Behind the Swap: Streaming Swaps

Background

THORChain and Maya Protocol operate using a slip-based fee model for its liquidity pools. This means that the trade execution fee is influenced by the swap size and pool depths.

Before Streaming Swaps, traders could achieve lower slippage for larger trades by manually dividing them into numerous smaller swaps. The downside? This method resulted in multiple individual on-chain inbound and outbound transactions. Consequently, traders faced a surge in on-chain gas fees and a tedious manual process.

How Streaming Swaps Work

Streaming Swaps streamline this process to ensure maximum capital efficiency. Users only need to send a single inbound transaction. Internally, THORChain and Maya Protocol divides the swap into several sub-swaps executed over time, consolidating them into a single outbound transaction to the chosen wallet.

This helps to reduce price slippage by allowing arbitrageurs to rebalance the pool intra-swap and reduce the swap size vs the pool depth.

Imagine sipping a drink slowly to savor it instead of gulping it all down in one go. By taking your time, you often get a better overall experience. Similarly, by being more patient with your swaps, you can achieve better price execution (optimal rate/lower slippage).

For a deep dive into the technical background of Streaming Swaps, check out THORChain and Maya Protocol Dev docs.

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Using Streaming Swaps, trades can be broken down into a number of sub swaps, allowing for potentially a more favorable average price.