High Level Overview: XFai DEX
XFAI has two overarching goals with our product pipeline:
- To get DEXs to the point of outcompeting CEXs by managing liquidity of tokens on AMMs such as Uniswap, while maximizing token holder returns.
- To greatly reduce arbitrage on DEXs and therefore create more efficient markets by using graph neural networks to construct multi-hop arbitrage bots between many existing DEX pools.
Our new DEX design effectively achieves the outcomes of both, and much more, while greatly reducing possible side-effects and edge cases.
The below points are preliminary and subject to change:
While we can’t get into the details (the competition has tremendous resources after all) we can talk about what users can expect:
- All trades on the DEX will be routed through our XFIT token.
- Unlike other AMMs where slippage is a function of liquidity (and therefore variable), and the fees are fixed, in the XFAI DEX both slippage and fees are variable and market driven.
- For larger trades what would normally be lost to slippage, will mostly go towards fees. This means larger trades will effectively be able to choose between getting exposed to more slippage or pay more fees.
- Frontrunning by taking advantage of slippage should not be possible anymore.
- Unlike all other DEXs, LPs will provide each ERC20 token to a single pool per token rather than fragment and have to manage their liquidity on multiple pairs. Basically “set it and forget it” is the approach we are going for.
- LPs only ever need to provide one token to the pool, no need to provide both sides of the pool unless that is part of your investment strategy. This allows LPs the freedom to provide either only one token to the pool, or both tokens.
- Traditionally understood spot-price arbitrage will not exist within the DEX. All token prices get “updated” after every transaction (in a computationally/gas efficient cheap way).
- Interest rate / APY arbitrage will become a thing on our DEX. This is a new type of market for speculators. Only LPs can do APY arbitrage, incentivizing liquidity aggregation.
- Exposure to oracle counterparty is greatly reduced as we now only rely on spot prices rather than on the DLO synthetic curve construction.
- The oracle does not update liquidity continuously anymore, as a result no fees will need to be diverted to the oracle, increasing returns to XFIT providers.
- XFIT holders in the system will receive fees / APY from every trade.
- Every token will be swappable with every other token, without the need for Uniswap/Metamask/1Inch style routers, tremendously reducing possible slippage when trading small token to small token. This will incentivize small cap token speculators to move on-chain.
We are looking forward to a bright future for the crypto ecosystem!
XFai develops tooling for the DeFi space, graphing it to build game-changing products. The XFai DLO is set to invite mid and small-cap tokens to start earning APY on their token holdings, while the XFai LGE is set 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.