Traders may now exchange up to 300 different tokens in a single transaction, according to a new tool developed by a team working on the Avalanche blockchain.
During a panel discussion in Seoul last week, developers revealed that the Multiswap platform developed by the CavalRe team had achieved the highest number of token swaps during a testing period, with 340 unique tokens being exchanged.
Typically, DEX liquidity pools allow traders to convert between different tokens. The algorithm behind Multiswap generates a liquidity pool of easily exchangeable tokens, allowing for many swaps to take place in a single transaction.
Liquidity pools consist of large quantities of bitcoin held in a digital agreement. This creates liquidity, which speeds up dealings. The participants who contribute tokens to the pools are known as liquidity providers (LPs).
Users can now set up more sophisticated trading strategies, such as ones that combine many tokens and require fast, low-cost execution.
“Think of it like a new kind of decentralized ETF,” explained CavalRe co-founder Eric Forgy in an email to CoinDesk. For demonstration reasons, we have over 125K trading pairs with no fragmentation of liquidity represented by a pool of tokens worth more than $500 per on testnet.
Each token’s full supply of liquidity can be exchanged for any other token in the system. To achieve the same effect on Uniswap, Forgy estimates that 125,000 individual pools would be required.
However, Forgy warned that users should still exercise caution because of the security concerns inherent to complex blockchain-based systems.
“There is no such thing as completely secure software, blockchain or otherwise. For instance, a recent hack took the use of a compiler flaw to steal data from contracts written in an older version of Vyper, a Python derivative.” Forgy told CoinDesk that these threats are hard to counter.
The Ethereum Virtual Machine (EVM) utilized by Avalanche’s C-chain, where they have originally deployed, is secure, and “we feel confident about Solidity,” he stated. Ethereum smart contracts are written in Solidity, a programming language built on top of the Ethereum network.
Multiswap plans to investigate opportunities for growth in the form of tokenized foreign currencies, commodities, and stocks in the coming months.