DeFi Project ParaSwap Launches Airdrop of Native Cryptocurrency to Early Adopters

DeFi Project ParaSwap Launches Airdrop of Native Cryptocurrency to Early Adopters

It pays to be early in crypto. And today is no different. As part of its first-ever token launch, decentralized finance (DeFi) project ParaSwap announced today that it is handing out 150 million of its native PSP tokens to early users.

ParaSwap is a platform that collects different cryptocurrency trading rates from across the DeFi space. One trade may be routed through Uniswap, while another trade may be executed by the Kyber Network. Sometimes, one trade may even be split and routed through two or more different decentralized exchanges (DEXs) to achieve the best rate.

Today’s airdrop makes up roughly 7.5% of the token’s total supply, according to a statement shared with Decrypt. The entire supply will be unlocked gradually over the next four years.

Source: ParaSwap

Retroactive airdrops like ParaSwap’s have become a highly-popular token distribution model. Uniswap made headlines last year, for example, for launching its UNI token in a similar fashion. Another well-known DeFi platform 1inch Network launched its 1INCH token on Christmas day through a retroactive airdrop.

Many of these airdrops have gone on to be worth hundreds of thousands of dollars.

The thinking goes that by giving early adopters tokens, they will be more inclined to participate in the protocol’s continued development. This is because these kinds of tokens all carry governance capabilities, allowing users to vote on various issues related to the platform.

The same is true for the PSP token, however, its primary utility will be that of incentivizing market makers on the platform to remain competitive when offering rates.

Parswap’s founder Mounir Benchemled said that the project will soon launch a DAO as well.

How do ParaSwap and PSP work?

ParaSwap is powered by a network of market makers who help match orders for crypto traders. By providing liquidity for a specific trading pair, they also help traders avoid pesky slippage. For this service, market makers earn a fee.

If there is a high amount of volume for a particular market, then the market maker earns a larger fee.

With the PSP token, the ParaSwap team wants to double down on this mechanism.

Now, token holders can stake their holdings with market makers that are either providing a reasonable price for their service or are servicing a unique token pair. As the amount of PSP staked increases, so too do the additional awards granted to the market maker. In this way, market makers are earning for high trading volume and through the trust of PSP token holders.

The latter rewards, those earned from staking, are split between the market makers and the stakers every two weeks. This also induces stakers to put their money on the best market maker, as well as incentivizing market makers to provide the best rates for a trade.

Benchemled said, “We are excited to introduce a brand new model that rewards both stakers and market makers and makes ParaSwap a better trading venue for users, dApps, and protocols.”

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