Frictionless FX Swaps

Frictionless FX Swaps enable Investors to invest instantly, securely and risk-free at super low cost in multiple currencies.

The FX Swap contracts in the Frictionless protocol provide an instant/atomic swap of a currency pair at a quoted spot or forward rate.

Built on cash custody with G-SIB banking providers and FX partners in the EU, the list of supported currencies and currency pairs is maintained in our Frictionless Institutional Deposit Tokens listing.

Frictionless FX Swaps remove the complexity of investing in multi-currency, whilst providing ultimate flexibility and transparency of FX rates and settlement.

FX Swaps work by automating the treasury operations in an FX transaction, namely:

Schematic a Frictionless FX Swap

1. Establishment of optional FX fees to be paid by the seller of currency A,

2. Utilization of the buying rate for currency Z in the swap. The rate utilized in the Frictionless protocol is obtained from our FX partners, the Frictionless Markets team support both spot and forward rates for FX Swaps offering clients the ultimate flexibility and transparency in FX swaps.

3. Execution of the swap as a single atomic transaction whereby currency A and currency Z are burned and minted from/to two counterparties with the automatic collection of optional fees. This operation can only be directed by the PROTOCOL_TREASURY to avoid market manipulation of FX rates.

An example of a live FX Swap on the Avalanche C-Chain is at https://snowtrace.io/tx/0x115570645b70ac573e9ce2f2d4e03f0bd71f502e4dd7019bab6a155417138851?chainId=43114.

In this FX Swap USD was sold for 5,000 EUR. The rate used was a spot rate provided to the Frictionless Markets team. In the block explorer, you can see the collection of fees, burn of fsUSD and mint of fsEUR. The swap and fee collection ran as a single atomic transaction and cost 0.80 USD to execute on the Avalanche C-Chain.

Live FX Swap - fsUSD for fsEUR (spot rate from Alpha FX)