It is becoming more and more apparent that the Polygon/Matic network is becoming the chain of choice for both big and small retail investors and we can see why.
The recent explosive growth of the chain has led those wary of the Binance Smart Chain CeDeFi approach and those marginalised by the Ethereum mainnet fees to the most thriving ecosystem in DeFi.
All good chains need a place to interact with familiar protocols such as automated market makers (AMMs) and yield farms. So why not a one-stop-shop for both?
In this article, we are going to look at one of the most promising AMMs and yield farms on the Matic network. Yeah, we can’t get used to saying Polygon either… we will eventually.
Introducing PolyZap (PZAP) –
PolyZap is the most exciting decentralised exchange on Polygon. Swap any desired coin on the Matic network for a ridiculously low fee. When we say low, you won’t even notice it leave your wallet.
Albeit it familiar to the veteran DeFi degen users, the PolyZap UI may look standardised but when you look under the hood at their tokenomic and emission scheduling, you will see that this isn’t “just another AMM”.
For those who are uninitiated in the whole DeFi space, we will take a whistle-stop tour of the pros of PolyZaps AMMs and yield farming protocols.
An automated market maker (AMM) is a protocol that allows a Decentralised Exchange (DEX) to function without operating like a Centralised Exchange (CEX). PolyZap is a great example of an AMM on the Matic Network.
PolyZap doesn’t rely on the regular order book model that you typically see on the big exchanges like Binance etc. It implements an AMM protocol that effectively allows its users to provide their tokens as liquidity so that others can trade and interact with the platform.
The easiest way to think of it is this… If you have PZAP and MATIC just sat there in your wallet, why not put them to good use and earn some excellent interest? Okay, so how do you do that? Well, you provide them as liquidity to the PolyZap platform.
Once you provide these tokens (effectively lending them out for the protocol to use), you will receive some handsome rewards for being such a good sport. The rewards are paid back in the tokens you deposit and often as a bonus more of the native token on the platform, in this case, PZAP.
TLDR: The system needs tokens to work so you allow them to use yours. In return, you get a nice yield for doing so. Very simple.
So what does the system need the tokens for? Well, on PolyZap, as it is a DEX, people are looking to trade their tokens.
Instead of using the regular order book model as we mentioned earlier, you swap tokens with a smart contract. This smart contract is where the liquidity providers tokens are held.
If you wanted to swap your USDC for some PZAP on the PolyZap DEX, you are effectively putting your USDC into the smart contract and in return, you take your requested PZAP.
The transaction fee of the transaction is then shared between all of those who provided USDC and PZAP to that smart contract and they also receive daily rewards on top of that.
The system just works. It is great for everyone involved. If this still isn’t going in, head to our What is DeFi article to learn more… HERE
So, you have swapped your USDC for PZAP, now what?
You can choose between the PolyZap yield farms or the PolyZap pools.
The difference being, the farms require another token to be provided whereas the pools only require one token to earn yield.
There are pros and cons of both which you can read more about here – What is Impermanent Loss…
With your newly swapped PZAP, you can now put it in the PZAP pool on PolyZap and earn 1% interest a day… Yeah, try getting that annually in your local bank…
Your whistlestop tour of AMMs and yield farms has now ended, lets get back to the article…
Emerging potential on Polygon (Matic Network)
It doesn’t take a genius to work out that Polygon is the place to be atm. We aren’t alone on this either.
Yield farming on Polygon is probably the most well kept secret among the hardworking DeFi farmers 👀
— Arthur (@Arthur_0x) May 18, 2021
The recent rise of the PoS chain is incredible. With less than $500m TVL less than 3 months ago to a recent high of over $7 billion. Truly remarkable growth.
So if platforms like PolyZap can tap into portions of the current and future TVL of the Polygon network, the future looks very bright for them.
To put into perspective the potential room for growth even in the short term that the Polygon chain has, the TVL at ATH for Binance Smart Chain was around $53 billion (around 7.5x that of Polygon)…
If you missed Uniswap and then missed the rise of Pancake Swap, you may have a third opportunity arising right here on Polygon with PolyZap.
What makes PolyZap different?
As I said, there isn’t much to any of the DEX user interfaces. They are all pretty similar and that isn’t a surprise to anyone. Familiarity is good.
It is the way it is because it works. People never seem to comment on how similar centralised exchanges are in their UI but like to comment on DEX.
If it ain’t broke don’t fix it.
It is under the hood where PolyZap really begins to shine, especially for its investors.
At #PolyZap investor confidence is our top priority! 🔒
🔹Audits & Code Security
🔹Harvest Lockuphttps://t.co/743du5LKBP#Crypto #matic #YieldFarming #DeFi #DEX #Polygon $PZAP $MATIC #cryptocurrencies $USDC pic.twitter.com/5hjWCQe56O
— PolyZap.Finance #Polygon #Matic (@PolyZapFinance) May 22, 2021
The tokenomics of PolyZap are excellent. Everything on the platform is structured in a way to benefit those who invest and use the platform.
A lot of AMMs go overboard with their emissions and end up flooding the market with way too many tokens too quickly. This scolds the early investors of a project in a bad way. Trust me I have been there many a time.
You would think that a project would look to reward its early investors and not penalise them by creating huge inflation. But, some do and it never lasts.
PolyZap on the other hand have done away with the infinite supply which has only really been successful with one AMM, Pancake Swap… even they are starting to struggle with such high inflation recently.
The hard cap of 21m PZAP will ensure that there is a finite supply coupled with great rewards but also excellent burning mechanisms to create a very nicely balanced and sustainable (this is the key) release schedule.
Doing it this way prevents ridiculous inflation and consequently a rapid drop in the token price. Which is great for investors in the project.
Gamification and unique burning mechanisms.
I love what the team have done with their gamification of the PolyZap platform. I haven’t seen this kind of interesting burning mechanisms be implemented anywhere across any chain come to think of it.
Battle of the bids –
This one is simple yet very effective. The winning bid before the 15-minute timer resets wins.
In doing so, the winner gets 50% of the whole prize pot, 30% is burnt forever, 10% is rolled over to the next pot and 10% is sent to the marketing treasury, although the team are looking to redistribute this portion somehow soon…
Wheel of Zap and Zap Lottery are also two other gamified sections on the platform. These are familiar and excellent onboarding tools to get new users familiar with PolyZap and hopefully win some more PZAP whilst doing so.
The more that use these features the more PZAP is burnt which is an overall win-win for every one invested.
As the platform develops and the PZAP token becomes overall net-deflationary (more tokens are removed from supply through burning than come into supply through rewards from farming), this becomes increasingly beneficial to PZAP holders.
Supply decreases, whilst demand and consequently price increases.
Speaking of being great for investors, this next feature is one of the best protection mechanisms I have seen in any DeFi project.
It does exactly that. This is a protection feature that limits all PZAP transactions to 0.5% of the current circulating supply.
This is great as a whale can’t immediately dump their whole supply on the market and destroy the price of PZAP for all the other holders.
If they were to do so it would require them to do so in lots of smaller transactions, which would effectively bring their price down each time in doing so. It has a hint of game theory as they are going to be harming themselves if they do so!
On top of this excellent protection mechanism, the PolyZap team have had two successful audits completed by TechRate and HashEx and a pending Certik Audit. Both prior audits resulted in no critical, immediate or medium issues.
PolyZap has also teamed up with one of our other favourite DeFi projects: Beefy Finance. This allows PolyZap users to get an even better yield for PZAP-MATIC LP and PZAP-USDC LP.
The added benefit of providing liquidity to PolyZap on Beefy Finance is that the yield you generate each day is auto-compounded for you. So any rewards are automatically reinvested, you don’t have to lift a finger.
PZAP price prediction?
Although no one can give you an accurate price prediction for any project (if they are adamant they can, run a mile), there are a few metrics we can look at to gauge the overall potential for PolyZap and the PZAP token.
The current market cap for PZAP is around $3 million at the time of writing. If you take any well functioning Ethereum or BSC AMM as a ballpark figure you are looking in the range of $100-$1b+
That isn’t an exaggeration either… Bakery Swap, who you could argue is the second most popular DEX on BSC is a $1bn market cap project. They stand out from Pancake by offering NFTs, really high returning investment IDOs and further gamification of the platform.
If Polygon continues to develop at the rate of adoption and TVL as it is currently (even despite this dip), there is certainly some room for PolyZap to grow along with it. A rising tide lifts all ships and all that…
Keep an eye out for this project as from my research and speaking with their hugely genuine team, they won’t stop and settle for where they are currently. This is just the start for the team and the top DEX/AMM on Polygon is there for the taking in my opinion.
The team are stressing the importance of trust and benefit to their investors which is huge. You only have to look at a few other projects that have tried and failed to occupy this space and see where they went wrong and these two key points were exactly it.
I expect Polygon and the Matic Network to continue to grow in adoption and TVL over the coming months and hopefully ignite DeFi summer 2.0
That being said, what do I know, always DYOR and never invest more than you can afford to lose. This is not investment or financial advice and is strictly for entertainment and educational purposes only.
PolyZap Links –
Website – https://polyzap.finance/
Twitter – https://twitter.com/PolyZapFinance
Where to Buy PolyZap – https://swap.polyzap.finance/#/swap