ONTOSWAP's Dual Token Approach Addresses a Crucial DEX Bottleneck

Solving the current bottlenecks affecting DEXes will require innovative solutions. Ontology's ONTOSWAP has introduced an intriguing solution, known as the dual-token approach. This model offers significant benefits compared to how all decentralized exchanges handle these aspects.

DEX Liquidity Token Concerns

A lot of new decentralized exchanges have popped up in recent months. Some of them bring something new to the table, whereas others clone Uniswap and add their own flavor. While both models are valid, they also have the same problems in common. Introducing a viable long-term incentive mechanism has proven difficult, if not virtually impossible. 

Rewarding liquidity providers is a very tough balancing act. A native token can serve as a reward, although that token may not retain much value. Once the token value decreases, liquidity providers will start to bail and explore more lucrative options.

Furthermore, there are concerns of how these native tokens are distributed. Allocating a portion of the supply to the developer is not an ideal situation. Coming up with a more sustainable approach will always be a challenge, but ONTOSWAP offers a different solution. Using a dual token ecosystem has a lot of merit. 

How Does it Work?

The dual token approach relies on the ONTO and YFO tokens. ONTO is the utility token, while YFO is the governance token in the ONTOSWAP DAO. To ensure a fair and distributed launch, YFO will not have a team reserve, there are no VCs, and there will be no pre-mining. For the end user, staking ONTO will yield YFO, creating an immediate use case for both tokens alike. 

Leveraging two tokens circumvents the unfair aspect of current DEX protocols. It is only possible to mine YFO with ONTO, yet the ONTOSWAP team - or anyone else - will not have access to ONTO in advance. Everyone will be able to buy the token at the same time, either through a native token sale or by exploring the secondary markets. 

To attribute value to both ONTO and YFO, there will be actual applications. Additionally, ONTO will be subject to buybacks and token burns, as 50% of ONTOSWAP's net profits will be used. The other 50% of profits will be rewarded to token holders. A further incentive to hold ONTO comes in the form of earning double YFO mining rewards. 

On the other end, YFI can be used to mine more ONTO, as well as play a role in the ONTOSWAP ecosystem, and amending liquidity pool support. Both tokens serve a purpose from day one, and will continue to do so throughout their existence. A very unique and balanced model. 

Ontoswap will launch their token sales at the end of the month, and the V1 product by early next month, together with liquidity mining.  Make sure to keep an eye on the team’s Telegram and Twitter channels for more information!


How do you rate this article?



JP Buntinx
JP Buntinx

Cryptocurrency and Fintech enthusiast @Jdebunt on Twitter

Fintoism - Fintech, Cryptocurrency, Finance, Block
Fintoism - Fintech, Cryptocurrency, Finance, Block

Key news regarding cryptocurrency, blockchain, finance, fintech.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.