CoinMarketCap takes a deep dive into Hashflow, a decentralized exchange guaranteeing the best token swap prices on the market.
Hashflow is a decentralized exchange focusing on interoperability, zero slippage and MEV-protected trades. It allows traders to trade any asset on any chain in seconds by connecting their wallets: it's a multi-chain DEX that operates on Ethereum, BNB Chain, Polygon, Avalanche, Optimism and Arbitrum.
Unlike many other exchanges, Hashflow charges no commission and executes all trades at the displayed price. According to the project, users are not bothered by slippage or miner extractable value front-running their trades and executing them at worse prices.
Hashflow engages users with its Hashverse, a gamified, storyverse-driven DAO, where you can stake tokens, complete quests and earn HFT and unique NFTs in the process.
The Hashflow Team and Investors
Hashflow was launched by CEO Varun Kumar, a San Francisco-based blockchain entrepreneur who previously worked for the German Aerospace Center, Udacity and NASA. He deferred his PhD in Aeronautics and Astronautics at Stanford University. CTO Victor Ionescu is a Romanian tech specialist with a computer science degree from Oxford. He previously worked at Airbnb, Facebook and Google.
Hashflow closed its Series A funding round in July 2022, raising $25 million from Jump Crypto, Wintermute Trading, Electric Capital, Dragonfly Capital Partners and Balaji Srinivasan. Other investors include Coinbase Ventures, Kraken Ventures, LedgerPrime, GSR, Kronos Research, Altonomy, Meltem Demirors, Anthony Sassano and Jason Choi.
How Does Hashflow Work?
Hashflow emphasizes that it takes a different approach from regular decentralized exchanges relying on an automated market maker. The exchange stresses that AMMs are “capital inefficient, routinely prone to risks like sandwich attacks and impermanent loss, and cannot price non-spot assets.” Instead, Hashflow employs a pricing approach called a request-for-quote (RFQ) model.
In an RFQ model, professional market makers manage liquidity pools and liquidity providers enjoy previously-unknown efficiency and security. In particular, the exchange moves pricing off-chain, allowing them to factor in data like historic asset prices and volatility. This leads to more efficiently-priced assets and, consequently, to a better trading experience for users. More precisely, users benefit from:
- Pricing: Since prices are formed off-chain, on-chain spreads are tighter.
- Zero slippage: All quotes are executed at the displayed price.
- MEV-resistance: Cryptographic signatures make front-running impossible.
- Bridgeless cross-chain swaps: Traders can swap across chains without relying on third-party bridges.
Hashflow stresses that its bridgeless cross-chain swaps don’t require users to wrap assets or take the smart contract risk of bridging to another chain. Instead, the protocol leverages market makers, who manage liquidity in the pools and are required to cryptographically sign quotes that remain unchanged until the execution of the trade. For instance, a simple swap of ETH for AVAX would involve the following steps:
1. Request a quote for selling ETH on the source chain and buying AVAX on the destination chain.
2. The market maker provides a quote.
3. The trader submits the transaction on the source chain.
4. Liquidity pool smart contract transfers funds to the liquidity pool and calls the gateway smart contract.
5. Gateway smart contract triggers an event, and validators validate transactions and submit proof to the gateway endpoint on the destination chain.
6. Relayers submit payload on the destination chain and transfer the balance to the trader’s wallet.
Unique Features of Hashflow
Hashflow attempts to innovate on the DEX market with several unique features.
More Efficient Pricing
Unlike traditional decentralized exchanges, which rely on automated market makers, Hashflow allows market makers to source liquidity and price assets using off-chain pricing functions, backed by cryptographic signatures. By moving pricing off-chain, market makers can use more sophisticated pricing strategies that factor in off-chain data like historic asset prices, volatility and other real-world information that allows them to price assets effectively.
Hashverse
With the Hashverse, the project introduces a gamified, storyverse-driven governance structure that operates with a vote-escrowed token model and engages stakers. Hashflow aims to upend the traditional governance approach of DAOs and introduce a model where veHFT stakers create an in-game character. With this gamified approach, users can complete tasks that benefit the community and earn rewards in the process, all the while staying engaged in the governance process.
High Interoperability and Reputable Backers
Hashflow has already expanded to several major L1 blockchains and the main Ethereum scaling solutions, like Arbitrum and Optimism. Traders can pick from several blockchains to swap assets. At the same time, the team managed to attract several high-profile investors, which led to a valuation of $400 million when closing the $25 million Series A funding round.
Hashflow Tokenomics
The HFT token is the protocol’s governance token with a total supply of 1 billion HFT. The token allocation is as follows:
- 19.32% - core team (four-year vesting)
- 25% - early investors (four-year vesting)
- 2.5% - future hires (four-year vesting)
- 53.18% - ecosystem development
- 18.54% to ecosystem partners
- 13.08% to community rewards (NFTs + rake the rewards + exchange distribution)
- 9.54% for future community rewards
- 7.50% to designated market maker loans
- 2.52% to vendors and early service providers
- 1.00% to the community treasury
- 1.00% for Hashverse rewards
Hashflow announced that there would be retroactive NFT rewards, with 6.75% of the HFT supply going to early users that received Hashflow NFTs (linear vesting for 12 months). The remaining 9.546% of HFT allocated to the treasury for rewards will go to trading rewards, market-making rewards and LP rewards.
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