Today, most small cap tokens are not earning any returns for their owners. This represents the vast majority of tokens currently in the market. Their liquidity is sitting in order books in centralized exchanges and are inaccessible. Our DEX Liquidity Oracle (DLO) allows the DeFi ecosystem to expand further, by ‘super-charging’ our small cap tokens by creating liquidity and creating a level playing field for them in the DeFi space. This allows any small-cap tokens to benefit from the unlocked potential of DeFi.
How does the DLO work?
Our DLO is designed to bring the benefit of DeFi to small-cap tokens by synchronizing the price feed and liquidity of centralized exchanges with those of decentralized exchanges. This has the added benefit of reducing the overall possible slippage of prices on DEXes.
We believe this is a game changer and a huge breakthrough for the industry!
We do this using an elegant two-step process:
- First, via API’s, we read the current order book on the centralized exchange. This allows us to calculate the total price to volume ratio of the order book. As if it were continuous.
- Then, we read the DEXes curves current appearance. If its below, we send in liquidity until it matches the current order book. If it is above, we remove liquidity so that it aligns with the analysis.
- This has the added benefit of moving the price left or right as needed.
XFai’s powerful end effect here is that a trade on DEXes will be as efficient if not more efficient than the same trade on a centralized exchange.
What are the DLO’s features?
The DLO’s ‘anti-slippage’ feature specifically targets and mitigates for the difference of the expected price on a trade and the actual price at which the trade is executed. This helps in decision making and allows you to enter and exit small cap tokens with ease at a lower price.
Existing DeFi oracles update only the price data on-chain. XFai tackles this directly with our “synthetic curve”.
Our synthetic curve approach constantly synchronizes BOTH the price AND DEX liquidity on-chain. These micro changes in the centralized exchange are being reflected real time in the DEX liquidity.
Other oracles do not do anything like this. This is a dramatic improvement and is a leapfrog solution where we are addressing fundamentals by averaging out the entire volume of the order book.
The greater the difference between the current liquidity of Uniswap and the desired synchronized curve, the blue area showing the injected liquidity, the more powerful our effect. Like a force multiplier XFai dramatically reduces slippage and supercharges returns for the liquidity providers.
‘DLO Brick Feature’
Centralized exchanges are creating a ‘firewall’ between smaller tokens and the rest of the DeFi ecosystem, this kills the possibilities of composability and options.
Due to the DLO-Brick providing liquidity on-chain it becomes accessible for other Defi projects to get information and price feeds on these smaller tokens from DEX’s. This allows other projects such as Aave, Maker or Uniswap to engage these smaller tokens and results in network effects. Giving them composability while also allowing the possibility of many additional layers and derivatives. Creating a building block effect.
This is the dream of all mid-size and smaller tokens and projects: to play in the same league as the bigger ones, create a fairer playing field, have a chance to perform, and make smaller cap tokens more attractive.
We achieve this by creating an efficient on-chain market.
As a result, traders are guaranteed the minimum fee required by the market and liquidity providers are guaranteed the maximum amount of fees.
Hence an efficient market where everyone wins!
‘Secure and Simple’
On DEXes such as Uniswap, if you want to earn returns, you have to provide two tokens for liquidity. This exposes you to price fluctuations on both tokens.
With our DLO you’re putting one token into our liquidity pool and you get returns in that same token.
XFai — The future of DeFi
Our specific Anti-Slippage technology, combined with our Synthetic curve alongside the fee benefits guarantee, the simple single token approach, the DLO-Brick and our powerful Liquidity Difference Force Multiplier, all integrate seamlessly into our XFa i DEX Liquidity Oracle.
This is a unique and industry leading approach and nobody is doing anything even close.