First up — how many confirmed DEX partners are there? What is being done to add more to this list?
I will make my answers very straightforward and explain. So now, we can safely say that we have confirmed 4 partnerships — they are from different sectors of the space and some are going through serious development. This is the reason why it is slightly delayed, and some of them are already working with notable entities in the space!
Next — DEX partners get favourable support, however anyone can list on the DEX. What does favourable support actually mean? What are the benefits of being a DEX partner as opposed to just listing on the DEX?
So for this part, I will first answer this from a business perspective. When we say favorable, we mean that they gain access to special features or promotions or even potential collaborations we could offer. We are so much more than a DEX. As current DEX mostly provide liquidity, it is difficult for them to offer additional values to projects other than that. We want to provide more than that. More than just liquidity but actual support and growth to the project.
From a tech perspective, the partners incentivize their users to provide their token as liquidity to our DEX. For those partner tokens we provide additional XFIT rewards to those users.
Now, are there any plans for XFai’s DEX to become a launchpad for projects?
Yes. Projects on the DEX have the option to create farming events for their tokens. The benefit of our farming events is that the tokens hosted on XFai’s DEX become automatically swappable with every other token on the DEX (project’s won’t need to create several token pairs). Plus the farming can serve as a continuous funding strategy for the projects. This means that projects will be able to create a market for their token with less liquidity requirements.
You’ve stated that the DEX will have better capital efficiency and outperform other DEXs.
What supports this statement? Do you have any indicative statistics to add further weight to this in terms of how much more effective it will be?
In conventional DEXs, liquidity providers accumulate fees only on a token pair basis. In XFai’s DEX, the liquidity provider of a token X will receive fees for every swap in which X is involved, regardless of token pair. Furthermore, less slippage by the DEX means higher fees for liquidity providers. Once we have the dex on the testnet, we can show this behavior to users empirically
We also have internal simulations which we intend to publish visually together with the DEX, so that the public can understand the pool depth and slippage dynamics. The slippage reduction is especially enormous for trades between small cap tokens, ie early stage tokens. this will be especially interesting to startups and speculators.
Who is your competition and how do you plan to crush them?
Right now of course we have the DEXs that are well established such as Pancake Swap, 1inch and Uniswap.
I think this goes first with our key features:
1. Chain Agnostic
2. Lesser Slippage
3. Burning mechanism for every swap leading to possible token increase.
4. ANY tokens can be listed with improved liquidity and less slippage
What is the minimum amount of liquidity that must be provided in order for a DEX pool to operate?
Significantly less than other DEXs. Since we have pools instead of token pairs, we require magnitudes less liquidity for the DEX to work as well as conventional DEXs. There is no minimum amount of liquidity for the DEX pool to operate, however there is a certain level of minimum liquidity to outperform existing DEXs. That varies for each token. Much less needed than on other DEXs though (assuming real world circumstances)
The community would next like to know, how does XFai operate with arbitrage? How does this apply when managing liquidity on other DEXs?
Every token on our DEX has its own deep pool. Arbitrageurs can have access to these deep pools through flash loans. The benefit of XFai’s DEX is that once you change a price, the price of all tokens in relation to the changed price will also change automatically. We believe that this will make our system extremely beneficial for arbitrageurs. Keep in mind, arbitrageurs in AMMs are a crucial component.
This means that due to the automatic price updates, and slippage optimization, our DEX price will quickly become the “reference” price for many arbitragers.
How does XFai plan to benefit from Impermanent Loss?
We think that impermanent loss is a feature, not a bug. We will not try to prevent it in our system. One could do it, but then the system’s robustness would be sacrificed. Instead we are focusing on slippage minimization. There’s a trillema: price, slippage, liquidity. Often by optimizing two, another one gets “damaged”. trying to prevent impermanent loss would cause the other attributes to not function properly. Removing impermanent loss should therefore not be the goal.
IL is a feature rather than a bug because it is the result of invariance in the system. Invariance is what makes a DEX robust. That said, IL will behave differently on our DEX compared to others.
How does XFai plan to combat frontrunning?
We don’t. Frontrunning is an architectural problem of blockchains, it’s not a problem that can be solved on a smart contract level. That said, frontrunning is especially a problem when it comes to arbitrage opportunities, and sandwich attacks. Arbitrage is different as prices get updates across the board, and sandwich attacks would require a different/more difficult approach due to slippage minimization. But it’s not solvable with how blockchains work today.
How do you plan to incentivise users and projects to provide liquidity to the DEX? Will you be allocating tokens as an incentive for this?
Yes definitely, both directly and via partner farming, or “double dipping” — at least for some time.
1) A project’s token gets immediately swappable with every other token on the DEX without having to provide liquidity for every token pair.
2) Projects can do their own market making through creating farming events on our DEX, which can also serve as a continuous fundraising strategy for projects.
Can you shed any light on other products XFai plans to bring to market in future?
How will these products benefit the XFIT token?
So there are updates on this. There are three type of features that will be built on top of the DEX:
- A farming platform for projects
- The option to host and swap NFTs through fragmentation
We will first launch the DEX with farming capabilities, and add NFT trading as an option. We are also exploring possibilities to add leveraging to the product. Ie direct partial swaps of NFTs with any other partial or whole NFTs and/or tokens. Leveraging is going to be very interesting if our simulations work out in ede case scenarios as well, because of the internal price updates across the board. The contracts have been designed to be extensible like this. Theoretically any type of derivative contract reliant on good price feeds will be better via our DEX.
We have a lot of supporters in our community who have been with us for a long time. How do you plan to give back and reward early supporters?
Through burning. Lots. of. Burning. It’s going to burn.
No for real though, the burning simulations are looking mind blowing. As XFIT is the bridge token of the DEX, we expect xfit holders to be very, very happy.
lol, yeah the burning is going to be *interesting*. As mentioned before we plan on launching on all evm compatible chains as well which will benefit long term holders.
Next — whenever a trade is performed, the given amount of XFIT tokens that flow out of a given pool gets essentially sent to a slippage optimization contract. Does this affect the circulating supply of xfit?
That is the whole idea of it. That’s the goal of it. Everytime a swap is performed, some xfit is sent to the SOC. (SOC = slippage optimization contract).
To follow from this, with tokens flowing out with every swap/trade to the SOC, will this not affect the amount of xfit available for use in subsequent trades especially if volume is high?
Basically the same answer. The more trades are done, the less xfit there is in the system, which means the higher the price of xfit gets. Ie for every trade. 100% correct.
The value of Xfit goes up with every single swap — is this due solely to the fees earned by xfit token provider and/or anything to do with tokens being sent to the SOC?
The price of a token on a DEX gets determined by looking at the ratio of the reserves of token X and token Y. If reserve Y is very low compared to reserve X, that means that the price of Y is much higher. The more swaps on the DEX are performed, the less XFIT there will be in the system, meaning that XFIT’s reserves in relation to all other token reserves gets smaller, which means the price of XFIT goes up. And that reserve ratio changes for every token as well, which is what we mean by price updates.
Are the tokens sent to the SOC to be used solely for slippage minimisation?
Yup. That’s the only function of it.
What does the integration of a new project look like?
It is a very broad question so I will try to tackle it as comprehensively as possible. So projects have different needs per stage. But mostly they want to minimize capital loss for providing liquidity to their supporters and since they also want to provide incentives to keep more token holders, they want that exact solution from us.
If native tokens providers can suffer IL, don’t you think it will put a lot of them off, especially those for whom the only incentive is to gain fees?
No, I don’t think that. 1) Anyone who participates in any pool has the possibility of impermanent loss. Providing liquidity in our DEX leads to significantly more fees, so it makes more sense than to go to some other DEX from a selfish perspective.
XFai secured over $5 million to be put into the liquidity for farming. It was stated that this would be injected “over the course of 6 months to ensure that the early stage of $XFIT token journey is bolstered and protected”. How much of this $5 million is now in the farming pool?
Some of the money has already been used to provide liquidity. Internally we called that Seed Liquidity. Those large Seed Liquidity providers committed to holding their LP in for several months which they did so far. However, we do not use the money to pump the price as such, as that would be subsidizing sellers. Furthermore with the DEX pivot we have to make sure that we have enough liquidity to seed our actual DEX. Keep in mind that the liquidity on uniswap today was supposed to also be used as part of the original DLO product as the DLO was supposed to manage uniswap liquidity.
How are the VC’s going to help the project and what are their views on project progress to date?
VCs are helping with very warm introductions for partners. Some of them also want to see the DEX in action.
What is the relationship between TVL and the price of XFIT? Is there a formula that for example states that the MCAP of XFIT would need to be a % of TVL: if so what would this be?
On uniswap there is no relationship between TVL and price. the causality is price->TVL because if the price increases, without the number of tokens going down in the pools, the USD denominated TVL goes up
The XFai technology appears to be ground-breaking, with this in mind can you speculate on why we have not seen any large recent purchases of XFIT. With the sale price now way below private sale I would have thought some of your partners/VC’s would want to gain additional exposure at a very low price?
My personal opinion is that potential buyers want to see the product in action first. Some of the largest farmers have been recycling their earned XFIT to earn even more XFIT via farming, which has pushed the price down (which from the perspective of a large holder doubling down makes actually sense). I don’t think many people, even the ones that very much support us, realize how big xfit will get after the dex launch. Personally I’m buying as much xfit as I can 😅
How many people now work for XFai full time?
9, but we’re looking for 1–2 more web3 developers. If you (the reader) are a developer who wants to work on cool stuff, DM me either here or on twitter. Please do not DM me on LinkedIn, I rarely read messages there.
What are your thoughts on the US Infrastructure Bill, what are some of the things XFai is doing to protect themselves against the ramifications?
I’m honestly a bit afraid for crypto in general because of the US bill. I think though that the effects of it will be very different than what some are expecting: By enforcing e.g. KYC everywhere, we can expect a lot of institutions to jump onto crypto. I therefore expect the price of tokens to actually go up in such a scenario. I also believe though that such a bill would hinder innovation in the crypto space *a lot*. Depending on the situation, I wouldn’t be surprised if we might be forced to add a KYC step to the DEX implementation. I hope not though.