The Bearish Case on DEX TOKEN Protocol

The Bearish Case on DEX TOKEN Protocol


And why claiming that DEXG token is the perfect token is an utter crap.

The Basics

Defi Decision Helper

That’s how you get started with a DeFi project.

It has been covered plenty in the previous submissions how DEX Token protocol operates and what DEXG tokens are.

But as a quick recap:

  • DEX Token protocol is launched by Flowchain based in Singapore and Jolen Chen is the CEO
  • DEXG is the native token
  • Speculative AMM — the price of the tokens will be based on the volatility function reducing price manipulation and speculation
  • Balancer shared pool — in Uniswap, when you provide liquidity,  the tokens need to be 50:50. For example, if you provide liquidity to ETH-DAI pool, you have to bring in 50 ETH and 50 DAI. With Balancer Shared Pool, you can join the DEX/USDC pool with customized asset weight management (90 DEXG/10 USDC)
  • No third party oracles to obtain the data (no Chainlink for example)
  • Max supply is 79,500
  • All DEXG holders will benefit from the trading fees 
  • Aims to provide off-chain token issuance, redemption, and withdrawal

Get it? Got it? Great.

The Real Deal

What does DEX Token really solve?

It is a question you need to ask yourself if you want to invest or try a project, so you will know if it is  sustainable and have longterm mission and vision.

Therefore, I will peel the onion layers instead to tell you the pros and cons of a defi project like DEX token by looking at the DeFi red flags.

The Red Flags in Defi

  • Misaligned incentives — when the team/developers get more incentives or shares, it  is a red flag. For example, when the Sushiswap founder Chef Nomi swapped his SUSHI holdings for $10 million worth of ETH, it tainted the reputation of Sushiswap.
  • Unaudited — we all know the disastrous aftermath of food tokens such as Yam which was not audited and caused massive loss of money to people who staked their money to Yam protocol. 
  • Concentrated ownership — DeFi is decentralized but when whales are the ones holding most of the tokens and providing liquidity, the shrimps will be eaten plus the cost of impermanent loss.
  • Unknown team — It’s just a red flag in the world of DeFi. Although, this is a double-edge sword. Bitcoin is founded by anonymous creator named Satoshi Nakamoto, yet people trust Bitcoin. I think the difference it makes here is that Bitcoin was created when the world of cryptocurrency was not yet made of pump&dump, hype, ICO, and yes, DeFi yield farming which lead to more scams.

Good DeFi

So a “good DeFi” project is sustainable, audited, community owned, and has trustworthy team.

Does DEXG tick all the boxes?

  • Trustworthy —  I don’t think a project that’s 3 years old can be considered trustworthy without realized goals and products, but Flowchain has built a USB dongle. Their partnerships are also limited. Also on their website, there is no other link to Linkedin profiles or social media site for other team members except for the CEO. With that said, Flowchain team has mentioned on their whitepaper that they will work with regulatory bodies.
  • Audited — the smart contract has been audited by Pessimistic and found zero bugs. However, the more audits the more reliable it should be.
  • Community owned — the team will get 10% of the token distribution, 10% for the fund, and 80% for the community. DEXG holders will also hold some governance on DEX Token protocol. 
  • Sustainable Incentives — the way the liquidity incentives are distributed, at least it makes DEX Token sustainable.

But what does it really solve?

Let’s take a look at the roadmap of DEX Token.
Roadmap

Source: Dextoken 

As one can see, DEX Token Protocol is a rather ambitious project.

But here are things to consider:

1.) There are many competitive blockchains whose purpose is to provide online payments instantly like Stellar, Litecoin and Ripple & for DeFi counterpart, Oasis is going to offer private and public payments. Whereas Flowchain is also competing with IOTA, Nodle and more for internet of things.

2.) The speculative AMM and the off-chain minting of the tokens are their selling points. However, other DeFi projects like Uniswap and Curve are constantly improving, since as much as AMM is quick to onboard users and liquidity, it’s prone to speculation and manipulation because the algorithm is transparent. Furthermore, Uniswap and Curve’s network effects are bigger and might thwart the efforts of other smaller DeFi projects.

3.) Regulation scrutiny as a whole is a threat to DeFi projects.

4.) CeFi meets Defi. Binance & Coinbase are the biggest players exploring DeFi trends. In fact, Binance has already launced many pools for staking, savings, and yield farming. Other interesting CeFi projects are Nexo, Celsius, and AnchorUSD. 

With all these points taken into consideration, achieving a “perfect token” is going to be difficult especially when user demand goes down.

In general, what Dextoken protocol, or I should say Flowchain is trying to solve and explore are:

  • Digital finance
  • Internet of Things (IOT)
  • Artificial intelligence (AI)

Can Flowchain deliver though?

The competition is tough; and when the market is saturated with projects trying to be the next big thing, is there really a room for genuine projects to thrive?


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Yaki Moto
Yaki Moto

I'll trade diamonds for sunscreen and a tiny house away from trolls ◾ writes about self-care on sunkissedwave.com ◾ subscribe to my Telegram channel: https://t.me/sunkissedwave


Hodl, Write Crypto! Aye sir
Hodl, Write Crypto! Aye sir

Satoshi has summoned me to keep writing about digital currencies and blockchain. I'm a good girl. I said yes.⚡

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