Can D5 Exchange Drive Crypto Trading in the Wake of US Regulatory Crackdowns?
The recent SEC crypto crash has affected many centralized exchanges (CEX). This scrutiny draws traders to decentralized exchanges (DEX). However, insufficient liquidity, permanent losses, limited trading features and high gas fees can make it difficult for users to migrate.
The first decentralized liquidity aggregator with order book and AMM mechanisms is the Gridex Protocol-based D5 Exchange, which solves DEX problems by offering CEX-like trading.
The rise of DEX
In November 2022, the FTX collapse massively damaged the credibility of CEXs. That same month, Block reported that trading volume for the DEX increased 93s% to $65 billion.
Emerging DEX projects with strong technological innovation will have higher growth potential than the older players in the next bull market (such as Uniswap and SUSHI). A notable newcomer is the D5 Exchange.
Three-pronged approach: liquidity aggregation, hybrid trading model, ultimate user experience
So, despite their loss of credibility, why can’t DEXs beat CEXs? Lack of liquidity, gas fees and permanent loss are some issues affecting DEXs. D5 Exchange, the first aggregator to combine order book and AMM functions, aims to revolutionize the crypto trading chain and accelerate the transition from CeFi to DeFi.
D5 Exchange Hybrid Trading Model: AMM + Order Book
Most DEX trade execution models are either order book or AMM. Both have advantages and disadvantages.
AMMs allow trading in illiquid markets. Traders can close orders without a counterparty match, save gas and complete transactions in one trade. However, large traders may suffer slippage and LPs may suffer permanent loss, the pool lacks liquidity. AMM-based DEX products include Uniswap and Balancer.
An advantage of order books is that traders can place limit orders and wait for them to be executed at the best price. If the market is liquid, trades can be made quickly and without slippage. They are often used in CEXs and are therefore known among mainstream traders. One downside is that they may need multiple orders to complete, which means high gas costs. Projects such as Injective and dYdX use order books.
D5 Exchange is the first exchange to combine the advantages of both AMM and order books and is the Ethereum ecosystem’s most liquid and dynamic DEX because the automatic router can pool liquidity from external DEXs such as Uniswap (V2+V3) and Curve to achieve internal liquidity and the best exchange rate.
GMOB+GPLM: Innovative order book algorithm with two models
The Gridex Protocol powers the D5 Exchange order books, the first Gridex-based DEX. Only Gridex has an Ethereum order book.
Gridex’s Grid Maker Order Book (GMOB) is a major improvement over centralized platforms’ Central Limit Order Book (CLOB). On-chain CLOB requires significant resources. Semi-centralized CLOB platforms such as dYdX match transactions off-chain and synchronize the results on-chain to solve this problem. This approach has systemic risks and goes against DeFi.
The GLOB model uses the “Grid Price Linear Movement” (GPLM) algorithm to achieve decentralization. based on L1 transactions – a huge improvement over L2 and off-chain DEXs. The Gridex protocol’s gas level matches CFMMs, while the GPLM algorithm does not affect transaction settlement efficiency or user costs. Gridex Protocol’s gas level is comparable to or lower than Uniswaps, which uses the AMM mechanism.
GMOB and GPLM allow D5 Exchange to offer a revolutionary on-chain trading experience. With this innovation, the Gridex protocol is poised to lead the decentralized order book market.
Maker orders are used on Gridex, allowing traders to buy and sell orders above and below the market price. Also, producer orders can be placed at the current price, and if the market price changes, they can be filled. Only when producer orders are placed at the bid/ask price can they deviate slightly from the trader’s expectations, but the effect is negligible.
Ultimate ease of use
D5 Exchange’s UX design is comparable to CEX’s; smooth, but with connected wallets that allow users to trade instantly, and zero transaction slippage.
The grid mechanism of D5 Exchange divides grids into three types based on price class granularity: 0.01%, 0.05% and 0.3%, suitable for different tokens. Stablecoin trading pairs have low volatility, so a finer grid results in faster execution. To maximize transaction fee income, Maker orders for high volatility trading pairs should use coarser grids. The market will suggest grids for orders. Canceling orders helps reorganize liquidity and avoid short-term losses. D5 Exchange optimizes order execution and transaction fee revenue.
GDX listing
Gridex’s initial currency, GDX, was formally listed on the D5 Exchange, the first on-chain trading protocol for the Ethereum ecosystem, on March 15. According to CoinMarketCap data, the price of GDX rose to a high of $1.97, an increase of over 1,000% from its listing price of $0.16. Furthermore, according to data from Abiscan, over 10,700 wallet addresses own some GDX. To facilitate trading on the D5 Exchange, Gridex has launched trading pairs such as GDX/USDT, GDX/USDC and GDX/GMX.
With a maximum supply of 200 million, 30% of GDX is set aside for project development and promotion, core contributors and early investors. The other 70% is set aside for community distribution, which includes airdrops, PoS incentives and maker prizes. The maker reward campaign started on Arbitrum One on the GDX/ETH trading pair (0.05% grid) on March 15, 2023. The total prize pool for the maker reward campaign is 54 million GDX.
Conclusion
In conclusion, D5 Exchange’s forward-looking approach to combining AMM and order book models will help the DEX industry grow. D5 Exchange does not solve all DEX industry problems, so industry builders need to work together. D5 Exchange and Gridex Protocol, leaders in the DEX industry, are developing DeFi together.
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