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The DEX battle is far from over, and the road to sustainable development still needs to be explored



Bancor is the first DEX project to practice the AMM model, but the first project to actually succeed in practice is Uniswap. At present, the most important field of DeFi is DEX, and the most popular model in DEX is AMM model, which is the model of automatic market making. Sushiswap's liquidity migration was successfully realized yesterday, successfully leveraged more than 70% of Uniswap's liquidity, and became the most liquid DEX today. Its current liquidity has reached 1.33 billion US dollars, and it has only been born for two weeks , and the liquidity of Uniswap is now less than 35% of that of Sushiswap. Uniswap instantly fell from the most liquid DEX to the second place in just two weeks. This is the "Game of Thrones" of the crypto world. (The liquidity of Uniswap dropped by more than 70% in one day, and most of it migrated to Sushiswap) (Sushiswap’s liquidity exceeded 1.3 billion US dollars, 2.8 times that of current Uniswap) These practices fully demonstrate that Uniswap does not pay enough attention to the token economic system , Not paying enough attention to community development, Sushiswap did not take any countermeasures during the two weeks when Sushiswap carried out the "liquidity migration attack" with great fanfare. The transaction volume of Metis-based DEX Netswap exceeded 2 billion US dollars: News on February 23, on February 23, DEX Netswap based on Metis Andromeda, an Ethereum Layer 2 expansion solution, announced that its total transaction volume exceeded 2 billion US dollars. Netswap is the first native DEX on Metis. As previously reported, on December 6, 2021, Netswap will launch the Metis mainnet. [2022/2/23 10:09:44] This leaves a big opportunity for other swaps. This also shows that the current DeFi DEX is still in its early stage, and there is no absolutely unbreakable moat. There are also opportunities for various Swaps later. Even the moat of Sushiswap, which has just been promoted to the number one DEX liquidity, is not unbreakable. Because other Swap can use similar strategies to deal with SushiSwap, it can be said that SushiSwap just opened the prelude to the DEX war. In order to build a moat on DEX, it is necessary to mobilize the power of the community to the greatest extent, and it is necessary to design an economic incentive system that takes into account both short-term rapid growth and long-term sustainable development, both of which are indispensable. We will pay attention to more various swaps in the future. Today we are talking about Miniswap’s exploration of DEX. *Miniswap was initially launched as an AMM model, and Miniswap is similar to Uniswap's automatic market-making model. At present, Miniswap has just been launched for two days, with a liquidity of more than 20 million US dollars and a transaction volume of more than 2 million US dollars. Among them, there are 9 token pools with a liquidity of more than 1 million US dollars. The main token pools are ETH/USDT, MINI/ETH, LINK/ETH, YAMv2/ETH, etc., which have a good cold start. This means that if it is not for large-scale conversion, the transaction slippage of these token pairs will not be too high. The total transaction volume of the DEX platform Raydium on the Solana chain exceeded 40 billion US dollars, a record high: On January 11, the total transaction volume of the Raydium DEX platform on the Solana chain exceeded 40 billion US dollars, reaching 40,059,263,619 US dollars, and the current total lock-up volume is 1,221,157,128 US dollars. [2022/1/11 8:41:03] (Miniswap’s liquidity exceeded US$20 million in two days) (Miniswap has nine token pools with more than US$1 million in liquidity) *What’s the difference between Miniswap and Uniswap? The biggest difference between Miniswap and Uniswap is its token incentive mechanism. In the Miniswap ecosystem, there are three important participants. One is the liquidity provider, the other is the trader, and the third is the token holder. All three have interest incentives in Miniswap. First of all, let’s take a look, what is the difference between Miniswap and Uniswap in treating liquidity providers? -Liquidity providers on Miniswap motivate CoreDEX to introduce a new mortgage mechanism OVL, which can prevent liquidity tools from being exhausted during periods of violent fluctuations: Ethereum-based trading projects are subject to liquidity due to the "free flow" of assets between exchanges The impact of uncertainty. At the time of initiating a trade, token holders cannot determine the amount of liquidity for a market maker. Delta Financial's CoreDEX product implements the concept of Open Vested Liquidity (OVL). It prevents liquidity instruments from running out during periods of high volatility. OVL enforces a "block time schedule" to lock up predetermined liquidity. During the vesting period, the liquidity of a given asset appears predictable. The OVL solution also enables users to unlock "frozen" assets within a predetermined time frame. CoreDEX will migrate to the new LP token CORE. CORE can be locked in the coreDEX migration contract and get fees from coreDEX alpha and beta iterations. DELTA will be used to resolve traders' impermanent losses. [2021/2/10 19:28:12] Similar to Uniswap, liquidity providers need to deposit two tokens into the token pool, such as ETH/SUSHI. When the user deposits 10ETH, according to the current price, the user needs to deposit 1190.66 sushi at the same time. After there are two types of tokens in the token pool, traders can exchange them. For example, a user uses token A to exchange token B, where f is the transaction fee, N^A is the number of tokens the trader is trying to buy, and N^B is the number of tokens the trader has obtained. FDEX Cloud cloud service launches 30% discount service: Recently, in order to better support partners, FDEX Exchange launched a decentralized cloud exchange service and launched a 30% discount service. The FShares Dex Cloud cloud service system adopts the cloud computing architecture of the SaaS model, which can provide partners with a full range of trading system construction, reduce technology research and development and operation and maintenance costs, shorten the system research and development cycle, and help partners quickly carry out trading platform operations and market business , And then win the development opportunity in the blockchain industry. [2020/5/15] Then the trader will get the amount of token B calculated according to the following formula: (The amount of tokens that can be exchanged for Miniswap, Source: Miniswap White Paper) The biggest difference between MiniSwap and Uniswap is that it is a liquidity provider Incentives are provided with the token MINI. At present, there is a limit of 500,000 MINI tokens per day for liquidity providers to mine. According to the current market price of MINI, there are currently 90,000 US dollars per day that can be captured by liquidity providers. In addition, Miniswap liquidity providers can also capture transaction fees, and the transaction fees are determined according to the proportion provided by users for the liquidity pool. -Incentives for traders In the ecology of DEX, in addition to liquidity providers, traders are also important participants in the ecology. In order to form a positive cycle, Miniswap also introduced a trader incentive mechanism. This is something Uniswap does not yet have. Paydex payment public chain layout mobile terminal: According to official sources, the mobile-oriented strategy is a strategy that Paydex payment public chain pays special attention to. The project party will work with third-party developers to support DAPP applications and mobile smart contract services from the technical architecture. Encourage third-party developers to join Paydex to develop the full-process services of the blockchain together and jointly promote the implementation of blockchain technology. [2020/3/8] Specifically, after trading on Miniswap, traders need to pay a certain percentage of handling fees. However, according to the size of the user's handling fee, Miniswap will return the user's MINI token. In other words, on Miniswap, not only liquidity providers have mining benefits, but traders also have mining benefits. This is conducive to attracting sufficient liquidity in the early stage of the project, which is very important for forming a positive cycle of transactions. Only liquidity providers, without traders, the fees and benefits of the agreement cannot be generated. By providing token incentives for early traders, the problem of cold start of traders can be solved to a certain extent. At present, Miniswap's daily transaction mining income is the same as the daily liquidity provider's mining income incentive level, which is the upper limit of 500,000 MINI tokens. That is to say, according to the current price, there is an upper limit of token rewards of about $90,000 per day. -Incentives for token holders In addition to liquidity providers and traders, token holders can also align with the long-term interests of the agreement. All MINI token holders can receive irregular dividends. This is also one of the biggest differences from Uniswap. On Uniswap, liquidity providers are more like mercenaries. After users provide liquidity and obtain fee income, once they withdraw from liquidity, they have nothing to do with the agreement. In other words, the long-term benefits of the protocol have little to do with the liquidity providers themselves, but with the incentives of the protocol tokens, the liquidity providers have the opportunity to capture the long-term benefits of the protocol. One of the performances of this income is that the value of the token increases with the increase in the transaction scale, and the second is that you can also get additional dividends. At present, the dividend distribution method of Miniswap is that the Miniswap contract will scan the number of MINI tokens in each wallet on the Ethereum chain, and at the same time, distribute dividends irregularly according to the ratio of the number of MINI tokens in the user’s wallet to the circulating MINI tokens. So, where does the dividend money come from? First of all, a 0.3% handling fee can be generated in Miniswap transactions, and the handling fee will be used to buy MINI tokens. Of these purchased MINI tokens, 50% of them will be returned to MINI token holders, which is the source of dividends. The remaining 50% of MINI tokens will be destroyed. Since the total supply of MIN is 1 billion, it means that MINI is still a deflationary token. The value of MINI ultimately depends mainly on the transaction fees of its platform. The handling fee mainly depends on the transaction volume scale of the agreement. The larger the transaction volume, the higher the handling fee. The more handling fees, the greater the purchase of MINI, thus supporting its value. In order to promote the increase of its transaction scale, firstly, there must be a better user experience, especially in terms of transaction slippage. If you want to have low transaction slippage, you need liquidity providers to provide more liquidity. And with lower transaction slippage, traders are more willing to trade on Miniswap. In addition, the most critical thing to guide the increase in transaction volume is to meet the user's token transaction needs. If some high-quality tokens can be mined and launched at the earliest, they will also have the opportunity to increase the transaction scale. In the end, how high Miniswap can reach depends mainly on the depth of active-ethexc participation of traders, liquidity providers and currency holders. Miniswap is currently DEX-based. Judging from its roadmap, it also tries to support various decentralized financial products. In the future, there are plans to introduce American options, American option insurance products, and finally cross-chain DEX transactions. In the future, when a user purchases a certain amount of option rights on Miniswap, the system will determine the user's profit or loss based on the market conditions. Options products allow users to buy or sell assets at a predetermined price no later than an agreed time. The predetermined price is the exercise price, and the agreed time is the exercise period. Options also have an option price, which is the difference between the strike price and the current price. For a call option, its value mainly depends on the value of the base price minus the strike price. The value of a put option is calculated by subtracting the underlying price from the strike price. In addition, when users purchase options, they can also choose to purchase option insurance. In some cases, when users purchase options and suffer losses, option insurance can give users a certain amount of compensation. Finally, Miniswap plans to conduct cross-chain transactions after its products mature, and introduce technologies such as Cosmos and atomic swap protocols to realize cross-chain point-to-point transactions. Sushiswap's two-week "liquidity leverage" battle against Uniswap has initially succeeded. This practice shows that the pattern of DEX is far from the end. Next, Uniswap may counterattack, such as launching better products and launching an incentive mechanism for tokens. Various other swaps will gradually attract everyone's attention. In this process, there will definitely be a battle for liquidity mining. Who can have a better mechanism design and better sustainable income in the process of liquidity mining? So, in the end, whoever is likely to take the lead in the DEX competition. On another level, since there is a certain balance of power between various DEXs in the end, it is impossible to only have one or two DEXs left. Because different swaps have their own profit points, their own bases, and their own advantages in certain points. However, although DEX may be dispersed, in the end, there will be several companies that gather the largest liquidity and trading volume, which is related to the value capture model of DEX itself. No matter how many tokens DEX issues, how to distribute tokens, whether to distribute to institutions or to the community, its value is rooted in the transaction scale, the larger the transaction scale, the more fees captured. When more fees are captured, they will eventually be transferred to the value of tokens. Whoever takes the lead in forming a sustainable positive cycle will take the real lead. How to form a positive cycle? At the beginning, there must be sufficient income attraction, and certain token incentives should be given to liquidity providers and traders, and the price of the token itself also plays an important role in the cold start process, which will stimulate greater liquidity providers Participate with traders to promote the development of short-term potential energy. What needs to be paid special attention here is that in the DEX battle, it is necessary to iterate quickly and adopt long-term and short-term incentives, not only long-term sustainable development incentives, but also short-term rapid promotion incentives. Once the potential energy of DEX rises, there will be a natural impetus. In addition, because the market is changing too fast, it is necessary to iterate the mechanism at any time, and work together with the community to advance rapidly. These are the major inspirations for the project party and the community from the current DEX battle.


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