McSwap OTC: Trustless Peer-to-Peer Trading on Solana

TLDR: McSwap OTC is a decentralized application built on Solana that enables secure, low-cost peer-to-peer trading of crypto assets. It uses smart contracts to lock trade funds in escrow, eliminating counterparty risk. Users can create OTC trade offers and accept offers from others, with trades executing automatically. The MCSW token is used for staking, governance and fee discounts.

What is McSwap OTC?

McSwap OTC is a decentralized trading platform built on the Solana blockchain. It facilitates trustless over-the-counter (OTC) trades, allowing users to swap tokens directly with each other without relying on a centralized exchange or intermediary.

The platform leverages Solana's high-performance blockchain to enable fast, low-cost transactions while ensuring that trades are executed exactly as agreed. By locking trade funds in escrow via smart contracts, McSwap OTC eliminates counterparty risk and the need for traders to trust each other.

How McSwap OTC Works

Using McSwap is designed to be simple and intuitive. Users connect a Solana wallet like Phantom or Solflare, then can create or view existing trade offers.

To create an offer, the user specifies the tokens and amounts they want to trade. For example, they may offer to swap 1000 USDC for 50 SOL. They also set an expiration time for the offer. Once created, the offer becomes visible to other users.

Any user can accept an open offer. To do so, they need to have the required tokens (in this case, 50 SOL) in their connected wallet. When they accept, their tokens are transferred into escrow, and the offer creator is notified. The creator then has a set time period to transfer their side of the trade (1000 USDC) into escrow to complete the trade.

Once both parties have locked their funds, the trade executes automatically and instantaneously via smart contract. The escrowed USDC is sent to the SOL trader's wallet, and vice versa. If either party fails to deposit their side of the trade before the expiration time, the trade is canceled and any escrowed funds are returned.

McSwap charges a small fee on each completed trade. The majority of this fee is distributed to MCSW token stakers, with a portion also going to the McSwap treasury to fund development.

Advantages of McSwap OTC

There are several key benefits to using McSwap over centralized OTC desks or order book DEXes:

• Trustless - Smart contracts eliminate counterparty risk and the need for reputation. Trades either execute exactly as agreed, or funds are returned.
• Permissionless - Anyone globally can trade without KYC or restrictions.
• Lower Costs - McSwap fees are significantly lower than centralized OTC desks.
• Capital Efficiency - Users only need to lock up funds when a trade is live, not continuously like on order book exchanges. Funds in escrow also earn interest.
• No Slippage - As a peer-to-peer model, there is no slippage on trades unlike on AMMs.
• Privacy - Identities of traders are not linked to offers or trades.

MCSW Token

MCSW is the native token of the McSwap ecosystem. It aligns incentives and facilitates decentralized governance of the protocol.

The initial total supply is 1 billion tokens, allocated as follows:

• 20% sold via Initial DEX Offering (IDO)
• 30% allocated for liquidity mining rewards over 3 years
• 20% to the McSwap treasury
• 20% to the founding team, advisors and partners (3 year vesting)
• 10% reserved for future fundraising rounds

MCSW has several core utilities within the ecosystem:

• Staking - Users can stake MCSW to earn a share of protocol trading fees.
• Governance - MCSW is used to vote on protocol upgrades, parameter changes and treasury allocations. This will be done via the McSwap DAO.
• Trading Fee Discounts - Users holding or paying fees in MCSW receive discounts on trade fees, with higher tiers for larger holders.
• Priority Access - MCSW holders will get early or exclusive access to new features and partner perks.

Demand for MCSW will grow alongside adoption of McSwap OTC trading. As trading volume increases, so will fees distributed to stakers. Holding MCSW will become increasingly attractive for active traders. And as the treasury grows, it provides more runway to continue developing the protocol.

Roadmap

The McSwap team has laid out an ambitious roadmap to add features and progressively decentralize the protocol over the coming quarters and years.

Near term priorities include:

• Completing security audits of the smart contracts by reputable firms
• Launching the MCSW token via an IDO and listing it on major DEXes
• Onboarding initial OTC trading partners and market makers
• Adding support for NFT for NFT and NFT for token swaps

Longer term, the focus shifts to decentralizing the platform:

• Launching the McSwap DAO to transition governance rights to the community
• Creating a multi-signature wallet controlled by reputable community members to upgrade contracts and manage the treasury as an interim step
• Achieving full decentralization by removing any admin access and entrenching all protocol changes and parameters to a DAO vote

By progressing toward decentralization, McSwap aims to minimize trust and become a robust, community-owned network for permissionless OTC trading.

Security

As a platform facilitating large OTC trades, security is paramount for McSwap. The team is taking a multi-pronged approach to minimize risk to user funds and the protocol:

• The core smart contracts have been audited by [audit partner], with the code and audit report available open-source for review
• Upgradability of contracts is initially controlled by a 2-of-3 multisig, requiring signatures from multiple team members, before transitioning to full DAO control
• Funds in escrow are held in audited, battle-tested escrow contracts used by major DeFi protocols
• McSwap's frontend is hosted on IPFS to minimize dependencies and single points of failure
• The team has committed to decentralizing all aspects of the protocol over time and removing any admin access

Users can have confidence that McSwap is designed with the highest security standards in mind, and will continue to strengthen trust minimization over time.

Conclusion

McSwap OTC offers a compelling solution for trustless, low-cost OTC trading. By leveraging Solana's high-performance blockchain and a smart contract escrow model, it provides a simple way to swap tokens directly with other users while eliminating counterparty risk.

The MCSW token aligns incentives and paves the way for McSwap to decentralize into a community owned and governed protocol. Holders can share in the protocol's success via staking and use the token for governance.

As adoption of Solana grows, so does demand for OTC trading venues. McSwap is well positioned to capture a large share of this market by offering a streamlined, low-friction trading experience. Its focus on progressive decentralization also makes it an attractive option for professional and institutional traders.

With an expansive roadmap, strong token value accrual, and commitment to security and decentralization, McSwap is poised to become the go-to OTC trading platform in the Solana ecosystem.