DEX represents an advanced ideology. Compared with CEX, it emphasizes permissionlessness, decentralization, and openness and transparency. However, as the DeFi track gradually turns from the peak at the end of 2021 to the trough, the overall transaction volume of DEX, TVL and other data indicators have also begun to show a downward trend, and DEX is facing a new bottleneck period of development.
In this context, new changes are taking place in the DEX protocol form and development ideas. Several obvious development trends include:
l DEX is expanding its capacity to reduce costs and gain new incremental users with a better trading experience.
l DEX is undergoing a paradigm shift from AMM to order book.
l In the long run, DEX will no longer be limited to encrypted asset targets, and the range of targets is expected to be further expanded
1. DEX is reducing costs through capacity expansion
More and more users are dissatisfied with the losses caused by transactions on DEX, especially in frequent transactions where Gas fees can even cover profits, such as traders on Ethereum, even after the upgrade of ETH2.0 The cost of the transaction is still not negligible (of course, the advantage of the low gas fee of BNB Chain and others has become no longer obvious).
With the rise of Layer 2 with expansion capabilities and the bottom layer of some emerging chains such as the Move system, it is providing the basis for DEX expansion and cost reduction. We have seen that several DEXs such as UniSwap, Curve, and PancakeSwap are actively leapfrogging to some emerging ecosystems with expansion capabilities. In addition to attracting more new users, they are also seeking a better trading experience.
2. Paradigm shift from AMM to order book
UniSwap has created a new wave of AMM, and AMM is still the main narrative of DEX so far. But in fact, only the top AMM DEXs have sufficient liquidity, and most long-tail DEXs are difficult to solve the liquidity problem through AMM. In addition, the long-term problems faced by AMMs such as low capital utilization, high slippage, and difficulty in expanding functions have not been resolved. Although UniSwap launched v3 very early, CLMM has increased the utilization rate of funds, but CLMM has further expanded the risk exposure, and a considerable number of LPs are facing high unpaid losses.
Relatively speaking, the order book has certain advantages in expanding trading experience, trading functions, and reducing risk exposure. Even the DEX that used the order book model in the early stage faced other problems such as difficulty in decentralized deployment in addition to the core problem of insufficient liquidity, but the application of technical solutions such as Zk-Rollup will make up for this deficiency. From a longer-term perspective, the order book model may be the main competitor of the AMM paradigm.
3. The target of the transaction will no longer be limited to encrypted assets
At present, derivatives DEX is developing into a wider field. They are actively introducing traditional financial targets into the chain, such as Kwenta, a derivatives platform based on the Synthetix protocol. Recently, it launched FAANG stock synthetic assets, including sFB, sAMZN, sAAPL, sNFLX and sGOOG, which track the stock prices of Facebook, Amazon, Apple, Netflix and Google parent Alphabet, respectively. In addition to Kwenta, Gains Network and others are also moving in this direction. Among the spot DEXs, there are very few developments in this direction.
In fact, the increase of on-chain users usually comes from the Web2 field, so in the long run, in order to attract more Web2 users, on-chain facilities that are more in line with the investment preferences of traditional traders have a greater chance of long-term development.
PoseiSwap is more trendy
PoseiSwap is the first DEX built on Nautilus Chain. We believe that this DEX has more long-term development trends and potential.
Nautilus Chain is currently the industry's first modular, Layer3-based underlying chain.
Based on the Layer3 concept proposed by Vitalik, Nautilus Chain gives a brand-new Layer3 idea. It does not think that Layer3 should patch Layer2 or even Layer1. Layer3 should be a set without repeating the wheel. Able to support a customized system at any time without over-reliance on other facilities such as Layer2, Nautilus Chain is achieving this goal through a modular and layered approach.
For now, Nautilus Chain is the industry's first parallelized and fastest-running EVM Rollup Layer 3 expansion solution. As the first modular chain, storage, computing, and consensus are all in different modules. High scalability, expansion, and customization capabilities further improve network throughput, security, and privacy.
To facilitate modular design, Nautilus Chain uses Eclipse for modular integration design. Eclipse is a Rollup solution. Developers can customize various components according to their preferences, such as execution environments such as EVM, SVM and MoveVM, as well as Celestia, Polygon AvailEigenDA and other data availability layers.
Therefore, compared to almost all current chain bottom layers, the modular architecture also gives Nautilus Chain advantages in all aspects, so PoseiSwap, as a DEX natively built on Nautilus Chain, naturally inherits all the advantages of Nautilus Chain. Then PoseiSwap itself is expected to greatly improve the user's trading experience, and customization also allows PoseiSwap to provide users with richer trading functions.
PoseiSwap itself uses the order book as the main transaction model. The Zk-Rollup solution provided by Nautilus Chain is expected to make order book transactions more decentralized and match the order book with features of high efficiency, security and privacy. On this basis, PoseiSwap also integrates the OFAC module, which has the ability to deploy compliant assets.
Therefore, based on the above, the advantages of PoseiSwap appear again. It can not only trade FT assets based on the order book, but also provide a high degree of support for NFT assets. Under the characteristics of compliance and privacy, PoseiSwap is expanding horizontally in the direction of RWA (tokenization of real assets), including stocks, gold, futures, etc. with compliance characteristics. Compliance is currently the vast majority of derivatives DEX do not have.
As a forward-looking DEX, PoseiSwap has advantages in many aspects and has more potential for long-term development. At present, the DEX is in the early stage, and it is expected to launch the first official version with the launch of the mainnet of Nautilus Chain.
PoseiSwap's upcoming first IDO
PoseiSwap uses POSE tokens as governance tokens, which not only have governance utility, but also earn income by holding POSE assets and participating in Farming. PoseiSwap itself has built a characteristic governance model, that is, pledge POSE tokens to obtain sPOSE, and then pledge sPOSE to obtain income. The income weight of sPOSE itself is linked to the time of pledged POSE. The longer the time of pledged POSE, the higher the income weight of sPOSE obtained. It will be a deflationary mechanism set by POSE in the early days. With the layout of PoseiSwap in the future, POSE will also anchor more physical assets to enhance utility and build a value base.
PoseiSwap is about to open IDO. According to the latest official announcement, PoseiSwap will open the IDO (Initial DEX Offering) of its governance token $POSE on the Bounce platform from June 13th to June 14th. Bounce has already accepted the IDO offering. Pre-sale whitelist application, users who pass the application will get the pre-sale quota. In addition, after the end of the IDO pre-sale, POSE will log in to CEX in the form of IEO after June 18, including Gate, Bitforex and other industry-renowned platforms.