Realizing the Full Potential of Veax’s Unique Features: A Comprehensive Guide

Veax is more than just another decentralized exchange. It’s a trailblazer in the digital trading sphere. Leveraging the innovative NEAR Protocol and adhering to the NEP-141 standard, Veax has cultivated a system that pushes the boundaries of what’s possible in decentralized trading. It takes a unique approach, focusing on maximizing profit for liquidity providers while minimizing fees for traders. Two core features that exemplify this mission are Concentrated Liquidity and Multiple Fee Levels.

In this guide, we will explore the mechanics, benefits, and potential of these groundbreaking innovations, along with other unique elements that make Veax a standout platform! 🚀

Overview of Concentrated Liquidity

Unlike traditional decentralized exchanges where liquidity is scattered across a broad price spectrum, Veax’s Concentrated Liquidity allows LPs to funnel their liquidity into specific price ranges. This focus amplifies capital efficiency and empowers LPs to earn higher fees.

For Stablecoin Pairs (e.g., USDT/USDC):

Imagine you are an LP in a stablecoin pool like USDT/USDC. The relative price here is highly stable, oscillating between $0.995 and $1.001. Liquidity beyond this range is unlikely to be utilized, so concentrating within this narrow bracket ensures that you collect the most fees.

For Volatile Pairs (e.g., BTC/USDT):

Consider a more turbulent pair like BTC/USDT. Here, the price can fluctuate substantially, but still, it’s improbable that it will reach certain extremes like 0 or infinity. Suppose the current relative price lies between $21,000 and $21,500. You could concentrate your liquidity within a specific, slightly broader range — say, $20,900 and $21,600. This way, you can collect more fees than you would earn in full-range pools despite using the same amount of liquidity.

Price Ticks and Limitations:

Veax ingeniously breaks the price range into “price ticks”. These ticks, equidistant on a logarithmic scale, set the boundaries for liquidity positions. While there are limitations to setting price borders (bounded to the nearest upper and lower ticks), it’s designed to reduce the number of swap steps, optimizing both performance and cost.

Single-Sided Positions and Reactivation:

A fascinating aspect of Concentrated Liquidity is the way it handles price fluctuations. If the price goes beyond the LPs’ range, the liquidity position becomes Single-Sided, meaning it’s inactive and stops earning fees. However, if the price returns to the range, the liquidity reactivates, resuming fee collection.

How Do Multiple Fee Levels Work?

In a regular DEX, a fixed fee structure often leads to a trade-off between attracting traders with low fees and rewarding LPs with higher ones. Veax has broken the mold with the introduction of Multiple Fee Levels, allowing LPs to select from eight distinct fee levels when opening a liquidity position.

Here’s an illustrative scenario:

• Opening a Liquidity Position. As an LP, you decide to add liquidity to two levels — 0.01% and 0.04% — depending on your risk tolerance and profit expectations.
• Trader’s Swap. A trader wants to perform a swap. Veax starts scanning from the lowest fee level (0.01%), but as the swap progresses and the spot price grows, it eventually becomes more profitable to swap using the 0.02% level despite the higher transaction fee.
• Engaging Multiple Levels. The system continues to engage higher fee levels as necessary until potentially all levels are involved. This innovative mechanism balances the needs of traders and LPs, achieving better fees for LPs while offering advantageous prices for traders.

Optimizing LP’s Profit and Minimizing Slippage:

What’s remarkable about the Multiple Fee Levels system is how it encourages LPs to compete for better fees while still allowing traders to find the most favorable swap prices. It’s a delicate balance that has the potential to redefine decentralized trading, providing both sides with unprecedented control and efficiency.

Guardians: Protecting Veax’s Integrity

In the rapidly evolving world of decentralized exchanges, security is paramount. Veax recognizes this and has implemented a robust defense mechanism known as “Guardians”.

How Guardians Function:

Guardians act as sentinels, monitoring the platform’s performance. They are additional accounts entrusted with the ability to suspend and resume payable API, which is crucial in preventing critical damage during maintenance or when a critical issue is detected.

• Owner Account. Always present as at least one guard. The owner account has the sole authority to add or remove additional guards.
• Additional Guards. These are supplementary accounts that have the power to suspend and resume payable API. They act as fail-safes to ensure the platform’s integrity.
• Safeguarding Measures. If Veax starts operating poorly due to malicious attempts, bugs, or performance-related problems, the Guardians can intervene. They have the ability to suspend the working smart contract, preventing further damage while a bug fix is in progress.

This guarding system acts as a shield, minimizing the risk of hacking and reducing the negative impact of unexpected issues, thus securing investors’ assets.

Audit: Commitment to Transparency and Security

Veax doesn’t just rely on its internal measures; it goes a step further by undergoing regular external smart contract audits. This commitment demonstrates Veax’s determination to operate with transparency and adhere to the highest standards of security.

Audit by H-X:

As part of this diligent process, Veax underwent an extensive audit by H-X, a reputable auditing firm.

• Website: H-X Technology
• Audit Date: January 25 — March 31, 2023
• Status: Completed

This audit adds an extra layer of confidence for both liquidity providers and traders. It’s a testament to Veax’s dedication to providing a safe and trustworthy platform, continually scrutinized by industry experts.

Conclusion: A New Paradigm in Decentralized Trading

Veax is not just another player in the decentralized exchange arena; it’s a vanguard, innovatively leveraging features such as Concentrated Liquidity and Multiple Fee Levels to redefine the landscape. With enhanced security protocols through Guardians and the commitment to regular external audits, Veax underscores its commitment to transparency, security, and efficiency.

Its mission to maximize profit for liquidity providers while offering optimal conditions for traders is not only a fresh approach but a potential game-changer. Veax’s unique features have set a new standard, and as it continues to evolve, it promises to be a compelling force shaping the future of decentralized trading.

Whether you’re an experienced trader, a potential liquidity provider, or simply someone intrigued by the evolving world of decentralized finance, Veax offers an exciting opportunity to engage with cutting-edge technology designed with both profit and security in mind. It’s a platform that’s worth watching and, potentially, a future cornerstone of the decentralized finance landscape.