Project Express | Kwenta: New DeFi mechanism, a decentralized derivatives exchange with zero slippage

0

 45 total views

source:

Kwenta currently supports the trading of three different types of derivative products, including cryptocurrencies, foreign exchange, and commodities such as gold and silver. Due to the way the agreement works, Kwenta’s automated transactions must be carried out between Synthetix derivatives (called “Synths”), which increases the transaction process, and at the same time, due to the complexity of the Synthetix agreement, Kwenta’s Gas is somewhat high. It will take time for Kwenta distance to become a mainstream solution.

Synthetix proposed the concept of synthetic assets, which is a very interesting DeFi protocol. If you look at the Twitter of the founder of Synthetix, you will find that it is a person with high quality of thinking. On November 19, the Kwenta decentralized derivatives exchange based on Synthetix was released, which solved a common slippage in DEX. The problem is that this has a measurable value for “large-value transactions” and “high-frequency small-value transactions” that occupy most of the trading market.

If referring to the development status of traditional financial and centralized digital currency trading markets, it is almost inevitable that the trading volume of decentralized derivatives will exceed the spot trading volume. But according to history, derivatives trading volume is more likely to surge when the market is out of a downward channel in the cycle, so Kwenta may be a longer-term project. But on the whole, given that the current spot DEX market has been fiercely competitive and the market is initially mature, I personally would like to participate in projects like Kwenta, and I would also think of the possibility of combining this with UBI.city.

READ  The Tech Entrepreneur Transforming The Way The World Uses Blockchain

summary

Kwenta is a decentralized derivatives exchange with unlimited liquidity based on the Synthetix protocol.

  • Comparison of ETH and BTC transactions on Uniswap and Kwenta
  • The results show that even for 1 ETH or 1 BTC transactions, Kwenta can save users money.
  • With a larger transaction size, Kwenta’s advantages become more obvious, saving thousands to hundreds of thousands of dollars.
  • Over time, these savings have a significant impact on the performance of the portfolio, regardless of size.

Kwenta has a unique feature: unlimited liquidity.

As a result of having unlimited liquidity, the slippage of all Synth-to-Synth transactions is 0%. When trading on Kwenta, you can completely bypass the conventional rules of the traditional order book model and automatic market maker model (AMM). Even if the transaction volume is too large, it will buy available liquidity from the initial transaction price, thereby pulling Increase prices and then be forced to incur higher costs for remaining transactions.

On the most popular DEX—Uniswap, the slippage of each token is different, depending on the amount of funds provided by the liquidity provider. Popular tokens have relatively small slippage for small transactions, but will have obvious slippage under larger transaction sizes. The following is an example of LINK/DAI on Uniswap. Taking 10,000 LINK to trade DAI as an example, more than 1% of the transaction value will be lost due to slippage.

项目速递 | Kwenta:DeFi新机制,滑点为0的去中心化衍生品交易所

Kwenta solved this problem by using the Synthetix protocol.

With Synthetix, users can take advantage of the peer-to-peer contract transaction model. In this case, the contract is a Synthetix debt pool to support the value of synthetic assets (Synth). The price of each Synth is determined by the decentralized Chainlink oracle network. As the price of Synth fluctuates, Synthetix’s debt will become the gain or loss of the counterparty, providing a reliable trading method that has no impact on the underlying market represented by Synth. Once a synthetic asset is created, it can be directly exchanged for any other synthetic asset at the market price of 1v1. The slippage of a single sBTC transaction is the same as the slippage of a 100 sBTC transaction, both are 0.00%.

READ  Can cryptocurrency survive as a payment method only?

Therefore, compared with mainstream exchanges, Kwenta and other services built on the Synthetix protocol can save a lot of transaction costs. To illustrate how much money users can save by using Kwenta, a simple experiment was conducted.

In this experiment, we compared similar transactions on Uniswap and Kwenta and analyzed the results.

Experiment 1: Uniswap’s ETH/DAI and Kwenta’s sETH/sUSD

项目速递 | Kwenta:DeFi新机制,滑点为0的去中心化衍生品交易所

Experiment 2: Uniswap’s WBTC/DAI and Kwenta’s sBTC/sUSD

项目速递 | Kwenta:DeFi新机制,滑点为0的去中心化衍生品交易所

Explanation of experimental results:

At first, it seemed to benefit large traders. A 1000 ETH transaction saved $7000.10 in Kwenta, and a 100 BTC transaction saved $28,767.32 in Kwenta. For large traders, not trading in Kwenta seems like a huge loss.

Smaller traders also save less, but there are still advantages to using Kwenta. Even trading 1 ETH, Kwenta can save $6.30. For 1 BTC, Kwenta can save $113.77. Although these savings are small compared to whale traders, the advantages of using Kwenta are obvious. Generally, traders with smaller trading volumes will trade more frequently than whale traders.

What if small and large traders will use Kwenta for a week and a year, and small traders will manage their asset portfolios more actively?

Experiment 3: ETH continues to trade on Kwenta

项目速递 | Kwenta:DeFi新机制,滑点为0的去中心化衍生品交易所

Experiment 4: BTC continues to trade on Kwenta

项目速递 | Kwenta:DeFi新机制,滑点为0的去中心化衍生品交易所

It is easy to see that continuous trading, even for small transactions, can save a lot of money compared to the most popular tokens ETH and BTC in the leading DEX—Uniswap.

Savings

The chart below shows the amount of money saved for the 1 BTC trader in the chart above over the course of a year. By the end of the year, this BTC trader could save nearly $60,000.

READ  Financing projects increased in the third quarter but the amount was basically the same. 40 DeFi projects disclosed $131 million

项目速递 | Kwenta:DeFi新机制,滑点为0的去中心化衍生品交易所

Expense description

Uniswap and Kwenta charge the same for BTC and ETH transactions, which is 0.3%.

in conclusion

Kwenta and other Synthetix-based projects can have huge cost savings. Even small traders can save a lot of money. In a large number of transactions, with the expansion of the transaction scale, Kwenta’s transaction yield will increase substantially.

With the launch of Kwenta’s advanced charts, futures, limit orders, etc., Kwenta will soon become the most competitive project in the entire market, and will bring greater trading capabilities to professional traders and new traders .

use

Kwenta official website: A lot of slippage can be avoided on Kwenta.io.

Kwenta Telegram group: Join the link.

Kwenta official Twitter:.