We recently hosted the last 2021 jam-packed AMA session with our community to answer their questions. This AMA was very important as it gives light to the latest development and features of the DEX.
We had Chief Scientist, Taulant Ramabaja , Lead Dev, Lum Ramabaja as well as our Business Development Manager, Daniel to answer all the questions needed.
Here is a recap of all the questions and responses.
Q1. Have the team considered the effect of ETH 2.0 on the project? How will it affect swapping fees?
- XFai’s DEX works independently of the underlying blockchain logic. That’s why we’ll be able to launch on different chains, all of which behave differently on a blockchain level. As ETH 2.0 will enable more swaps to occur (because of lower gas fees, initially at least), we can expect more swaps to occur, and therefore more XFAI burning as well.
Q2. How is impermanent loss (IL) offset within the DEX, for example, if I provide stable coins to the DEX won't I incur massive IL with the rising price of XFAI?
- IL is a relative metric. When you provide liquidity (either through one-sided, or two-sided liquidity provisioning), you select a pool. Let’s say you entered the USDT pool by providing USDT, USDC (or just USDC if you chose one-sided liquidity provisioning). When you exit, you will exit again in USDT + some other token. At no point in time were you exposed to XFAI. Your IL therefore is USDT / USDC dependent, not USDT / XFAI. We’ll have to write a detailed blog post about this when the DEX launch is near
Q3. What measures are in place to protect from someone creating 2 new tokens and trading them against each other in a malicious manner? E.g. sell all Token A for Token B then buy XFIT with the artificially inflated token B token.
- Each token has a pair with XFAI. If the maliciously created token A pool has 1000000 A tokens, but only 10 XFAI tokens, the upper bound of XFAI tokens that can be sent to the also maliciously created B pool, is 10 XFAI. So they put in 10 XFAI and exited with 10 XFAI, no harm done on a system level.
Q4. Do we have any statistics on how much more efficient the DEX is going to be e.g. gas price, price impact, slippage, fees?
- Gas prices will depend on a blockchain basis. We will try to make it as gas-efficient as we can. Price impact, slippage, and fees will depend on other factors (e.g. transaction volume, number of transactions per unit of time, etc). We will start sharing some DEX simulations with the community sometime in Q1. I believe the community will be quite happy with the results ;)
Q5. It has been said that it will also be possible to provide a pair of tokens as per existing DEX’s, is this still going to be an option? If so, can you expand on what are the benefits and how this interacts with the XFAI token?
- Yes, that will still be an option. Let’s keep an in-depth explanation on this question for the next AMA, as we’re currently actually changing the mechanics of liquidity provisioning quite a lot. What I’d be telling you now would probably not be the correct explanation until the next AMA.
Q6. Do you still plan to offer leveraged trading, if so will this be across all tokens and when will this be released. Will we be able to create leveraged trade for the XFAI token? Is the XFAI DEX an AMM or a vAMM?
Leverage will be a later addon. The XFAI DEX is a new type of AMM. The leverage addon is a new type of vAMM.
- We’re looking into it for V2. V1 will be an AMM. We’d love to add that for V1, but then the project would get even more delayed. We think incremental deployments make more sense for us and the community as well.
Q7. Can you comment on some of the aggregators you have planned to work with the DEX.
- We can’t comment on the business development discussions we’re having atm. However, we are in talks with several partners (not just aggregators) which will be very synergistic.
Q8. Has XFAI formed any new partnerships, how many are you presently in talks with? This is the only area still quiet.
- We have secured multiple ones. The reason why we cannot announce them yet is that we moved to a new model, the DEX. Logically speaking you cannot keep bringing partners without showing a new product. They at least must know how it will work affect them via demo.
Q9. Can you talk about your plans to incentivize LP’s during the bootstrapping phase?
- The answer to that will have a lot to do with the answer to the previous question “It has been said that it will also be possible to provide a pair of tokens as per existing DEX’s, is this still going to be an option? If so, can you expand on what are the benefits and how this interacts with the XFAI token?” We’ll talk more about this in the next AMA, but in short: yes we have some really exciting plans for LP’s :)
Q10. How much liquidity will XFAI inject into the DEX and in what token form will this be?
- Liquidity, as planned, will be injected in an agile manner. The funds raised are all at our disposal for this purpose.
Q11. Can we have another farming drip-rate boost while the staking issue is resolved?
- Unfortunately not. The function that caused the gas issue for farming and redeeming, applies to the drip rate modification function as well. That said, the APY is already higher than most projects.
Q12. Can Aron Dutta or Geoffrey Khan join the next AMM to give their thoughts on the XFAI progress and their plans to grow XFAI?
- An AMA will in our opinion make the most sense once we can make our partnerships public. Right now it’s all tech-focused.
Q13. What will happen to farming when your staking is released, will it continue?
- Current farmers will either be able to redeem their liquidity + rewards, or stake it in the upcoming staking contract.
Q14. Why are Metamask fees on XFAI averaging 2 ETH per tx? It’s madness! Lol
- Please read the XFai blog posts for more details.. https://xfai-official.medium.com/important-updates-for-the-community-ec14d7bd6060
Q15. Do you have plans of deploying a DEX on Solana? Or NFT trading on Serum?
- Maybe ;) Considering Solana’s growth, we’re not going to ignore it.
Q16. Xfit started as a DeFi/launchpad but now has evolved into a dex. If you look at all of the other launchpads now, all are doing very well — bscpad, seedify, even spaceswap (because of sidus hero IDO) are doing well. Even Bloktopia has jumped on the bandwagon! Maybe you would like to share your plans on this because this is the reason why people are not dumping their launchpad tokens. Since we also have an edge to do IDOs when the dex is up and running.
- A launchpad for what? Maybe the user can elaborate on the question at the end of the AMA. If they mean a platform where LP’s can gain fees and farmers' rewards, we’re still doing that.
- We never started as a launchpad. There are too many launchpads already and it requires different expertise.
Q17. The price of XFIT is rising whilst we are waiting to swap from the farm to the liquidity contract. New users are buying on the open market but dedicated farmers are missing out and will be buying XFIT at a likely much higher price, which seems a little unfair. Will you take this into account somehow?
- Farmers will be able to stake their LP + XFIT rewards into the staking contract and have proportionally a bigger share than others that come in (assuming that they stake right away and don’t wait).
Q18. When it comes to XFAI, I think I understand it, but I am having a hard time explaining how it works to my team. If you were to break it down as simply as possible for a crypto that is just now launching how does it work? (eg, how would you explain it to your grandma?)
- In short: We’re a DEX with a different architecture design that allows us to offer really really low slippage to users. We’ll write more technical blog posts going forward. We’ll publish one online today/tomorrow about the flash mintable XFAI token, then another one for the new Liquid NFT format, and then we’ll focus on more detailed DEX mechanics blog posts.
- The most price-efficient DEX on the planet?
Q19. How will you make it clear to distinguish XFIT and XFAI on different chains as being different tokens when looking at places like COINGECKO etc? Will the ticker just be XFIT and XFAI on every chain or will it be distinguishable between chains?
- Just like you have it in any exchange. When you pick e.g. USDT, it will ask you for the chain / token format. That’s not really an issue in my opinion.
Q20. With recent hacks, it’s clear that sometimes audits really aren’t enough. I saw you blacklisted certain auditors, but even if you wait for the good ones, there’s a chance something could be missed. Is insurance being looked at?
- We have broadly identified 3 types of hacks.
- Low hanging fruit coding mistakes eg Monox). These generally get caught by good auditors, automated tools, and bounties.
- Oracle-related hacks and third-party contract integration hacks, which we don’t have.
- Crypto Economic hacks, which nobody currently realistically covers outside the core teams. The best we can do here is to be paranoid and make sure we play it safe and keep all the math invariant.
Q21. Will you work with a security protocol of some sort? I understand that the DEX will be very secure, but I like the idea of having a moat around the fortress. Extra security will only be positive and add more assurance for liquidity providers and dex users.
- We are still looking into different smart contract insurance DAOs. We think that there are systemic risks associated with most of them atm. Insurance is however a serious consideration of ours.
Q22. What timeframes can we expect for the DEX staking contract and the new website?
- We’re aiming for the end of December.
Q23. Will XFai offer allocations in projects that launch on the DEX? Almost like staking on launchpads.
- No, projects are independent. For early partner projects doing farming with us farmers get to double dip with XFIT tokens being dripped.
Q24. What is the current circulating supply?
- ~170M. By the time staking starts it’s going to be 200–230M.
Q25. Will your rebranding still have the XFai flair? When can we get more of a look at rebranding?
- End of December.
Q26. In the last AMA I believe it was mentioned that XFIT would still have a potential purpose for “other” features being built but it’s unclear what the reward could be. Could the team please clarify, besides capturing positive price movement, what would be the purpose/benefit to hold XFIT?
- Maybe in future products, similarly to how XFAI is tight up with XFIT. No final decision at the moment.
Q27. To confirm farming ends when staking is released? There will be no more farming of XFIT from this point forwards?
- Current farmers will have two options, either stake, or redeem. After 1 month they will be only able to redeem. Long story short, we have to make such a harsh decision to protect the protocol against attacks
Q28. If the DEX is launched on L2 would this also be a different token?
- Good question. Honestly right now all the L2s I’ve seen are just other chains with various forms of bridging. As each one has a different swap rate, each one will be forced to treat it uniquely. That said, I think in general these L2s and chain bridges will cause a huge mess up sooner or later in the crypto space. The level of security of a project will be that of its weakest chain / l2. Expect insane hacks in the future when it comes to projects that are spread across several chains / L2s.
- Presumably with the end of farming will you be dependant on migration out of farming over to Uniswap LP to buy/sell XFIT till the DEX launches. To clarify, farming ends which is also used as Uniswap, LP, correct? If you remove farming then there won’t be a lot of LP for users to buy XFIT. What are the plans to allow people to buy/sell XFIT with enough liquidity till the DEX launches.
Q29. There’s also LPs who aren’t farming. The smaller the pool, ths more fees they make. It’s a decision people will make for themselves.
- Actually, there will be two types of farmers, which will influence the liquidity pricing in Uniswap a lot: Some people might go all-in from farming to staking, pushing the XFIT price a bit up.
- Some others however might exit altogether.
- We can expect high variance activity in XFIT’s price once the staking starts. The less liquidity though there is on Uniswap the easier it is to skew the distribution in XFIT’s favor (price-wise that is).
Q30. On the malicious token question, how does the DEX work out the available XFIT that can be traded/extracted?
- Because every pool has a token reserve, as well as an XFAI reserve. We simply look at the XFAI reserve and determine that upper bound
Q31. Do you have an estimated date for staking release?
- Yes, we are aiming for the end of December
Q32. What will be the incentive for the projects to list on Xfit? Users benefit from low slippage and fees etc anything to incentivize other projects?
- Swappers will pick our dex because of lower slippage. Projects will pick the DEX because of the way farming will work
Q33. Are you concerned about gas wars — can you release an indication on how much gas is required to stake?
- Gas fees for staking will depend on the staker’s choice. E.g. staking simply xfit as a user will be quite cheap. Staking XFIT as a farmer and redeeming the lp will be a bit more expensive (because we have to call some Uniswap functions for that). Going all in will be the most expensive option gas-wise. Again this isn’t smth that we’ve decided, it’s just the way it is.
Q34. Since DEX has paired with Xfit, any chance of native swaps of other chains tokens?
- We’re not a bridge project. Each chain has its own DEX and will have potentially different tokens hosted
Q35. I was trying to find out if investors can earn passive income by slowly redeeming and selling their earned SOC rewards rather than touching their initial stake.
- The mechanism works like this:
You stake XFIT, and get an NFT with a ‘liquidity’ and a ‘share’ field. The ‘liquidity’ variable represents your initial stake. The ‘share’ variable is a number that gets calculated like this:
( StakeAmount / balanceOfStakingContract * 1e18 )
That way earlier stakers get significantly larger numbers for the “share” variable than later stakers. When we want to calculate what % of the SOC fees belong to a specific NFT, we simply take the NFTs share variable, and divide that with the totalShare (i.e. a variable that is the sum of all share variables).
So if you redeem all of the ‘liquidity’ of the NFT (your stake), the next time you redeem the ‘share’ variable will be affected (it will be slightly decreased). That also means that your SOC share relative to others also shrinks after starting to redeem the ‘share’ part of the NFT. So there’s an opportunity cost when one starts to redeem their share.
Thank you to all those who participated in the AMA.
We look forward to have more questions in the next AMA with more updates. Stay tuned for more information.
XFai develops tooling for the DeFi space, graphing it to build game-changing products. The XFai DEX is set to invite mid and small-cap tokens to start earning APY on their token holdings. We are aiming to become industry-first in providing a more efficient, transparent, and fair way for everyone to get involved at an early stage. The LGE for XFai’s native token, XFIT, was launched on 16th April 2021. We invite everyone to join the DeFi revolution, spearheaded by XFai.