A Tez-less DEX on Tezos: a SpicySwap Review

A Tez-less DEX on Tezos: a SpicySwap Review

The team behind Genius Contracts has launched a decentralised exchange SpicySwap on the mainnet on October 10th, and on the very first day of its operation, users have pooled over $1m, and the weekly trading volume reached $420k. Not bad for a Tezos-based exchange that does not support tez! So, who needs its services and how to use them? Let’s find out.

Disclaimer: This post is not investment advice or trading guidelines. Tezos Ukraine cannot be held liable for your investment decisions. Never invest more than you can afford to lose.

This post is full of DeFi terminology, so use our dictionary if you encounter something unknown.

How SpicySwap Works

SpicySwap is a decentralised exchange based on automatic market-making (AMM). Users deposit tokens in liquidity pools and smart contracts calculate exchange rates as  X × Y = K, where X and Y stand for the number of respective tokens in the pool, and K for a constant that can be changed only through operations with liquidity.

Say, Alice deposited 10 tez (X) and 60 kUSD (Y) in an empty pool. K, therefore, equals 600, and the rate is 6 kUSD for 1 tez. Then Bob exchanged 5 tez for kUSD in the pool. He expected to get 30 kUSD but the contract gave him only 20 kUSD.

For the pool’s AMM Bob’s operation means that X will soon become 15, Y will decrease, but K will remain the same. The market-maker puts the new values in the same formula and gets A, the number of tokens to be given to Bob for K to remain the same.

X × (Y − A) = K

15 × (60 − А) = 600

900 − 15А = 600

15А = 300

А = 20

That is how most DEXs work, usually unnoticed by users who perform operations that take only a small fraction of the pool’s liquidity. Thus, had Alice deposited 10k tez and 60k kUSD, Bob would have sold 5 tez for 29.98 kUSD and remained pretty happy.

This is important because SpicySwap has only recently opened, and some pools have little liquidity at the moment. If someone attempts to exchange 2 WTZ for kUSD, they will get $10.66 instead of $14.2.

WTZ and Other Features of SpicySwap

SpicySwap has no support for tez (XTZ). Instead, you use WTZ, a wrapped version of tez you can release on Crunchy. Crunchy delegates tez to bakers at a 6% APR. The wrapping itself is free but you will have to pay a 1% fee while exchanging WTZ back for tez.

You can put WTZ in SpicySwap’s liquidity pools paired with other Tezos-based tokens. The exchange supports some of the most popular projects like Wrap Protocol, Crunchy, Plenty, Kalamint, HEN, QuipuSwap, SalsaDAO, and algorithmic stablecoins.

You can manually create a pool: click one of the paired tokens in the Liquidity tab, click Add, and put in the token’s contract address and ID. Then select the second token and add liquidity in exchange for LP tokens.

Unlike Quipuswap and Vortex, SpicySwap allows one to create a pool of any two tokens, and the fee will be payable for only one operation in case of exchanging one token for another. On Quipuswap, you can only create a pool with an XTZ pair, and exchanging incorporates two steps. Thus, the market maker first exchanges kUSD for XTZ, and then XTZ for WRAP in order to buy WRAP for kUSD.

SpicySwap users pay a 0.3% fee, of which 0.2% goes to LP token holders, and 0.1% to those who farmed LP tokens on the relevant farm. SpicySwap automatically sends them rewards in LP tokens.


SpicySwap is arguably the best place to trade the exchange’s native token SPI as well as SalsaDAO: sDAO, GSAL, wTaco, and RSAL. Users can buy them without noticeable price fluctuations, or increase liquidity to earn from fees. That said, be cautious while exchanging other tokens: lack of liquidity in the pool can result in major losses.

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