platforms.
What about with SkyPools?
With SkyPools, in 1 step, Bob selects ETH, confirms the slippage tolerance and clicks Swap.
The next step? Bob would need to send his BTC to the SkyBridge address for the bridge & swap process to start.
From here on, we will swap his Bitcoin to Wrapped Bitcoin via SkyBridge, and then swap his WBTC to ETH via our LP aggregators.
Just like this, Bob receives the ETH in his wallet without having to switch across different platforms and wallets. Now he can start hodling ETH, providing liquidity pools or start staking thanks to SkyPools. You're welcome, Bob!
Use case 2: Taking profits into Bitcoin
Here's another scenario - let's say that Bob is happy with his DeFi gains and wants to move his funds back to Bitcoin - the OG cryptocurrency that he trusts.
Bob uses the SkyPools interface to select ETH and BTC, and clicks Swap. The same process in use case 2 happens in reverse, where we swap ETH to WBTC via LP aggregators, and then use SkyBridge to bridge the WBTC to BTC.
Within just 1 platform (i.e. SkyPools), Bob achieves the ETH to $WBTC swap, and then receives the BTC in his Bitcoin wallet.
Say goodbye to complicated transfers, centralised exchanges and jumping across different platforms! With SkyPools, you can efficiently swap, bridge and move your assets across chains easily and efficiently. For those of you with heavy Bitcoin stacks, now is the time for you to give your stacks the superpowers of DeFi!
But we're not done yet! At first glance, SkyPools might look like a product only for swaps, but we assure you it is not. Remember when we said, that it is to combine the SkyBridge trustless bridge, together with any smart contract interaction?
Yes, we mean it by any smart contract interaction - AMMs and swaps are only the start. If we can interact with AMMs to do swaps, can you imagine what we can do with other smart contracts?
What if we could connect with lending protocols such as Aave and Compound, allowing you to bridge and lend your Bitcoins out in 1 click?
What if we could connect with NFT projects such as Open Sea, allowing you to bridge, swap Bitcoins and buy NFTs in 1 click?
The possibilities are endless here really, and we're really early in the journey. What kind of use cases can you dream of? We're stoked to find out more about the crazy, unthinkable, degen use cases that you can think of. Let us know, and we'll do what we are best at - build!
Meanwhile, in our next article, we’ll dive deeper into the technical overview and smart contracts behind SkyPools! For the geeks and builders, you’ll be in for a treat 🛠