User:Mykola Bieliavskyi/sandbox

QuipuSwap is a decentralized cryptocurrency exchange (DEX) deployed on the decentralized network protocol called blockchain to enable traders to buy and sell cryptocurrency without needing an intermediate or broker. The protocol facilitates automated swaps between cryptocurrency tokens on the Tezos blockchain through smart contracts.

History
QuipuSwap was created by MadFish – an IT company in the blockchain industry located in Ukraine. The launch of QuipuSwap on a mainnet happened on March 31, 2021. The initial development of QuipuSwap was funded by Tezos Foundation on a grant basis for MadFish.

On March 2022, MadFish released yield farming programs for QuipuSwap to incentivize users to add their tokens into liquidity pools.

In June 2022 QuipuSwap received updated smart contracts created for swapping same price tokens, for example, stablecoins, between each other for a better price.

Overview
QuipuSwap is a decentralized finance protocol used to exchange cryptocurrency tokens and provide liquidity to earn on other users’ swap fees. It is built as open-source software on the blockchain network.

QuipuSwap allows users to exchange tokens created on the Tezos blockchain (FA 1.2 and FA 2 ) and TEZ (the primary Tezos token used for transaction validation by nodes and network fees) between each other. QUIPU is the primary QuipuSwap token.

QUIPU tokens were initially distributed to early users of the protocol and now serve as rewards for participating in yield farming and other QuipuSwap activities.

Protocol
QuipuSwap uses liquidity pools as a market maker instead of classical order books in centralized exchanges.

Individuals and bots—termed "liquidity providers" — provide liquidity to the exchange by adding a pair of tokens to a smart contract, which can be bought and sold by other users according to the constant-product rule K = X * Y. It means that the product of token reserves should be the same before and after the swap. In return, liquidity providers are given a fee earned for that trading pair.

In the formula above, X implies the number of the first token in the classic QuipuSwap pool, while Y implies the number of the other one. For each trade, a certain amount of tokens is removed from the pool for an amount of the other token, thereby changing the price.

QuipuSwap's code can also be forked as open-source software to create new exchanges.

Security
Least Authority audited the protocol’s contracts security for the correctness of the implementation, DoS, security exploits, vulnerabilities in the smart contract’s code, data privacy, draining, and the manipulation of funds as well as other points.

QuipuSwap was also audited by the Runtime Verification team, included the contracts'  business logic, reviewing each entry point for errors and potential attack scenarios and analyzing the behavior and state of the contract.