AirSwap (AST) Review: Decentralised ERC20 Exchange Network

AirSwap (AST) is another entry in the long list of decentralised exchange tokens that have recently headed to market.

More specifically, AirSwap is a decentralized exchange (DEX) for ERC-20 tokens that is based in Hong Kong. It uses its own cryptocurrency, the AirSwap token or AST, to create markets for trading any of the thousands of ERC-20 tokens in existence. This is all done without the need for a centralised market maker.

However, given the plethora of other DEX tokens on the market, can it really compete?

In this AirSwap review, we will take an in-depth look into the project including its technology, development and roadmap. We will also analyse the potential use cases for the AST token and their long term adoption potential.

What is AirSwap?

The AirSwap exchange was developed with user privacy and security as top priorities. The company wants to give its users a platform where they can trade anonymously in a peer-to-peer manner that avoids third-parties and trading fees.

The AirSwap token itself is an ERC-20 token and the platform uses the Ethereum blockchain to create a decentralized trading platform. The platform itself was also designed to support Ethereum based ERC-20 tokens, which is very useful for traders given the huge number of altcoins based on the ERC-20 standard.

AirSwap held a crowdsale in 2017 that saw them issue the AST token to contributors. This was a relatively successful ICO that saw the project raising over $30m

AirSwap Protocol

AirSwap created their Swap Protocol to enable transaction free trading. The Swap Protocol uses smart contracts on the Ethereum blockchain to settle orders. Everything else is handled off-chain. The AirSwap team believes that connecting traders off-chain makes trading on their decentralized exchange faster than competing decentralized exchanges such as EtherDelta that depend on the blockchain for order fulfillment and the propagation of information.

The AirSwap team realized early that matching trades on-chain wasn’t the best solution because of the delays it creates. When fulfilling trades on-chain you need to wait for nodes to reach consensus on transactions, and on the Ethereum network this takes roughly 15 seconds. That is far too slow for an exchange, where orders should be fulfilled in microseconds.

Another issue with using on-chain order routing is that the possibility exists for bad actors to manipulate public data from the blockchain. In traditional stock markets this is known as front-running and it becomes a problem for decentralized cryptocurrency exchanges when they publish all their order information publicly on the blockchain.

Since AirSwap uses the off-chain Swap Protocol it eliminates the possibility of front-running that could occur if third-parties were privy to sensitive order information that could be exploited. Another benefit to the Swap Protocol is that it does away with a centralized order book. This is possible because AirSwap implements an indexer and an optional oracle.

The Indexer on AirSwap works like a search engine for the DEX. It holds counterparty information and shares it privately when needed by the counterparty in any trade. If a trader is unsure what price is appropriate for a trade they can consult the oracle.

The oracle is there to provide suggestions on pricing. This gives the AirSwap DEX price discovery even with low levels of liquidity.

How does AST Token Work?

The AST token primarily functions as a means for market makers (aka makers) to set markets on AirSwap. When a maker wants to offer one cryptocurrency for another at a set price on the exchange they use the AST token to create the market for that altcoin. This is also known as providing liquidity for the exchange.

The maker sets the bid price, or the price they are willing to pay, as well as the ask price, which is how much they expect to receive. The maker is able to create a market for a given asset because they hold a large amount of the asset being offered. Then they profit from the difference between the bid and ask price, also called the spread.

Traditional exchanges have set market makers, but with AirSwap anyone can become a market maker by signaling their intent to provide liquidity. This is done by staking 250 AST. Once the AST is staked it is locked up for seven days and a market is created.

The amount that needs to be staked to become a maker, and the duration of the lockup are both determined by AST holders, who vote on the staking amount and lockup period. Initially the stake was just 100 AST, but coin holders voted to increase that to 250 AST.

On the other side of the market are takers, or those who purchase the altcoins being listed on the exchange by the makers. Takers pay no fees other than the network transaction fees. They can discover all the makers on the platform, get pricing information, and place orders, all for free.

The AirSwap Team

The founders of AirSwap are Don Mosites and Michael Oved, who were students together at Carnegie Mellon University. Oved went on to become a successful algorithm trader, while Mosites became a full stack designer and entrepreneur. Mosites spent over a decade designing products at companies like Zynga and Google before launching AirSwap with Oved.

A third co-founder is Sam Tabar who has 15 years of expertise in the finance industry. Tabar was previously Head of Capital Strategy at Bank of America Merrill Lynch and prior to that was a graduate of Oxford University and Columbia Law School. Other notable figures in the AirSwap platform are former hedge fund manager Michael Novogratz and Joseph Lubin, who was a co-founder of Ethereum. Both are advisors to the project.

AirSwap Community

AirSwap is active on several soial platforms and has a modest following for a blockchain project. Twitter followers have passed the 30,000 mark, which isn’t huge. On the AirSwap sub-Reddit there are just shy of 3,600 followers. Posts are sparse, with several a week, and no more than a handful of comments on each post.

The AirSwap team does host a weekly discussion, and those have a bit more interaction. The Telegram channel has just over 3,600 followers and on Facebook the AirSwap page has just over 4,100 followers. The AirSwap team continues updates on both platforms.

Development and Roadmap

One of the best ways to get an idea of how much development is being done at a project is through their GitHub activity. These public repositories are where most projects will publish their open source code for their community to observe.

I decided to jump into the Airswap GitHub to see how much code was being pushed by the developers. Below are the code commits for the three most active repositories in the project.

As you can see from the commits over the past 12 months, there is still quite a bit of activity from the developers. Of course, this is nowhere near as much code that is being pushed by other projects that we have reviewed.

This also does not seem to backup the number of updates that appear to announced by the team. For example, in their 2018 yearly review they stated that in the year they had pushed 2 million lines of code. It is therefore also possible that the developers are pushing code to private repositories for inclusion in the main repos later.

Similarly, there may be other reasons that Airswap has not been publishing as much code as other project's recently. AirSwap was launched back in 2017 and a great deal of code was pushed in 2018. Whether we are likely to see that many more commits this year depends on what they have set to release in their roadmap.

So far, the only roadmap that is publicly available is the initial one that was released back in November of 2017. However, the team says that they plan to release an updated roadmap in "Early 2019".

Of course, the particular reddit comment was made about two months ago and we are currently heading into March. We can only hope that it is on the way soon but if you want to keep updated on this you can monitor Fluidity's official blog.

AST Token Performance

AirSwap held their ICO back in October 2017, meeting their hard cap and raising $33 million dollars. AST tokens were priced at $0.30 at the ICO and reached as high as $2.08 in January 2018, but then got swept up in the bear market in cryptocurrencies.

The coin continued falling all throughout 2018, and even with major crpytocurrencies showing some signs of life in early 2019, the AST token remains heavily depressed. As of the end of February 2019 AST is trading at just $0.032621 or almost 1/10 of the ICO price. That’s quite a blow for early investors.

Because AST is an ERC-20 token it can be stored in any ERC-compatible wallet, but if you plan on using it has to be stored in one of the wallets capable of being connected to the AirSwap platform. That includes MetaMask, Ledger, Trezor, and Opera. It also supports mobile wallets including Trust, imToken, Status, and Coinbase Wallet.

Those interested in buying AST can find it on Binance and IDCM, as well as Huobi Global and of course on the AirSwap platform itself. AirSwap supposedly supports fiat purchases through the Wyre application, but I was unable to get the Wyre widget to work on the AirSwap site.

AST is currently sitting at rank 398 on CoinMarketCap. There seems to be a relatively healthy level of liquidity for the token although over 90% of the volume is taking place on only two exchanges. This means that most of the liquidity is dependent on these centralised exchanges (the exact issue AirSwap is trying to address).

Conclusion

The AirSwap platform got off to a strong start back in 2017, with a talented group of founders and a strong advisory team, however the bear market of 2018 has really taken something out of the platform. While it should have grown tremendously since launching it seems instead to be languishing, with very little growth in the trade volume.

The idea of free trading certainly has some appeal, but traders haven’t really gotten on board with the concept for some reason. Currently the largest trading volume for the DEX is in DAI, Chainlink and OmiseGo, but understand that the total daily trade volume is under $30,000.

The AST token has good potential if the platform can gain some traction, and with the price as depressed as it currently is the AST token could be a huge bargain if the AirSwap team can breathe life back into their project. Fee free trading is certainly an incentive, but so far it doesn’t seem to be a large enough inventive to bring in traders by the masses.