Overview
Honeyswap is a decentralized exchange operating on Gnosis Chain (formerly xDai Chain) and Polygon, built and maintained by 1Hive — a community-driven DAO focused on public goods funding. Launched in 2020, Honeyswap is a Uniswap V2 fork that takes advantage of Gnosis Chain's extremely low transaction fees (fractions of a cent) to provide accessible DeFi trading.
Honeyswap serves as the primary swap venue for the Gnosis Chain ecosystem, handling the majority of on-chain trading for GNO and xDai-native tokens. The 1Hive community also created the HNY token through a fair distribution using Conviction Voting — a novel governance mechanism. While Honeyswap is a well-built and community-loved protocol, its volume and TVL are modest, limited by Gnosis Chain's overall adoption.
Smart Contracts
Honeyswap's core contracts are a standard Uniswap V2 fork deployed on Gnosis Chain and Polygon. The AMM uses constant product pools with 0.3% swap fees, with 1/6 of fees directed to the 1Hive common pool. The contracts are identical in logic to Uniswap V2, inheriting its extensive security track record. 1Hive has added custom farming and staking contracts for HNY distribution. The simplicity of the V2 model is a feature — well-understood, reliable, and gas-efficient.
Security
Honeyswap benefits from the battle-tested Uniswap V2 codebase. No major exploits have occurred on the Honeyswap contracts. The Gnosis Chain itself is secured by a set of validators including the GnosisDAO — it's a smaller validator set than Ethereum but is credibly decentralized. The main security considerations are Gnosis Chain's bridge security (assets bridged from Ethereum carry bridge risk) and the relatively smaller validator set compared to L1 Ethereum.
Liquidity
Liquidity is functional for Gnosis Chain's ecosystem but small in absolute terms. Major pairs like xDAI/WETH and HNY/xDAI have sufficient depth for moderate trades. However, many pools are thin, and large trades will experience significant slippage. The Gnosis Chain ecosystem's overall TVL limits how much liquidity Honeyswap can attract. For tokens that exist on both Ethereum and Gnosis Chain, traders typically prefer mainnet DEXs for large swaps.
Adoption
Honeyswap is the default DEX for Gnosis Chain users, giving it a natural user base. It handles the majority of swap volume on the chain. The 1Hive community provides a loyal core user group. However, Gnosis Chain's total user base is a fraction of Ethereum, Arbitrum, or BSC, which caps Honeyswap's addressable market. The DEX sees consistent but modest daily volume, primarily from Gnosis Chain natives swapping ecosystem tokens.
Tokenomics
HNY (Honey) is the 1Hive community token, distributed through Conviction Voting and various community programs. HNY has a small supply (under 35,000 tokens) with ongoing issuance controlled by the 1Hive DAO. The token is used for governance and provides fee-sharing from Honeyswap revenue. HNY's price is volatile given the small supply and thin liquidity. The community-driven distribution model is philosophically pure but limits market-making and exchange listings.
Risk Factors
- Gnosis Chain ceiling: Adoption capped by the chain's overall ecosystem size
- Low volume: Modest daily trading volume limits fee revenue
- Bridge dependency: Assets on Gnosis Chain carry bridge risk from Ethereum
- Competition: DEX aggregators and Gnosis Chain alternatives compete for flow
- HNY illiquidity: Very small token supply with thin markets
- Uniswap V2 limitations: No concentrated liquidity or advanced AMM features
Conclusion
Honeyswap is exactly what a community-built DEX should be — functional, honest, and aligned with its ecosystem. The 1Hive community demonstrates how DAOs can build and maintain useful infrastructure without VC funding or aggressive tokenomics. However, Honeyswap's growth is fundamentally constrained by Gnosis Chain's adoption. It's the big fish in a small pond. For Gnosis Chain users, Honeyswap is the natural choice. For the broader DeFi market, it's a niche protocol serving a niche ecosystem. A good project with honest limitations.