How To Use DeFi On The Internet Computer? A Look At ICPSwap

Last week I wrote an article outlining some of the basic DeFi concepts and applications on the Internet Computer, and one of the conclusions I came to was that it’s still a growing segment early in development — with some of the main applications including InfinitySwap, Sonic, and ICPSwap. Regardless of how big they are currently, all three of these apps have tremendous potential and upside.

DeFi is one of the largest segments in cryptocurrency and blockchain with $70 billion in TVL. Because of its importance, it’s essential that readers have a step-by-step understanding of how to use certain DeFi applications. After all, DeFi isn’t really something that a beginner can go in and master in a day, knowledge transfer and guidance are needed.

So to take a look at one particular DeFi application on the Internet Computer, in this article I’ll be highlighting the current features of ICPSwap, one of the most advanced DeFi apps on the IC.

As a side note, ICPSwap is on its 3rd Beta Version, but right now we’ll be discussing its current features and roadmap. With that being said, let’s dive in.

What Is ICPSwap?

ICPSwap is “a DeFi hub that provides full-stack financial, market, and DAO services.” Its intention is to build upon the shoulders of Uniswap and PancakeSwap and address the issues/pain points of existing DeFi projects.

ICPSwap is different too in that its services are not just for individual investors and traders, but also for developers to build out their DeFi capabilities such as token minting, trading, distribution, allocation, fundraising, project operation, and marketing.

So ICPSwap goes a little outside the traditional boundaries of DeFi, which is why it calls itself a “full-stack financial, market, and DAO service” — because it does in fact do financial services, it also does marketing, and lastly, it has governance offerings as well.

ICPSwap essentially got its origin from the weaknesses of using Uniswap, PancakeSwap, SushiSwap, and the Serum DEX on Solana (high gas fees, DeFi siloes, narrow-services).

What Can You Do On ICPSwap?

ICPSwap has many features, in particular, swaps, token pools, farms, marketplace, and a wallet. So let’s go through each of these in order.

Crypto Swapping On ICPSwap

For those unfamiliar, swapping in the crypto context refers to exchanging one cryptocurrency you hold for the equivalent value of another cryptocurrency. For example, you give your friend 12.5 ETH, and your friend gives you 1 BTC in exchange. This exchange or trade is a swap in the ETH/BTC pair, where you’re giving ETH in return for BTC. Centralized exchanges such as Coinbase, Kraken, Gemini, and Binance are good for swapping cryptos as well as decentralized exchanges like Uniswap, PancakeSwap, Balancer, and Bancor (for example).

The market is really huge for decentralized exchanges and cryptocurrency swapping as more coins come into the market and as investors discover more coins they want to invest in, hold, stake, yield farm, earn interest on, provide liquidity, etc.

Among the entire DeFi industry, decentralized exchanges have the largest market share (with $28 billion TVL), followed by lending ($19 billion TVL), bridging ($12 billion TVL), CDPs ($12 billion TVL), liquid staking ($11 billion TVL), and yield ($9 billion). So there’s still a gigantic market for decentralized crypto swapping services.

The first service ICPSwap provides is crypto swapping. To get to the ICPSwap dashboard, go to the homepage and click ‘Launch App 1.0’ and follow the instructions of connecting the app to your Internet Computer wallet such as Plug or Stoic. Once you do that you’ll then find yourself on the ICPSwap app homepage where you’ll land on the Swap feature.

At the moment, the Swap feature is limited to two coins: WICP (Wrapped ICP) and XTC (Cycles). So first, in order to use this feature you must have WICP in your wallet. To get WICP you must first go to the Wrap tab to the left of Swap in the middle of the dashboard and wrap some ICP into WICP. Doing this will allow you to swap WICP into Cycles to be used on other DApps.

So swapping is the first service provided by ICPSwap, however, under the Swap category as well is the third tab called Liquidity. This tab (as seen in the image below) is quite advanced and developed with multiple offerings.

For a refresher, liquidity pools are a mechanism by which users can pool their assets in a decentralized exchange like ICPSwap to provide asset liquidity for traders to swap between cryptos. Liquidity pools are essential to facilitating decentralized trading, lending, and borrowing. So ICPSwap having this service is absolutely critical to its development moving forward. And on this point, ICPSwap has multiple pools that you can begin participating in: WICP/NDP, WICP/GHOST, WICP/XTC, and WICP/WICP.

So as you can see, WICP is the base currency, which means it’s on the left of the currency pair — thus, you need WICP to use the pool. That is why the Swap feature requires you to wrap your ICP into WICP, i.e., so you can participate in ICPSwap’s liquidity pools. Then when you want to add some liquidity to try it out you can click on the ‘Add Liquidity’ button towards the bottom left of the screen.

So the three features under Swap are wrapping, swapping, and liquidity. This means ICPSwap has all the features needed to facilitate decentralized crypto exchange for Internet Computer ecosystem tokens.

ICPSwap Token Pools: What Are Those?

The second service on ICPSwap is using Token Pools to stake GHOST and WICP. Token Pools is a fancy word for staking. So for this product what you’ll have to do is click on the ‘Harvest’ button under the cryptocurrency that you would like to stake and earn an APY on and then deposit some of that particular cryptocurrency.

In conclusion, ICPSwap’s Token Pool feature is on the early side of development with not as many offerings. But nonetheless, the UI and UX are very attractive and friendly, so once more pairs go live with more participants as well. It should be more fun to experiment with.

Yield Farming On ICPSwap

The third service currently on ICPSwap is farming. Farming is the third tab on the top of the app. At the moment, the only farming options available are related to staking NFTs to earn WICP. This one is slightly more complicated as it requires you to add liquidity to the specific trading pair of which you will then receive a corresponding NFT in your wallet. Then you go back to this Farms tab and select the NFT to stake. After you do that you’ll start earning WICP.

ICPSwap Marketplace: Shop ’Til You Drop

The fourth service on ICPSwap is the marketplace. ICPSwap’s marketplace allows you to buy certain Airdrop NFTs, farming position NFTs, and other ‘regular’ NFTs. This is one of the coolest features that will likely get even better in ICPSwap’s next update. Stay tuned for the new marketplace. Marketplaces are familiar segments because they remind regular folks of online shopping as well as crypto people of scrolling through NFT marketplaces like OpenSea and Entrepot.

ICPSwap Wallet: See Everything You Own

The fifth and final feature on ICPSwap’s current app is the wallet, which is pretty standard in the industry to have. However, the UI here is great because it shows all your assets in an attractive and organized manner. Wallet security is extremely important and ICPSwap has you covered by relying on the Internet Computer blockchain for asset storage and security.

ICPSwap Roadmap & Outlook For 2022

As briefly mentioned above, ICPSwap has a new Beta Version 3.0 for users to try, but not all the functionalities are working like they are in V1. However, you can see the dashboard below to check it out for yourself.

It’s pretty similar with some design upgrades. But in the coming months, the other more exciting features will be released such as advanced trading features, ICS tokens, DAOs, liquidity mining, and other NFT innovation functions. Stay tuned!