Introducing Dexter — Interchain DEX for Yield-Generating Assets
A long time ago, in a galaxy far, far away, a breed of super-intelligent degen robots started exploring the Cosmos. These degen robots traveled across the challenging DeFi landscape of the Interchain in search of sustainable yield. On their quest, they came across Persistence — The Liquid Staking Hub for PoS.
Dexter, their most reliable and trustworthy explorer, is tasked with exploring the planet and potentially establishing a base.
Background
Liquidity is critical in DeFi ecosystems.
Billions of dollars worth of assets are locked as staked assets to secure Proof-of-Stake blockchain networks. Users can earn a fee for securing the network by locking assets in “staking pools” with validators on a network. They face the dilemma of staking their assets to earn a passive yield or using them on DeFi protocols.
Proof-of-Stake blockchain networks need a way to maintain a large number of assets staked across several validators to ensure security while simultaneously preserving the liquidity of the native token in the DeFi ecosystem.
Liquid staking allows users to stake assets and simultaneously use them in DeFi.
Moreover, across the DeFi ecosystem, users lock liquidity in protocols and mint yield-generating assets, such as interest-bearing tokens on lending protocols.
Support for yield-generating assets like liquid staked assets and interest-bearing tokens in the DeFi ecosystem will maximize capital efficiency by allowing users to use these assets while earning their yield in the background.
Dexter will unlock liquidity in Interchain DeFi by building an AMM for yield-generating assets.
Enter Dexter
A team of passionate builders from AstroTech Labs and Yeti Labs has worked closely with Persistence Labs to build Dexter — Interchain DEX for Yield Generating Assets.
A market for these assets will allow traders to swap for instant liquidity and liquidity providers to earn an additional yield on their assets through trading fees.
Yield-Generating Assets
Yield-generating assets represent a share of an underlying pool of assets (like an interest-bearing token from a money market or liquid-staked assets like stkATOM or stOSMO) and follow an exchange rate with the assets deposited in the pool, which generate the yield.
Liquid-Staked Assets
A subset of yield-generating assets, liquid-staked assets are a claim on the underlying staked assets and can be redeemed for them and the accrued rewards based on an exchange rate.
Users can mint these tokens by staking their assets with liquid staking protocols like pSTAKE and Stride on Cosmos, LIDO on Ethereum, and Marinade on Solana, which take care of staking their assets with validators in the background while issuing these tokens in return.
These assets may not be instantly redeemable since staked assets are subject to unbonding periods.
Dexter has come across large deposits of liquid-staked assets on the planet and plans to build an AMM base to stack these assets into pools and generate yield while offering traders in the interchain a market for liquid-staked assets.
Interest-Bearing Tokens
These tokens are a claim for supplied assets on a lending protocol and can be redeemed for the deposited principal and the accrued interest.
For example, interest-bearing cTokens on Compound (e.g., cDAI ) or yTokens on Yearn, where the rate of the token increases as the interest accrues.
Dexter’s future missions would focus on bringing these assets onto the base.
Curating the best of AMMs
Dexter has traveled far and wide, gathering extensive knowledge on AMMs, and now brings all this wisdom into building his AMM base on Persistence.
Inspired by the best innovations in all of DeFi, Dexter will bring tried and tested AMM models to the Interchain and offer an optimized experience for yield-generating assets.
Dexter v1 will feature pools with liquid-staked assets such as stkATOM, stATOM, qATOM, and stkOSMO, along with the Cosmos assets like ATOM, OSMO, JUNO, and XPRT.
Traders will be able to trade on the following pool types —
- Weighted Pools — Inspired by Balancer
- Stableswap Invariant — Inspired by Curve
- Stable 3/5 Pool — This adaptation of the popular stablecoin pool from Curve can support 3 to 5 assets.
Dexter will introduce more efficient AMM models focused on yield-generating assets in an update soon after launch. A deep dive into the protocol architecture and mechanism will soon be released.
Building on Persistence
The Persistence chain facilitates the issuance and deployment of liquid-staked stkASSETs
With the launch of pSTAKE (the liquid staking protocol by Persistence One), the Persistence Core chain will solidify its position as the Liquid Staking Hub on Cosmos.
By supporting liquid-staked assets issued on Persistence and assets from other liquid staking zones such as Stride and Quicksilver, Dexter will build the foundation for a thriving economy of yield-generating assets in the Interchain.
Timeline
Dexter is in the final stages of development and is undergoing third-party audits. Dexter v1 will be launched on the testnet in the coming weeks. Followed by a mainnet launch by Q1 2023, after a verdict on the on-chain proposal by the Persistence community.
Conclusion
Dexter will be a cornerstone in Interchain DeFi and will aim to do the following —
- Support liquid-staked assets — stkASSETs on Persistence, along with assets from other liquid staking zones like Stride and Quicksilver.
- Support other yield-generating assets — Interest-bearing tokens from money markets.
- Support multiple pool designs ( StableSwap Invariant — supporting 2 to 5 assets and Weighted Pools)
- Facilitate the adoption of yield-generating assets across the Cosmos ecosystem
- Provide a flexible architecture that allows builders to create new AMM models.
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