Into the Loop DEX Aggregator: Three good reasons to use it
Decentralized finance connected to the Cosmos universe is increasingly in turmoil and has recently been enriched by a powerful new tool: the Loop Finance DEX. I have previously written about Loop’s migration to Juno blockchain and the launch of one of the most important tools in its suite, the DeFi Marketplace NFT. The cornerstone tool of the protocol, first on Terra and now on Juno, is the decentralized exchange. In this article, I will explore this tool and its main strengths. I anticipate that by using it, you will also be eligible for the airdrop that Loop Finance has launched for the Juno community.
1. A user-friendly exchange
If you are looking for an easy-to-use trading portal, Loop’s DEX is the one for you. Although it is still under development (we are still in Beta), the exchange already supports a very good assortment of swap pairs and related pools.
Regarding swaps, the operation is similar to that of many other DEX exchanges, with a few minor improvements. Graphs regarding the trends of exchange pairs, in an advanced version, will be available soon and will help users make their swaps at the right time.
Providing liquidity on the portal is also a simple and rewarding experience. Very useful for the liquidity provider is the information mirror on the Pools page in which we find data on the main pools, specifically the total liquidity deposited for each trading pair and the trade fees generated over the past 7 days.
We also find the combined APY, which considers the APR from transaction fees (by providing liquidity, the user earns 0.5 percent of the fees on the funded exchange pair in proportion to the contribution made), and the APR from liquidity token farming.
Farms are another vital component of the protocol, allowing users, as written earlier, to earn additional rewards by bonding their LP tokens. Rewards are paid in LOOP tokens and, for some pools, also in double tokens (see the LOOP — SGNL farm).
More unique than rare in the DEX landscape is the Auto Farm Boost feature which, when activated, allows the user to increase rewards based on the initial deposit added to the rewards generated over time (and not redeemed), which are automatically reinvested. The Auto Farm Boost has a constraint period of 3 months. In case the user decides to withdraw the position before this term, the accumulated rewards will be lost.
Finally, the Dashboard provides a comprehensive overview of protocol performance, including exchange fees generated, volumes, and the number of daily transactions. The next expected development is token staking, which will be enabled soon and, along with other products, will help increase user Loop Power, a topic I will explore in a future article.
2. DEX Aggregator
Many observant traders will surely have noticed that DEX (as well as CEX, on the other hand) offer different quotes for the same trading pair. This depends on many factors, chief among them the liquidity on the exchange (and thus the impact of exchange on the price of asset A on B).
Without belaboring the point too much, for some time now a tool has been making its way into the crypto world that can guarantee the user the best exchange rate for the pair they are interested in: I’m talking about the exchange aggregator.
Loop’s DEX has recently adopted this feature, and because of this, it allows cosmonauts to exchange their tokens by comparing the quotes of the main DEXs in the ecosystem, making use of an algorithm capable of calculating a whole series of factors in a few fractions of a second. As a DEX Aggregator, Loop guarantees you the best exchange rate and will show you, in the appropriate mirror, the token exchanges through which it was obtained.
The Cosmos ecosystem is still expanding, and the differences are still small. Think, however, about how convenient it will become to trade assets on Loop Finance when volumes, in the future, increase exponentially. The aggregator is a hallmark of the Loop protocol, and it is a great reason to choose this DEX for trading.
3. The airdrop for the community
Third and last (at least for this article) good reason to use Loop Finance is that, until September 30, under certain conditions, through DEX you can increase the amount of your Loop airdrop. But let’s take a step back.
On September 19, the Loop team announced the eligibility requirements for airdrop intended for the Juno community. In order not to displease the wrecked user base from Terra Classic, the following requirements were identified:
- Be a staker of at least 25 JUNOs as of August 22, 2022;
- Be a $LOOP holder on Terra Classic who claimed tokens on $JUNO in the rescue mission, and did not sell more than 10% of what you received.
If you fit either condition, filling out the appropriate form will give you an NFT Reward containing $15 in LOOP. You will be able to claim your NFT between Oct. 15 and Oct. 30, the rewards inside can be redeemed daily by staking the NFT over 12 months.
But let’s come to the advantages of using DEX. To increase the amount of our airdrop, the team pointed out some steps to take:
- Swap on the DEX aggregator and write feedback on the experience in the form to receive in the NFT Reward $10 in additional LOOP;
- Add liquidity in one of the pools, farm the liquidity tokens obtained and provide feedback to get an additional $10 in LOOP;
- Mint a Tradooors NFT and stake it to start accumulating rewards. This task will allow you to recover the cost of minting in LOOP, i.e., $60 (always consider that the price of LOOP is volatile, while USDC, needed for minting, is a stablecoin).
This is a clever gimmick deployed by the team to introduce and experiment with its new DEX to the Juno community.
The importance of exchanges is measured in terms of trade volume, hosted trading pairs, active users, and commissions generated for stakers and liquidity providers, among other factors. It is still too early to determine how far Loop’s DEX will go, but the prerequisites to become a benchmark in the Cosmos ecosystem are all there. Now we just have to wait for the arrival of Loop Power, another piece that will embellish one of the most innovative protocols on the scene.
Previous articles on Loop Finance:
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