Series 1: Introduction to VE 3,3 Solidly Type DEXes and Opportunities They Have to Offer
In any given economy, there are different types of financial markets: stock markets, bond markets, forex markets, commodity markets, derivatives of all the previously mentioned markets, and an emerging market called the cryptocurrency market.
In some of these markets, retail investors (small-scale investors) are not allowed to participate or are already priced out. Only in emerging markets such as the crypto markets do they stand a chance, which would explain why there are flocks of people trying to gamble their way into dynastic epochal wealth lol. 90% of them won’t make it of course, but like in any given economy, there are secrets or strategies you can employ to corner and maximize your portfolio gains.
For example, if you have a physical piece of land measuring about 50 hectares where different people meet to trade goods and services, you may ask yourself: What is the optimal way to generate revenue? Do I set up shop and sell something? If you set up shop, there’s a likelihood that 10 other people are selling the same thing as you, which is good for competition but not so great for revenue. You may also consider transportation services to move people in and out of the market, but you are immediately faced with an upfront cost, so what do you do?
Let’s assume you have state power and you decide not to do any of those but instead levy a fee on every single transaction done in the market. Suddenly, your story changes and you find an infinite money glitch, congratulations! You can explore your side quests now.
Ok, but how do all these relate to VE3,3 solidly decentralized exchanges?
What goes on behind a dex? How am I able to swap token A for token B?
For that swap to happen, someone or a group has to pool together tokens A and B to enable that swap in exchange for fees. The exchanger walks away happy with his tokens, and the pooler walks away with fees. This, of course, is an oversimplification of the mechanics behind that simple swap, but my goal here is to enlighten you on the potential of VE 3,3 dexes and how you can own a piece of the forex markets.
When you, as a pooler, pool your capital for other people to trade, you experience IL (impermanent loss), which for VE3,3 type solidly model Dexes, I like to call the cost of doing business.
With a VE3,3 dex, they have tokens that usually follow an emissions schedule whose chief aim is to reward liquidity providers on the dex in compensation for the IL, to give them ownership of the dex, and to also protect existing holders from dilution through a process called rebase. You can buy the tokens on the secondary market but they are useless in themselves and can only be used for speculation unless you lock it forever. In return, you get a cut in fees from the dex on every transaction proportional to your Vote escrowed locked tokens for as long as the exchange exists (remember the market levy illustration?).
Not only that, you and other token holders get to decide which pool gets emissions per epoch (1 week). Bonus points if it’s a pool you’re a liquidity provider in. Why are ve3,3 type dexes important and where is the opportunity?
Well for the first time in human history, you can now own a piece of the forex market and collect rents as long as people keep trading, which is a certainty in an emerging market such as DeFi. Nowhere else on the planet, in the observable universe, is this remotely possible.
In the following series, we will explore the mechanics behind a VE3,3 dex and it’s history, the opportunity cost of locking up tokens forever, portfolio construction, and how to size investments appropriately.
https://t.me/+WSBNrNN4AoGaKPcr
