Post written by our brilliant and hardworking CTO, Túlio Braga
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Today, we make a big move by open sourcing the Swapy Exchange Protocol. It means that now you are able to use the protocol and its source code for any purpose, to distribute it, to modify it, and to distribute modified versions of it, under the terms of the Apache 2.0 license. This move has been discussed since the beginning considering that the open source concept and the decentralization have much in common. As the implementation achieved a certain level of maturity we decided to move it to a public repository on Github. By doing it, we are increasing our project's transparency whereas giving power to the community.
Freedom is something that is intrinsically related to the Swapy's purposes. While we build our network to empower individuals and organizations into the credit market, it would be fair to allow the community to bring together their knowledge, ideas, and effort. We hope that this movement not only improves the quality of the protocol discussions but also contributes making the #blockchain space more powerful. Furthermore, we appreciate your attention and take this opportunity to invite you to join us in our dream of a world in which everyone has the right to ACCESS TO CREDIT.
How does it work?
Now, we would like to briefly explain how the Swapy Exchange Protocol works. Well, this protocol decentralizes a fundraising process involving an investor or investment fund and a business. We are also developing tools to make the protocol interactions smoothly for the credit market. In our case, the protocol allows credit companies in emerging nations, where the interest rates are much higher, to raise capital from investors from developed nations, where the interest rate is much lower, in a decentralized manner with much less friction.
In summary, the smart contracts represent a two-parties agreement that enables one side to start a fundraising offer composed by gross return rate, payback period, asset value, and its particular physical contract hash. After creating the offer, the contract owner is able to sell it to an investor. Right after the sale and before the payback by the fundraiser, the investor is able to re-sell the asset to another party, transferring the right to withdraw the return in the stipulated time to the buyer.
As you may notice, investment involving businesses should take a more strict procedure to avoid illegal operations. This way, the protocol implements the following rules:
To allow an ETH address to transfer funds to a fundraising smart contract, the fundraiser must explicitly inform the whitelisted ETH address.
Now, only the identified investor holding that ETH address is able to transfer funds to the smart contract that forward the funds to the fundraiser.
When selling their assets to someone else, investors must explicitly provide the buyer's whitelisted ETH address.
As soon as the buyer transfer funds to the smart contract, it proceeds with the investment ownership transference.
Finally, when the fundraiser transfer the return to the smart contract, it will be able to forward the funds to the asset's current investor.
It is important to notice that every time the asset's investment ownership changes, both parties must provide the physical contract's hash and the stipulated ETH amount for that transaction. The transaction only occurs if these values match in both sides.
Of course there are some more details we avoided to talk in this post as it is intended to be only an introduction to the protocol. Please, check our whitepaper for in-depth explanations on the project. You are more than welcome to check our repository at Github and be a part of our community. We also would like to invite you to follow us on our blog and on our social media channels to keep updated regarding our progress. As soon as our Swapy Data Protocol achieve a good level of maturity, we will be also open sourcing it under the same Apache 2.0 license. Just to make it clear, we separated Swapy Network into two protocols to make it simpler to understand and interact, although both will communicate in the long term. In the near future, the community will have the chance to decide if it is reasonable to merge them together.
Don't hesitate! Join us in our dream of providing UNIVERSAL ACCESS TO CREDIT!