In the current macro bull-run, it seems that there are new projects being built on almost a daily basis. When looking at Polkastarter, there are multiple IDOs happening, along with so many other tokens being listed on Uniswap. While the surge of new projects entering the market may give more options for traders to be more exposed to new opportunities, it also brings higher difficulty in selecting the right projects. Most often, the most sensible choice is to look at new projects that can interact well with another project to bring a synergy effect to the entire ecosystem.
XFai — the latest project I have on my radar — ticks all the boxes. Its main purpose is to interact with various small-cap tokens in the market through its innovation protocol to essentially create a more fair trading experience for DEX (decentralized exchange) users. While the project is still at its early stage, XFai’s video explanation on how its DLO (DEX Liquidity Oracle) is set to operate has brought excitement for me, personally, as I see the potential benefit that XFai can bring especially to my favorite token: DigitalBits.
What is DigitalBits?
DigitalBits is often referred to as blockchain for business. It is a protocol layer built to support consumer digital assets, especially branded cryptocurrencies. This allows for businesses to issue their own stable coins, enabling consumers to further interact with a cryptocurrency version of loyalty points.
DigitalBits recently had a number of partnerships, one of the biggest ones being Zytara and the wave of e-sports teams that it brought. The partnerships are set to increase the utility of the DigitalBits ecosystem and its hotly-anticipated mainnet.
What is XFai?
XFai is a DeFi oracle that is set to challenge the way we often interact with small-cap tokens. Using its DLO technology, XFai measures the token price movement in relation to the volume and the order book depth on centralized exchanges and injects liquidity to DEXs such as Uniswap to create equal, if not more efficient, trading opportunities for token holders.
Moreover, XFai offers an anti-slippage mechanism to ensure that traders are protected from unforeseen slippages happening that could affect their token holdings as a whole. This removes a lot of power from the hidden market makers that often lurk in centralized exchanges, freeing up small-cap token holders from being stuck in the centralized exchange order books.
XFai’s DLO Effect on DigitalBits
So what would happen if DigitalBits decided to join XFai’s DLO? What would the possible effect be? Simply put, it would be a massive win for holders like me, traders, DigitalBits as a project, and its business partners.
First, DigitalBits would have a large portion of its highly supportive community turn into liquidity providers. In order for XFai’s DLO to show its full potential, XDB token holders would add liquidity into DLO so that the liquidity injection and automatic management can happen. This would remove the necessity for the DigitalBits community to sell their precious XDB tokens to realize profits, as they can enjoy some hearty profits from providing liquidity. Then, in turn, XDB would face less selling pressure as it continues to experience positive price movement.
Second, XFai’s DLO would provide an optimal condition for XDB token holders to benefit from minimum slippage. Since XFai uses its powerful API to read the order book and the price feed on centralized exchanges, it is able to inject liquidity into DEX to match the trading environment provided by the centralized exchanges. While centralized exchanges have hidden market makers that can amplify especially sell orders, XFai’s DLO would provide an anti-slippage mechanism on DEX-listed pairs. This means that more XDB token holders would be able to exit — if necessary — and cause minimum slippage as compared to the CEX’s slanted order books, thus continuing to support the project even when exiting.
Third, DigitalBits would enjoy added benefits. On top of both community supporters and profit-seekers being motivated to HODL the XDB tokens (to either be supportive or earn high returns by providing liquidity on DLO), DigitalBits would be able to add its treasury fund into DLO and earn returns on that. Moreover, it would be a massively bullish signal to the DigitalBits community, as the project would show its determination and dedication by going long on its own tokens. The increased liquidity would also be essential in supporting price discovery and look highly favorable in all token metrics.
Fourth, DigitalBits could invite its business partners to participate in XFai’s DLO as an additional source of revenue. Businesses using DigitalBits’ mainnet would have to hold some XDB tokens regardless — either for usage or holdings — and the ability to provide these profits to go long on XDB by adding their holdings into XFai’s DLO and earn profits on top would simply be revolutionary. Especially during these difficult times, which business would say no to additional revenue? This could also encourage more businesses to join DigitalBits, as they could print branded stable coins for their customers while also earning through DigitalBits’ involvement in XFai’s DLO.
Fifth and last, the DLO bricking effect brings possible future composability, as XFai’s DLO has enormous 3rd party integration potential. This gives token holders and investors yet another reason to go long on XDB. For example, instead of selling the token to buy another, they can use XDB as collateral in Aave to release funds. The long-term goal would be eventually never having to exit the token. This is a dream for any small and mid-cap token project!
Endless Possibilities
Of course, my understanding is not fully complete as the discussion between XFai and DigitalBits would be more complex than how I have laid it out. However, the possibilities are enough to excite me as an XDB holder, and also as someone who is keeping a close eye on the latest developments at XFai.
XFai is set to have its launch event — Liquidity Generation Event — at the end of March or beginning of April 2021 according to some rumors. The event will be open to the public, and those participating will have the opportunity to purchase XFai’s native XFIT tokens and add the tokens into the liquidity pool to earn some exponential earnings.
The details are yet to be shared, but early support from some of the biggest influencers such as Scott Melker (Wolf of All Streets) [insert link] is pointing in the right direction. XFai’s development and its potential partnership with excellent projects such as DigitalBits should be closely monitored by those interested in new, lucrative opportunities within the DeFi space.
Join the Community
DigitalBits
XFai
Disclaimer: Please only take this information as my OWN opinion and should not be regarded as financial advice in any situation. Please remember to DYOR before making any decisions.
♂️ Hi, my name’s Sal.
If you found this article useful and would like to view my other work please be sure to clap and follow me on Medium and LinkedIn!😎
