It is difficult for the automatic market maker system to completely replace the existing bidding system and market maker system, but it can become a supplement to financial market transactions by virtue of its simple and flexible transaction characteristics.
Original title: “Defibox, a star project under the market change, becomes an EOS stabilizer? 》
Author: Wu said blockchain
Yesterday’s market was affected by the investigation of Bithumb, the largest exchange in South Korea and the downtime of Binance, and mainstream currencies such as Bitcoin saw a dive. As a result, the price of Bitcoin dropped directly from 12,000 points to 11,160. This led to the downward trend of the entire crypto circle. ETH went from the opening price of 480, the lowest of 420, and the closing price of 430, while the EOS closing price was 3.3, the lowest to 2.89, and the closing price was 3.0.
The reason why the EOS market can recover is to a certain extent related to the current star project Defibox under EOS. KOL Super Jun pointed out that the people who did arbitrage last night bought EOS on Huobi and sold coins on Defibox. Defibox acts as a damper.
Picture from Knowledge Planet
Defibox is currently the star DeFi project on the EOS chain. It mainly provides two functions:
The first is Swap, which is a decentralized token exchange agreement and an automatic market making agreement (AMM). The agreement provides the exchange price in real time through a constant product algorithm, and users can complete the token exchange instantly. In addition to token exchange, users can freely create an exchange market, or choose to join an already created market to become a market maker, and provide liquidity for the market (deposit two tokens in proportion), and the market maker will account for the proportion of liquidity , Automatically earn the commission paid by the transaction user.
The second is the USN stable currency, which is a decentralized mortgage stable currency on EOS. The stable currency USN (1:1 anchored to the US dollar) issued by mortgage EOS can meet various needs such as leveraged transactions and obtaining liquidity. The system adopts the risk control mechanism of over-collateralization and liquidation of liquidation to avoid market fluctuations and provide value support for each USN with sufficient collateral.
At present, due to the congestion problem of Ethereum, many funds are transferred to other public chains for mining or arbitrage. Defibox on EOS has just taken up this wave of craze. According to official data, the total lock-up volume for 45 days after the launch has exceeded 15 million EOS, and the lock-up volume is still increasing by 1 million EOS every day. The 24-hour exchange rate exceeds 8.45 million EOS. It is currently the DeFi project ranked first in EOS ecology and second in total ecology on DappReader.
Defibox is a very robust project, and its contract code has passed the security audit of SlowMist and Paidun. At the same time, Defibox has united multiple super nodes to achieve smart contract multi-signature. Regarding the modification of the smart contract and the transfer of funds, in addition to Defibox, at least the co-signature confirmation of the other three nodes is required to complete.
As we all know, in the case of drastic fluctuations in the market, centralized exchanges will have transaction mismatch and insufficient liquidity, which will cause panic and lead to a sharp drop. The sharp drop of 312 is largely due to the lack of liquidity caused by panic. The AMM mechanism currently commonly used by decentralized exchange DEX can be supplemented to a certain extent.
Taking Defibox as an example, its AMM mechanism can enable users to complete token exchanges instantly without placing purchase orders, and provide liquidity to become automatic market makers. At present, it has indeed attracted a large number of automatic market makers. The transaction speed of Huobi online is slow, and users will always not get matching when paying. However, Defibox’s AMM model solves the above problems. With unlimited liquidity, instant human-machine transactions, anyone can be a market maker, which greatly increases the depth of transactions. Therefore, a large number of users bought EOS on Huobi last night and then went to Defibox to sell EOS for arbitrage, which stabilized normal liquidity to a certain extent.
Why do centralized exchanges have such problems, and why can DEX supplement them? There are even opinions that the core DEX may steal the pricing power of the centralized exchange CEX in the future.
With reference to the Oukeyunchain research report, we can see that in the CEX bidding system, the price priority principle is a matching principle commonly used in the bidding market, and it is regarded as the first priority principle, that is, the first priority principle.
This model requires the broker to buy or sell assets in the interests of the principal when accepting commissions, that is, when buying assets, higher purchase price orders are given priority to lower purchases Price orders; when selling assets, lower sell price orders are given priority to satisfy higher sell price orders.
In the AMM mechanism of DEX, there is no price discovery function. For example, in the transaction of a certain asset, user A (market maker A) places a buy order of $5 per lot, and user B (market maker B) places a buy order of $10 per lot. In the bidding system Or under the market maker system, user B (market maker B) realizes the transaction first, but in DEX, because the price of AMM is driven by liquidity, the transaction price is determined by the asset situation of the reserve pool, not the order price , That is, AMM will automatically generate a transaction price. For this reason, AMM has to introduce the important role of arbitrageur: once the price on the AMM platform is different from the fair market price, there will be room for arbitrage, and the price will be brought back to the right track, so last night’s Huobi-Defibox The arbitrage situation has also indirectly pulled EOS back to the normal market.
From the perspective of future development, it is difficult for the automatic market maker system to completely replace the existing bidding system and market maker system, but with its simple and flexible trading characteristics, it can become a supplement to financial market transactions. DEX and centralized exchanges are the dichotomy The world can be expected.
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