Why we believe that Multichain Trading with $IOTA is important? (Part II: trading Shimmer assets with $IOTA)
This article is the second episode of our DeFi Honeypot column, where we share our ideas and thoughts on DeFi topics. If you have not yet read the first part: Trading with stablecoins, make sure you do and follow us on Medium to receive more content like this!
Liquidity, liquidity, liquidity. It is all about liquidity.
If you are on a busy schedule today, you may stop here: this is the only keyword of the article :)
Nah… of course I’m just kidding. Do take a seat! Let’s spend a few more minutes together, elaborate, and discuss.
Even if the whole crypto world is still relatively new to you, you may have already noticed that DEXs on a given chain always choose its “standard coin” and spend most of their efforts on supporting trading pairs around it: Uniswap — ETH; Pancake — BNB, Quickswap — MATIC, just to name a few.
But why?
Is the reason behind this purely technical or rather, intentional?
We believe that in most cases, this is simply the best choice a DEX could make from an economic point of view.
The standard coin on a chain normally has the largest market cap. Makes sense right? That is the reason for it being THE “standard coin”.
The size of its market cap then in turn helps the standard coin gain even better liquidity because:
- Projects in the ecosystem tend to raise funds in standard coin as there is a larger amount out there;
- Traders and LP providers tend to trade and/or add liquidity with their standard coin assets to earn yield because they simply have more;
This nature of standard coin further results in traders having a preference for trading pairs around it, which is absolutely normal: poor liquidity typically means limited transactions, as there is either no buy or no sell, sometimes worse, neither. No transactions, no benefits.
From here, it is no longer difficult to understand why most DEXs choose to provide trading pairs around the standard coin of its chain: there is a need, there is a market, then there is motivation.
Back to IOTA.
In our ecosystem, the story is not that much different: projects need funds, and traders wish to earn yield, yet the market cap of $SMR is relatively small compared to that of $IOTA — the standard coin, so why not trade your assets on Shimmer with $IOTA and bring better liquidity for all?
Trading pairs with $IOTA will always be needed by the ecosystem and we want to support that:
- Trading stablecoins with $IOTA will be supported independently from Shimmer release in the format of Iotabee SWAP;
- Trading Shimmer assets with $IOTA will be supported once Shimmer launches
- Trading Shimmer assets on an EVM protocol will be supported once the smart contract is live in the format of Iotabee DEX.
No matter which option you prefer and when you wish to start trading with $IOTA, we will always have you covered. :)
Alright, with this image above, let’s call it a day.
I hope you enjoyed the reading!
If you do, make sure you follow us here and on Twitter to receive more content like this! If this is of interest to you, join our Discord or give us a shout in the community, we would be more than glad to get in touch.
Thanks again for reading and we will see you next time in our DeFi Honeypot. If you wish us to write about other topics, let us know!
