This page summarizes the main benefits you can draw from using ParaSwap's over interacting with decentralized finance services directly or using another middleware.
ParaSwap connects to most major decentralized exchanges, such as Uniswap, Kyber, Curve or the 0x network.
When you input a trading pair on ParaSwap, for instance, ETH to DAI, ParaSwap compares the available rates for the pair on each exchange (accounting for your transaction's volume).
ParaSwap does whatever it takes to find the best rate - including splitting your order across several decentralized exchanges.
Splitting orders is particularly effective for large transactions, such as the one presented here: a swap of 500 ETH to DAI, routed on three supports: 1. 40% ParaSwapPool, 2. 40% Uniswap V2, 3. 20% Kyber.
ParaSwap routing algorithm explores every relevant path, including the ones involving extra hops. For instance, to buy ETH from USDT, a direct USDT -> ETH swap might not be the way.
Getting the best rate might involve going USDT -> USDC -> ETH in that case. No need to compute all this complexity (across all DEXes) by yourself - ParaSwap does it for you!
Here, this large transaction is routed through DAI and on 2 exchanges to achieve the best rate possible.
MultiPath can also help you interact with several services and smart contracts in one gas-efficient transaction. For instance, if you'd like to swap ETH to SNX and then deposit the SNX into Aave for aSNX, ParaSwap can do this for you in one step:
In the example above, the ETH-> SNX trade is first split between SushiSwap and Uniswap to reduce slippage. Then, the SNX tokens obtained are deposited on Aave and represented by the aSNX tokens obtained. Aggregating several interactions in one transaction like this one helps increase gas efficiency.
Every trade made on ParaSwap is settled on the Ethereum network and incurs a gas cost paid to the miners to verify and broadcast the transaction. The gas price (chosen by the person submitting the transaction) influences the time required for the transaction to be validated.
If the gas price is too low, a transaction might never be incorporated into a block.
The Gas Token (GST2) enables the tokenization of gas when prices are low. The GST2 previously minted are then harnessed to reduce the effective gas costs when the Ethereum Network is most busy.
ParaSwap pools the liquidity provided by professional liquidity providers in the ParaSwapPool. This pool is included in any relevant trade, just like another decentralized exchange.
When interacting with a DeFi service never used on a given wallet before, a specific transaction is required to enable tokens to be spent or moved around:
Allow. The transaction must be repeated for each token spent/traded, and on each new service.
Since ETH is the base asset of the Ethereum network, it is the only asset that does not require an
Allow transaction to be spent or utilized.
With ParaSwap, you still need to perform the
Allow for any new token you interact with. However, once you've allowed the ParaSwap contract, you'll be able to trade your tokens on any DEX - including potentially new DEXes added after your first trade.
Since ParaSwap is a middleware, your funds are only exposed while a transaction is being processed. ParaSwap never holds custody of your assets - you stay in full control.
As of Friday, Oct 09, a total of $4M were staked on ParaSwap's contract. Source: NexusTracker
While being a middleware reduces the scope of risk, it doesn't eliminate it. The main operational risk lies in the failure of one of ParaSwap's contracts. We implement several solutions to hedge for this risk:
ParaSwap's contracts are audited. New versions go through a thorough audit process before being released.
Any user can subscribe to insurance covering the risk of a technical failure of ParaSwap's contract using Nexus Mutual.
To minimize the risk exposure, ParaSwap only integrates with services following thorough security practices.