How can blockchain projects profit from deploying their own DEX?

2023-05-01 10:58

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As the crypto industry relies on centralized trading platforms, blockchain projects are exploring the benefits of DEX integration to regain control of native tokens.

Original source: Native

Cryptocurrency trading platforms have played a key role in the adoption of blockchain technology, but the industry has become too reliant on them. Today, the crypto industry is still centered around exchanges and traders rather than blockchain projects and developers. Developers building projects at the application layer face too much resistance.

Listing a token on a major centralized exchange (CEX) requires a six-figure fee, in addition to paying additional monthly fees to market makers to ensure liquidity. In 2018, a Business Insider investigation found that cryptocurrency exchanges charged between $50,000 and $1 million to list ICOs.

Even after these fees are paid, exchanges earn fees from all transactions, which drains value from crypto projects and makes it difficult to attract liquidity in a sustainable manner.

In addition to the high Token listing fee, DApp builders also need Comply with the policies and fees of the trading platform, thereby losing control of Token liquidity and value. In addition, listing on a centralized trading platform may also lead to counterparty risks (if you don’t have the key, it’s not your token).

Regain control of native token

An alternative to attracting liquidity is to turn to decentralized exchanges (DEXs), which have lower counterparty risk and lower fees because there are no intermediaries. This solution allows application builders to better control token liquidity, reduce reliance on centralized exchanges, and improve security. Additionally, using a DEX instead of a CEX allows blockchain applications to benefit from the features of a DEX, including non-custodial transactions, reduced security risks, and no KYC obligations.

While DEXs have many benefits, they also have some disadvantages. For example, they are limited by the transaction capacity of their network. As transaction volumes increase, so do the fees to execute transactions, which has become a major problem for DEXs. Many DEXs are hosted on Ethereum and use automated market makers (AMMs) to manage trades. Furthermore, DEXs are not yet competitive enough to compete with CEXs in terms of capital efficiency and liquidity levels. In the end, the priority of a DEX is to generate revenue for its liquidity providers and token holders, not for the projects that use them.

While self-custody and permissionless settlements are possible with DEXs, they are not efficient enough. DEX still lacks support for off-chain pricing models, and cannot price based on the overall liquidity in the market (including on-chain and off-chain), but can only price the liquidity in a given AMM smart contract.

There is also a pain point in the user experience. Accessing third-party DEXs forces users to leave their favorite apps when making transactions.

DEX for Shopify

The solution may be to make DEX as efficient as CEX and let each project have its own DEX. But how? The good news is that there are a few dedicated projects that provide such DEX-as-a-feature solutions, one of which is Native . The project enables developers to easily deploy exchanges, integrate directly into their DApps, earn their own exchange fees and access liquidity across the network.

Native is a DEX infrastructure layer, or more simply a toolkit, for Any other project becomes its own DEX, cutting out middlemen and reducing costs, just like Shopify allows entrepreneurs to create their own e-commerce websites.

Native's Proprietary Integration with Professional Liquidity Providers and Market Makers Dominates Crypto Days More than 30% of the trading volume, giving the team a significant advantage over independent DEXs. Best of all, it's completely free to use: projects set their own conversion fees, which go to the token issuer.

The technology behind Native matches CEX-level efficiency and is fully modular, which means This allows teams to create any type of trading platform they want, using whatever liquidity sources, pricing models, and trading pairs they want. Projects can directly cooperate with professional liquidity providers and market makers on the chain in a permissionless manner and obtain their own liquidity.

Liquidity is king

Liquidity can come from three sources: the project itself, the community, or external liquidity sources such as automated market makers (AMMs), aggregators, and professional liquidity providers. Due to its approach of using off-chain pricing and on-chain RFQ (Request for Quote), Native can leverage a wide range of liquidity resources, which allows any project to use market makers and professional liquidity providers to obtain on-chain liquidity.

By providing a decentralized infrastructure layer for DEX, Native is solving blockchain projects A big step forward in terms of the liquidity and control issues faced. With its innovative approach and focus on empowering crypto entrepreneurs, Native is helping blockchain projects benefit from increased revenue and deeper liquidity. At the same time, DApp users can directly redeem native tokens in the app, enjoying a simpler and smoother experience.

Ricky Li of Nomad Capital, which invested $2 million in Native’s seed round, said: “Native allows Everyone can own their own DEX and control liquidity and fees. Its vision is that no builder or user should be held hostage by CEX and centralized DEX like Uniswap or Curve for liquidity. This is the same as our It fits perfectly with our belief that there is currently a lack of a financial infrastructure layer that will allow us to scale and attract the next wave of users. We need more DeFi middleware infrastructure projects like Native.”

To demonstrate how to use this technology, Native released 5minuteDEX, a full-featured DEX with deep liquidity, covering All top trading pairs.

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Native launched a private beta in March of this year and opened the platform to anyone in a permissionless manner in April.

By providing a DEX layer, Native enables teams to create their own DEX, reducing costs and regaining Control over its native Token. Thanks to this approach, Native has struck strategic partnerships with many blockchain projects, including Ankr, NodeReal, Metaverse.ai, Augmentlabs.io, CyberConnect, QuestN, LightNet, and Byte.City.