FreeTon DEX Architecture & Design Proposal
The goal of this contest is to workout possible architectures, design approaches and technological stack for implementation of decentralized exchange (DEX) on top of free ton blockchain and infrastructure.
Good working examples with different approaches on ethereum network could be found here - https://defipulse.com/ in category dexes and include:
Both popular approaches 1. Liquidity pools as in Uniswap and Bancor and 2. Distributed order book as in loopring and idex are possible.
Governance is an optional requirement but can be used as a way to reward active users and/or distribute profits for trading and liquidity provision.
All tools developed prior to the contest on the free ton network can be fully utilized for purpose of this contest (e.g. atomic swaps, stable coins solutions, etc)
Deliverable of the contest is a technical paper with description of proposed architecture. Images, diagrams and illustrations are nice to have. Good economy is a huge plus as well.
There’s no need to explain that in the heart of any economy - be it state-governed, global or local market exchanges or community governed blockchain, there is always a need for a place to exchange assets like tokens, loans, IOUs or other types of liabilities.
Free Ton is no exception and desperately needs a mechanism of non-custodial distributed way of exchanging assets/tokens (simply “decentralized exchange” or DEX) and ability to earn income for the provision of liquidity to the market with different risk/reward characteristics (depools is good example of earning on provision of liquidity).
Such decentralized exchange might become a major service for other dapps like decentralized borrowing/lending services, payments solutions, derivatives trading and other ways of earning passive income.
Begins 07.10.2020 - Ends 21.10.2020
- 1 place 50 000 Crystals
- 2 place 30 000 Crystals
- 3 place 15 000 Crystals
- 4-11 places 5 000 Crystals
The main features supported by proposed solutions should be:
- Support for non-custody exchange of any tokens within free ton network
- Support for adding liquidity to the exchange from external blockchains through smart contract system or using atomic swap bridges described in atomic swap contest
- Non-custody approach to both exchange and liquidity provision
- Scalability potential for adding new tokens
- Maximum utilization of free ton network advantages such as speed and sharding
- Optional governance mechanism or possibility of adding such mechanism in future to govern the parameters of the exchange, the liquidity provision and the fees
- Good economy for exchange, liquidity makers (providers) and liquidity takers.
Existing DEX problems to be aware of
- Frontrunning (flash boys 2.0 and Mooniswap vs Uniswap value proposition). If it is not possible in Free TON (as it is), should be clearly stated why.
- Shortcomes of standard curves and its inflexible nature in liquidity based approach. These result in the issue - dilution of liquidity into several AMMs (general and specific ones with more specific curve like Uniswap vs. Curve ) which leads to non optimal price execution.
- One-sided liquidity. Impairment loss problems. Market risk on 2 assets in the pool is widely discussed. These problems should be somehow covered or at least mentioned for further research.
- Another liquidity pool based approach problem is customized proportion of assets, number of assets in the pool and metapools. How to regulate number of assets in the pool, what is the price optimal routing, will it be available to create metapools.
- Orderbook-based exchanges should state clearly how the on-chain order book is maintained and how its scalability issue is resolved. It is naive to state that transactional expenditures would stay at effective zero level, so it has to be covered.
Anyone can participate, but Free TON does not distribute TONs to US citizens or entities.