Just when you think you have a great handle on the crypto topics coming across your desk, you come across a Speculative Automated Market Maker, Flowchain & Offchain Minting. These are just part of the Intel You Should Know About DEXG.
Objective of This Article
Like many users from traditional finance to the digital currency space, thoughts around trading can be similar in regards to:
Speculative and arbitrage trading are part of the free market. We believe that this is the free market’s normal state, and that this phenomenon should be considered positive. - Flowchain Foundation
The challenge comes from extreme over-speculation, where investors and other operators are unable to respond from massive fluctuations which result in extreme losses.
This article is looking at the DEXG Protocol, some of its components and possible opportunities or use cases today and into the future.
Overview
Let's start at the ground level so everyone is on the same playing field for this discussion. Before the boom of Decentralized Finance applications, the overall principal was still very much focused on an order book mentality.
Even if exchanges and other swap protocols were more advanced, the principle was still present. The decentralized LEDGER acted as an order book tracking the debits and credits in the trading world. I realize that is an oversimplification, but hopefully it pushes the point across.
As smart contracts evolved and more decentralized services have come online, there has been quite an array of developments that most in the crypto space have come to know. Some have had to learn them in the most painful ways.
Throughout this process of growth and development there are always some of those questions about how a big bag holder can inflate or deflate a market at seemingly light speed as well as how are the prices actually achieved.
Remember, pricing is power.
Underlying Principles
I highly encourage you to check out the DEXG Protocol White Paper as it provides a great picture of the issue and what the project is doing to remedy the situation. More importantly there are 6 categories which comprise the DEXG Protocol Ecosystem.
- Universal Price Model
- Speculative Automated Market Maker (AMM)
- Off-Chain Computation
- AMM to Off-Chain Trust
- Staking
- Products
If you take a minute to digest each one of them, in my experience the veil lifts on the opportunity that appears.
Also important to flag, that while several of these areas are listed out in the upcoming quarters of 2021, there is still time on the uptake.
Universal Price Model
This price model that is spelled out in the white paper creates the basis to work from and everyone can understand what is happening. The first stage in the model is listed below;
It is helpful to see how a price model is developed. The back of the napkin conversations happen all over the world in one form or another where speculation, alternative reasoning and other factors usually enter the conversation.
I find even more powerful is how the formula is applied in the Speculative AMM.
Speculative Automated Market Maker (AMM)
In putting the formula to work it's important to remember that algorithmic functions are being used to set prices. In Table 1 from the White Paper
In regards to the AMM being used in the DEXG Protocol the vision of the project is to increase stability in pricing and take some of the anomalies off the table that have become more of the "norm" in todays pricing ecosystem.
Off-Chain Computation
Candidly, I've had to adjust my thinking about what Off-Chain Computation actually means. What has been helpful is to think about comparisons to the tokens being something like hotel points or airline miles.
When those types of examples are used to digest how Off-Chain Computation is being used, it's helpful to think about a step further and how you use those in person or during making recommendations. Then the whole off-chain environment makes a little more sense.
In essence the fungible tokens are minted off chain through a separate smart contract that is managed through a smart contract on-chain which regulates supply. If you're like me, that's when the pen and paper comes out to draft what it looks like.
According to the DEXG Protocol, this set-up of using the AMM in an Off-Chain fashion is the first of its kind in the world.
AMM to Off-Chain Trust
Now that we have a flavor of Flowchain creating a world first in the AMM use off-chain, we know this will lead to more robust staking conversations and an understanding of the surety behind AMM working off chain.
We can see in the flow below there's a logical process in minting and issuance.
Staking
Connecting to the workflow above one additional note that needs to be highlighted is in regards to the ERC-20 contract. To redeem or withdraw the tokenized assets an Ethereum smart contract will be needed.
Products
The final topic in this arc of development for DEXG Protocol, are 3 areas that Flowchain will put forward;
- Token Swap Exchange
- Decentralized Exchange with Fast Orderbook
- Staking Pool
As you can see from the first few nuggets of the roadmap (found on page 39 of the whitepaper), we are very much at the beginning of the journey for the DEXG Protocol.
My Two Cents
With the flurry of all things DeFi in 2020, especially the most recent Uniswap airdrop, it's helpful to keep a close eye on all of the different happenings in the space. I for one have had a bit of consternation about the liquidity pools and some of the areas where they can be manipulated.
In reading through DEXG Protocol's vision and more salient points in the White Paper, it really seems there is something afoot.
Like all things, the recipe for success is in the details, the team and the community. Looking forward to see where all of this goes!
