DeFi components on Tezos: TEZEX, a cross-chain gateway

DeFi components on Tezos: TEZEX, a cross-chain gateway

By Allen Walters | Publish0x posts | 27 Dec 2020


With USDtz, ETHtz and tzBTC available on Tezos, we can now offer tradingpairs on Tezos-based DEXes that could attract a new group of traders who are currently trading on Ethereum-based DEXes. Untill now only XTZ pairs are available on DEXter. If you're not trading XTZ, these tradingpairs will not convince you to try DEXter. But an ETHtz - tzBTC pair could change that. Or USDtz pairs with ETHtz or tzBTC. These trading pairs themselves are nothing special, but the fact that they become available on Tezos, means that a big advantage can now be monetized. When trading on a full Tezos-based ecosystem (wrapped tokens on a Tezos-DEX), you only interact with Tezos. This means low fees, so low costs. Trading on Tezos is, on average, over 3,000 times cheaper than on Ethereum. 

Transaction fees are (on average) 1/5,177th of fees that you pay on Ethereum.
An average transaction on Ethereum will cost you on the time of writing this article (December 24, 2020) $4.159. 
An average standard transaction on Tezos will cost you 0.0004 XTZ x $2.01 = $0,000804
100 transactions on Ethereum will cost you $415.90
100 transactions on Tezos will cost you $0.08

When we look at more complex transactions, which are more expensive, we see that certain use cases become unrealistic to deploy on Ethereum: 

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Will you trade on Ethereum-based DEXes, or Tezos-based DEXes? It does becomes tempting now to try a Tezos-based DEX like DEXter. One more thing to cover though: Liquidity and how to get your funds (for example ETH or USDC) on Tezos.

Liquidity has been growing since DEXter launched in September. Additionally institutional liquidity provider Woorton will increasingly provide liquidity on DEXter. And anyone can add liquidity on DEXter. You can earn a portion of transaction fees doing so. (But before you add liquidity, make sure you learn more about the risks and the rewards, so you can make an educated choice. Most important risk factor is impermanent loss.) ETHtz minters are currently in the registration process, so some ETHtz liquidity should emerge soon.

How to get your funds on Tezos: This is where TEZEX comes in to play. TEZEX is a cross-chain gateway to Tezos. As soon as TEZEX launches (this month or the next), another crucial instrument joins the Tezos DeFi landscape. Pre-minted ETHtz and USDtz (and later more tokens) will be available on TEZEX through smartcontracts. People will be able to deposit ETH or USDC and get ETHtz or USDtz in return which can be used in Tezos-based applications. No KYC, no registration of any kind, just a simple transaction and you're ready to engage in Tezos DeFi. In a few clicks you can start adding liquidity to pools, or start trading.
TEZEX is a necessary tool that lowers the threshold for people to start dipping their toes in Tezos DeFi. It's a very important component that will be available soon.

Wrapped ERC20 tokens
Another very interesting development to diversify the DeFi range on Tezos is wrapped ERC20 tokens. BenderLabs announced "Wrap Protocol", to be launched in early 2021, which will enable you to wrap your ERC20 tokens into wrapped ERC20 tokens on Tezos.
With ETH, USD and BTC set on Tezos, ERC20 tokens can be paired with these 3 popular coins to create tradingpairs.
TEZEX could very well also be supplying wrapped ERC20 tokens.

TZX tokens
Users of TEZEX will earn TZX tokens. These are governance tokens of the TEZEX platform which will give users voting rights for decisions to be made on further development of the platform.
The first batch of TZX tokens will be issued to TRU tokenholders. The Trustee Network will be launched soon, which is a governance network for all Stable Tech DeFi applications. Holders of TRU tokens will receive 1:1 TZX tokens (and all tokens that will be issued for any of the "Stable Tech" DeFi applications). TRU tokenholders will be the ones to create stability in the primary phase of tokendistribution. They are not intended to be the ones to preserve majority in governance. After the initial batch release of TZX tokens to TRU holders, users of TEZEX will start to earn TZX tokens too and slowly but surely the TRU holders majority position will be overtaken.

Tezex will be launched this month or the next.

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Allen Walters
Allen Walters

Fascinated by blockchain and future proofing cryptocurrency. Discover the tech before it gets relevant. Twitter: @IgnoranceIt


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