AirSwap
$0.02879 6.47%
AST · 101w

Airswap: a centralized exchange tragedy

Airswap: a centralized exchange tragedy the follies of attempting to design and ICO a controllable “decentralized” exchange experience

This week, a token exchange called Airswap will be completing a ~$32M token sale (42,000 ETH cap with over $20M already secured in presale). Airswap is a ConsenSys backed team building both a tokenized exchange and smart contract based token trade protocol system called Swap. If you asked Airswap what their product is, they might tell you its purpose is to reduce friction and increase efficiency in the token trading process through the services provided by the AirSwap Indexer and Oracle. However, this post shows in reality they are building an overly complex centralized exchange on top of Ethereum.

Lets introduce the parts of the Airswap Token (AST) ecosystem:

Oracle(s)

Airswap has committed to developing a number of Oracles for several inputs whose selection and values are determined by AST holders. The Swap whitepaper barely addresses Oracle design or implementation and mostly treats it as a black-box concept while proposing top level API endpoints. Recent blog posts do less to introduce the new Oracle types not in the whitepaper (token whitelist and AST lock amount oracles). Decentralized oracles have not been successfully developed or tested at scale so more than likely the Airswap team will end up using centralized trusted Oracles they can control. Even if AST is used for voting mechanisms the Airswap team is only offering 13% of tokens to whitelisted ICO participants and 40% of tokens will likely be released to the Airswap team in Q1 2018 (~6 months from ICO).

Indexer(s)

The Indexer is an off-chain service used for makers and takers to find each other, use the price oracle for guidance, negotiate, then settle on a price peer-to-peer. To place an “intent to trade” (order) in the Indexer a maker must hold and lock AST tokens (amount determined by an oracle) for 7 days. Since the “lock amount” or...

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