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Summary
L7 DEX is ushering in a paradigm shift in decentralized futures contract markets by adopting the PvP-AMM mannequin.
Inside the L7 DEX ecosystem, a novel liquidity buying and selling mannequin is being developed, specializing in liquidity-as-a-service.
Recognizing the upper dangers related to futures buying and selling, L7 DEX has additionally launched an order insurance coverage (stop-loss insurance coverage) mechanism.
Sooner or later, L7 DEX goals to supply the market with much more easy and environment friendly funding options by way of liquidity and IEO mixture.
What’s L7 DEX?
In comparison with centralized exchanges, decentralized exchanges (DEXs) initially had a smaller share within the futures buying and selling market as a result of on-chain efficiency constraints. Nonetheless, latest developments in mainstream blockchains and Layer 2 options have propelled the decentralized perpetual futures trade sector into the highlight as high-frequency buying and selling is more and more viable.
L7 DEX is a decentralized contract buying and selling platform primarily based on Web3 with its main improvements of the PvP-AMM protocol, liquidity-as-a-service (LaaS), and extra. The progressive PvP AMM protocol, coupled with optimized good contracts, offers customers with a seamless futures buying and selling expertise whereas addressing points resembling excessive slippage, entrance operating, poor liquidity, and the lack to position orders, making futures buying and selling safer, extra steady, and cost-effective.
How Does L7 DEX Work?
Within the DeFi sector, most protocols use automated algorithms like AMMs to stability the provision and demand of tokens in liquidity swimming pools. Nonetheless, L7 DEX introduces the PvP-AMM mechanism, bringing a paradigm shift in decentralized futures markets.
Within the L7 DEX ecosystem, LP (Liquidity Supplier) tokens act as an middleman within the PvP-AMM mannequin and are minted by way of depositing USDC, BTC, or ETH. These tokens can be utilized as collateral for perpetual futures buying and selling or to supply liquidity to the marketplace for a share of the protocol income. Particularly, LP tokens are launched to current the general revenue and lack of trades and the revenue and bills of the insurance coverage enterprise. Right here's an instance as an example:
Suppose Alice mints 1,000 LP tokens by depositing 1,000 USDC and opens a $10,000 lengthy ETH place whereas Bob mints 2,000 LP tokens with 2,000 USDC deposits and opens a $20,000 quick ETH place. Now, there are 3,000 USDC within the LP pool and three,000 LP tokens, the place 1 LP token = $1. If ETH rises by 5%, and each Alice and Bob shut their positions, Alice's stability will turn out to be 1,500 LP tokens, and Bob can have 1,000 LP tokens left. Then, there are 3,000 USDC within the LP pool and solely 2,500 LP tokens, with 1 LP token = $1.2.
The precise calculation is as follows:
Alice: 1,000 + $10,000 * 5% / $1 = 1,500 LP tokens; Bob: 2,000 – $20,000 * 5% / $1 = 1,000 LP tokens
New LP Provide = Alice's LP tokens + Bob's LP tokens = 2,500 LP tokens
New LP Worth = 3,000 USDC / 2,500 LP tokens = $1.2
On this instance, we are able to see that the overall deposits within the pool stay fixed, and the revenue and lack of merchants are mirrored within the LP token provide, inversely affecting LP token costs. Because of this PvP merchants are thought to be a bunch, and when the group earnings, it drives up LP token provide and lowers token costs. Merchants must make comparatively increased earnings in comparison with the group degree to earn cash by buying and selling USDT-margined futures.
Additional evaluation reveals that within the PvP-AMM mannequin, the essential issue influencing revenue and loss is the ratio of lengthy positions and quick positions. This enables PvP-AMM to deal with points associated to one-sided market situations. It’s pure Alpha buying and selling that’s much less affected by market tendencies and doesn't require further liquidity suppliers, as merchants can carry out trades independently. Moreover, this mannequin offers a mix arbitrage alternative for API and SmartMoney, attracting new minority orders and mechanically balancing the lengthy and quick ratio.
Other than serving as preliminary margin in futures buying and selling, LP tokens have a number of use circumstances: 1) Customers buy LP tokens (i.e., mint LP tokens) on the present value by depositing USDC, BTC, or ETH property into the protocol vaults. 2) Customers promote LP tokens (i.e., burn LP tokens) on the present value by withdrawing USDC, BTC, or ETH property from the protocol vaults. 3) After buy (minting), LP tokens enter Staking Earn.
Notice: The PvP-AMM mannequin gained trade consideration primarily due to GMX's X4 plan in 2022. Nonetheless, the X4 plan was placed on maintain as GMX later shifted its focus to artificial property.
What Are the Benefits of L7 DEX Ecosystem?
Inside the L7 DEX ecosystem, a brand new liquidity buying and selling mannequin centered round LaaS has been established. On this context, liquidity procurement entails buying liquidity from the market by way of a mix of "token incentives" and "transaction charge rewards". Liquidity distribution (typically by way of compensated means) includes offering the acquired liquidity to different entities, together with establishments, undertaking groups, or customers in want of liquidity. Moreover, liquidity administration consists of providing liquidity administration instruments to undertaking groups which have bought liquidity, enabling them to plan their liquidity expenditure successfully. L7 DEX's liquidity provision mechanism generates revenue for the platform by effectively managing obtained liquidity whereas sustaining synergy between buying and selling and the liquidity markets. This built-in method ensures long-term monetary stability and sustainable operations.
Recognizing the upper dangers related to futures buying and selling, L7 DEX has additionally launched an order insurance coverage (stop-loss insurance coverage) mechanism. This mechanism considerably raises the brink for potential losses, albeit probably sacrificing a portion of earnings. Consequently, it’s extra appropriate for long-term traders and merchants with increased threat tolerance. Merchants can select to create numerous insurance coverage methods for a similar buying and selling asset. Totally different insurance coverage ratios utilized in trades will generate a number of distinct positions, whereas trades with the identical insurance coverage ratio can be merged with present positions. Subsequently, the PnL together with the insurance coverage charges can be calculated. Relating to the PvP-AMM protocol, merchants have the choice to use insurance coverage to long-term buying and selling orders, including an additional insurance coverage ratio that may vary from 10% to 50% of the buying and selling margin. If an order is settled or liquidated, merchants who expertise losses can obtain compensation as much as a most equal to the buying and selling margin. Moreover, L7 DEX's PvP-AMM protocol calculates the PnL share of buying and selling orders utilizing an index value (derived from ChainLink and the common weighted costs from a number of CEXs). This method helps mitigate potential points related to Oracle latency arbitrage.
Sooner or later, L7 DEX goals to supply the market with much more pure and environment friendly funding options by way of liquidity and IEO mixture. It makes an attempt to ascertain an asset administration and allocation system centered round LSD (L7 DEX's native token) and different platform property. This complete system seeks to take away obstacles which have beforehand hindered extraordinary customers from taking part within the main market.
L7 DEX distinguishes itself from different DeFi protocols by way of its progressive design mechanism, which affords liquidity suppliers the next revenue ratio whereas bolstering total system stability. Moreover, it diminishes platform token volatility and elevates the consumer expertise throughout the protocol. Individuals, encompassing establishments, undertaking groups, and particular person customers who present liquidity throughout the L7 DEX ecosystem, stand to profit not solely from buying and selling charges and insurance coverage charges generated by L7 DEX but additionally from the potential upside related to the expansion of different blue-chip undertaking tokens throughout the ecosystem.
What Is the Token Mechanism of L7 DEX?
In its early developmental phases, L7 DEX has efficiently cultivated synchronized progress in each its incremental and present consumer base by establishing a worldwide neighborhood and a elementary NFT financial mannequin. Proudly owning an NFT throughout the undertaking is akin to actively taking part in its development. Customers have the chance to stake their NFTs and reap long-term earnings, concurrently changing into early-stage traders who profit from the undertaking's progress. NFT holders can even get pleasure from benefits resembling decreased buying and selling charges and elevated liquidity rewards. Moreover, these customers actively contribute to shaping the neighborhood and influencing the path of product growth by way of voting.
LSD is the native governance token of the L7 DEX platform, providing customers a various array of utility and value-driven interactions. The overall provide of LSD is 210 million tokens. Along with its governance performance, holding LSD affords a number of benefits throughout the ecosystem:
(1) Present customers with decreased or waived buying and selling charges for futures trades on L7 DEX.
(2) Have interaction in LP mining for blue-chip initiatives throughout the L7 DEX ecosystem.
(3) Take pleasure in precedence entry to all forthcoming airdrop advantages launched by L7 DEX, together with high-priority participation and early entry to the platform's future progressive merchandise.
(4) Have the correct to vote on essential proposals throughout the ecosystem, with governance rights commensurate with their holdings.
(5) Acquire early funding alternatives in a various vary of distinguished initiatives.
Abstract
In the long run, the decentralized derivatives buying and selling sector presents vital alternatives. L7 DEX is ushering in a paradigm shift in decentralized futures contract markets by adopting the PvP-AMM mannequin, poised to speed up its progress. Moreover, L7 DEX distinguishes itself by way of distinctive options resembling an progressive liquidity buying and selling mannequin, an order insurance coverage mechanism, and the "liquidity + IEO" growth method. These attributes bolster the protocol's effectivity and safety, making decentralized contracts extra accessible and enhancing the consumer expertise. Furthermore, they act as compelling incentives, attracting a wider consumer base to take part within the ecosystem.
Web site: https://www.l7dex.finance/
Twitter: https://twitter.com/L7_DEX
Telegram: https://t.me/L7DEX_Official
Discord: https://discord.gg/l7dex
Disclaimer: The data supplied on this press launch isn’t a solicitation for funding or supposed as funding recommendation, monetary recommendation, or buying and selling recommendation. It’s strongly really useful that you just observe due diligence (together with session with an expert monetary advisor) earlier than investing in or buying and selling securities and cryptocurrency.
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