Many Dex are based on Ethereum or the Solana chain, and those Dex have their own advantages and disadvantages. But there is another chain called the Cardano chain driving the DeFi ecosystem. And a platform like MinSwap leads the way in Cardano’s DeFi space, offering swaps, liquidity pools, yield farming, and governance with unique optimizations.

What is MinSwap?

Minswap is a community-centric decentralized exchange platform functioning as a multi-pool automated market maker based on the Cardano blockchain. It allows users to trade Cardano native tokens directly from their wallets without relying on centralized intermediaries. Like typical DEXs, Minswap charges a fee on each trade that goes to liquidity providers as a reward. Minswap relies on liquidity pools, where users provide funds in exchange for a share of transaction fees and yield farming rewards. The platform has its native utility token, MIN, which is used for governance and incentivizing users to earn ADA coins through yield farming.

Background of Minswap

Minswap was founded in 2021 and incubated by Cardano Lab. It has conducted one funding round via Crunchbase, led by the Cardano Foundation as the top investor. Long Nguyen is the founder and current CEO of Minswap, with backgrounds in blockchain technology, decentralized finance (DeFi), and software development. Richard Nguyen is the co-founder & blockchain engineer lead of Minswap. He previously worked at Trail CRM as a DevOps Engineer. Phan Nguyen Huy Hieu is the second co-founder; he has a strong engineering background with a Bachelor of Software Engineering (BSE) focused in Computer Software Engineering.

Minswap Products

Minswap is a decentralized exchange (DEX) built on the Cardano blockchain, offering multiple products and features to enhance DeFi accessibility and efficiency. Its key products include:

Trade

The MinSwap Trade allows users to seamlessly trade Cardano native tokens through a decentralized, on-chain process. To use the Swap feature, users connect a compatible Cardano wallet, such as Nami, Eternl, MetaMask, or Yoroi, select the tokens they wish to trade (e.g., ADA for MIN), and confirm the transaction. Currently, Minswap supports four order types: limit, stop, OCO, and partially fill.

Pools

Here, users can explore various liquidity pools available on the Cardano ecosystem on the platform. Each pool displays key metrics such as the total liquidity, trading volume, fees, and annualized yield (APR). These on-chain data help users decide which pools to join based on potential rewards and activity.

Zap In

Zap In is a feature of Minswap that eliminates complex processes during liquidity provision. This allows users to add liquidity to a pool using just one token instead of needing both tokens in equal proportions. This means users just need one available token to participate in the pool. For example, when a user provides liquidity to a pool, the user must deposit two tokens in a specific ratio (50:50). The Zap-In feature eliminates this complexity by automatically converting a portion of the single token into the required second token. Minswap sold some amount of the first token for the second token.

Yield Farming

Yield farming involves staking or locking up assets in liquidity pools to generate passive income, usually through governance tokens or a portion of transaction fees. In the case of Minswap, users need to stake LP tokens to earn MIN tokens as a reward. The MIN reward depends on how much the share the LP token users are staking is compared to the total LP tokens staked in the particular farm.

How to Farm?

• Provide Liquidity: Users deposit a token pair (e.g., ADA/MIN) into a liquidity pool and receive LP tokens.
• Stake LP Tokens: These LP tokens can be staked in MinSwap’s yield farming pools to start earning rewards.
• Earn Rewards: Staked LP tokens generate yield over time, paid in MIN and possibly other tokens.
• Harvest & Withdraw: Users can claim rewards and unstake their LP tokens whenever they choose.

MIN Point System

The MIN Point System is a way to track and reward liquidity providers based on their participation in pools on Minswap. Instead of directly earning MIN tokens, users accumulate MIN points, which can later be converted into MIN tokens. A simple mathematical formula on-chain is used every two weeks to determine how many MIN tokens will be allocated in the next pool reward.

MIN Staking

Users can stake their MIN token to earn ADA rewards, so when someone swaps on Minswap, there is a 0.3% fee, of which 0.05% is the fee switch distributed every month. The staking mechanism is soft lock type, which means users can lock their MIN for a certain amount of time but can unlock at any time with some penalty. Once the staking period is over, the MIN token is effectively unstaked, and the user may claim their rewards anytime. In the first iteration of $MIN Staking, the boosts will work the following way:

• Staking $MIN for 1 month gives an unboosted $ADA APR
• Staking $MIN for 3 months gives a 3x boosted $ADA APR
• Staking $MIN for 6 months gives a 6x boosted $ADA APR
• Staking $MIN for 9 months gives a 9x boosted $ADA APR

Launchbowl

Launch Bowl is a decentralized platform designed to help projects launch tokens and build a strong community on the Cardano chain. It connects projects with liquidity providers who can stake their ADA to receive the new project’s tokens. When users stake their ADA, they receive LP tokens, which represent their contribution, and this earned LP token can be used to farm and earn boosted rewards within the Minswap ecosystem. Using Launchbowl, the project can conduct IDO so participants can pre-purchase tokens by committing ADA or a stablecoin at a fixed price set by the project. This allows early participants to secure project tokens before they enter the market.

Stable Pools

Stable pools are for users who want to avoid permanent loss of their assets; these assets maintain a relatively constant price ratio (e.g., stablecoins like USDT/USDC). Due to their design, stable pools often have a lower risk of impermanent loss than regular pools, making them appealing for LPs seeking more predictable returns.

Minswap Governance

Minswap is a decentralized exchange, and its community controls its development. The community votes on major changes to the protocol, while smaller changes affecting operations, farm rebalances or onboarding of new farms are decided on by the core team. The Governance Module enables MIN token holders to propose, discuss, and vote on protocol changes.

How It Works?

• Proposal: Only the Minswap core team can create proposals using the attached information. However, MIN holders can submit governance proposals on the Minswap forum regarding protocol upgrades, fee structures, token distributions, or new features. If the proposal gets enough attention, the proposal will be added to on-chain voting.
• Snapshot: Snapshot voting is a mechanism used to determine voting power based on a snapshot of wallet balances at a specific time (everyday at 7 AM UTC). The snapshot will capture the amount of MIN, the MIN in MIN-ADA LP tokens, the MIN in MIN-ADA LP in yield farming, and the MIN in the MINt staking system in anyone’s wallets. Regardless of how MIN is held (liquid, LP tokens, staked, or in MINt staking), each 1 MIN = 1 voting power.
• Quorum: Quorum is the minimum unique voting power required for a proposal to be considered valid. If a proposal does not meet the quorum, it is automatically rejected, regardless of the voting outcome. A proposal must reach at least 5% of the circulating MIN supply in voting power to pass. Given a circulating supply of 500 million MIN, the current quorum voting power needed is 25 million MIN.

What is the MIN token?

MIN is the native utility token of MinSwap on the Cardano blockchain, serving three key functions: staking to earn ADA rewards, holding to receive a share of trading fees, and participating in governance through voting rights. The total supply of MIN tokens is 3,000,000,000, distributed in various sectors with a vesting period.

What is the MINt token?

MINt is a Cardano native of Minswap. The token was launched so early supporters could utilize the protocol and interact with the DEX. The MINt token was temporarily started on April 16, 2022, ending on April 16, 2023. The whole MINt supply is given to early supporters; this is done by entering the MINt-to-MIN conversion process with a 1:1 conversion rate. Users must know that the MINt token mechanism is no longer available as it was set to expire one year after launch.

Conclusion

MinSwap has become one of the leading DEXs on the Cardano chain. As the Cardano market cap increases, it will attract more users. Minswap is poised to benefit from increased adoption, leading to higher trading volume and deeper liquidity, making it a key player in the Cardano ecosystem.