DEXToken Protocol- unveiling a new era of finance #DEXTokenDeFined

By Blindworld | Blindworld | 12 Oct 2020


In 2009 when Satoshi Nakamoto mined the genesis block of Bitcoin we never thought that it will lead to a revolution. In countries like India digital banking was still in the developmental phase. People paid in cash, lets say they were in love with the physical banknotes. Imagine telling a street vendor in 2009 that you will pay him in a virtual currency, no one knew what virtual currency is. Blockchain was a new term. For many currency is still something issued by the government, It is something of monetary value and for them, the purchasing capacity of $100 dollars will remain the same today and tomorrow even though it is not right in every aspect. For the common people, crypto like Bitcoin was never a mode of payment, but investors realized its potential and started buying it. For a while, crypto was just an overpriced commodity. 

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In 2020 things are already far from home, new stable coins have reached the market. Corporates and governments around the world began to realize the scope of blockchain technology, before we go further its imperative that you are familiar with a few terms. If you already know about them feel free to scroll down.

Stablecoin: Cryptocurrency like Bitcoin and Ethreum are subjected to high price changes. The best explanation for this is they are decentralized and the price is decided by the market, and the most probable factor will be the trades itself. The price of these cryptocurrencies is decided by its demand and it has an estimated market volatility of +or - 50%. Stable coins are issued with reserve collateral. The collateral can be Fiat currency, gold, oil, or any other expensive commodity, another cryptocurrency itself can also be used as collateral ( collateral value is estimated by taking account of possible market fluctuations). These coins show very low price volatility and are hence stable.

DEX and CEX: Decentralized exchanges and Centralized exchanges are two ends of a boat. CEX or Centralized Exchange refers to your conventional exchange. Prices get controlled by decisions and announcements, they are also affected by market speculations. Established rulebooks exist and governmental agencies monitor everything. Decentralized exchanges like the word itself are decentralized no single entity or government has control over it. In this system the price is determined by the open market trading and cryptocurrencies are created on open blockchain networks.

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AMM: Automated Market Maker is a method to enable the blockchain network to determine a fair and reasonable price for an asset. It is said that AMM can remove high market volatility generated by over speculation.

DeFi & CeFi : They stand for centralized and decentralized finance. CeFi is the conventional financial system and it still has a very high following, DeFi received much popularity in 2020 since it is a completely Decentralized system. As of now few DeFi projects are already up and running and are expected to reach the mainstream soon.

Smart contracts: It can be seen as a set of codes that form a command and automatically executes it when the conditions are met.

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now let us learn about DEX TOKEN PROTOCOL

 

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DEXTOKEN PROTOCOL AN OVERVIEW:

 

In the most simple way, it is a shopping mall with its own ways to decide prices. The flow chain foundation is the engine behind the DEX token Protocol.

The idea evolved in almost 2 years was made possible when the flow chain observed the traction DeFi was receiving. Over speculation was a reason for economic depression in the past. When we are talking about cryptocurrencies that are made on top of open blockchain over-speculation can cause high price volatility.  DEX TOKEN PROTOCOL aims at creating reasonable and fair market conditions by employing a new AMM algorithm along with a new trading system. It aims at creating a strong DEXg community force and also introduces a governance token $DEXG.

 

Why DEXTOKEN PROTOCOL IS UNIQUE?

DEX TOKEN PROTOCOl aims to nullify the high market volatility. In the current trading model, the changes or the speculators decide the price of an asset, our asset here is a cryptocurrency and the volatility resulting from the speculation can cause huge losses to the investors. Trades are executed via a trading pool which uses speculative AMM to decide the reasonable price. It allows traders around the world to arbitrage transactions between other exchanges and DEX token exchange.

SPECULATIVE AMM- Changing the way trading works:

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Price fluctuations are the basis of the existence of free markets. But in order for a stable condition, the over-speculation which leads to high market volatility should be dealt with. The speculative AMM introduces a new price valuation model which enables the blockchain to determine the reasonable price. The price valuation is done taking to account the properties of the blockchain network such as the number of users, transactions, platform utilization, etc.

According to the latest whitepaper, The Decentralized exchanges that enable speculative AMM can establish a reasonable price trading mechanism.

HOW WILL TRADE HAPPEN?

*image from DEXT whitepaper

The exchange interface only comes with a buy button. The user only has to enter the quantity required and the trade will be executed at a reasonable price by using speculative AMM. The orders are sent to a trade engine in proper order from the timestamp queue. The trade engine calls speculative AMM and finds the output price which will be the most reasonable price and the trade will be executed. Instead of the traditional order book system, the trades are executed from the staking pool. In the staking pool, users can stake different assets considering market volatility. If the quantity cannot be fulfilled from the staking pool at a time the trade engine will mark it for further order fulfillment and the Speculative AMM will again provide an output price.

 

GOVERNANCE TOKEN-DEXG

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DEXTOKEN PROTOCOL aims at a governance token. Stable coins are created to withstand the effects of market volatility. But some of the stable coin projects were shut due to regulatory issues. So DEXG was created. DEXG, the governance token is said to be the perfect token that has all the properties of the blockchain. DEXG will have an initial supply of 20000 and a maximum theoretical supply of  200000. It is an ERC 20 token.

 

OFF CHAIN TOKENS

DEXToken protocol has the potential to mint of-chain tokens. These off-chain tokens can be regulated using on-chain smart contracts. The smart contract for issuing off-chain token will be executed with the signature of the issuer a the requirement. The transaction records of minting are then submitted to the public blockchain network.

CONCLUSION OF DEXToken Protocol

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DEXToken Protocol initiative by the Flowchain foundation has scheduled to create a complete DeFi ecosystem by 2022. DEXToken Protocol is a very promising project that aims to minimize market volatility using a new trading algorithm that uses speculative AMM. The decentralized exchange will enable investors to minimize losses as the price controlling power will not anymore be with exchanges or the speculators but with communities to an extent. Flowchain also concentrates on a DEXT community and will create DEXG token, the governance token which is perfectly ideal since it is not affected by market volatility.

 

 

 

 

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RESOURCES:

 

1)https://flowchain.co/assets/DEXToken-Protocol-Whitepaper-1.0-en.pdf

2)https://cointelegraph.com/news/new-blueprint-for-the-future-marries-iot-and-ai-on-the-blockchain

3)https://hackernoon.com/crypto-series-1-new-power-players-entering-the-defi-space-v8113w1d

 

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#DEXTokenDeFined

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Blindworld
Blindworld

The world is full of surprises and i am the one trying to explore them. I am a student and i will always be a student


Blindworld
Blindworld

The world is full of surprises, try to stay ahead of them with me

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