The DutchX as an Open Protocol
Smart contracts and dApps building on top of the DutchX
On our mission to build new market mechanisms that enable the distribution of resources — from assets to incentives, and information to ideas — we strive to build a fully decentralized exchange, founded upon market efficiency and fairness.
While the long-term vision for the DutchX is to become the first truly decentralized exchange — a first iteration of fully decentralized exchange models, we are now focusing on the DutchX as an open platform for the fair price finding of tokens.
Everything happens on-chain in the DutchX — from submission to settlement (no need to sign or receive orders off-chain). Hence, the DutchX is a platform for interactive use by other smart contracts or decentralized applications. Anyone can build on top of the exchange — no need to ask for permission, or be afraid of changing rules. This shall incentivize people to use it, build on top of it, and collaborate going forward.
The use cases for the DutchX open protocol are numerous:
- DAOs could use the DutchX to convert tokens based on their governance outcomes
- Prediction markets may use the DutchX to make outcome tokens peer-to-peer tradable
- Crypto funds may use the DutchX as an on-chain price feed that is completely independent of a fund manager, and for converting tokens as part of the fund’s strategy
- Wallet providers may integrate with the DutchX, may it be for calculating withdrawal thresholds, or thresholds for a number of private key holders that are needed for signing transactions in multi-signature wallets, or more generally for converting one token to another
- Any kind of payment dApps or escrow services could use the DutchX to trigger payouts in a particular token based on rules defined in smart contracts
- Various decentralized systems in need of customized price feeds could write their own integration with the DutchX
- A protocol for decentralized token lending built on top of the DutchX could yet be another use case
- Teams trying to find use cases for their transaction scheduler might also find it helpful to use the DutchX. If the transaction scheduler is not public ahead of time, bidders might find considerable value in it
Essentially, any decentralized application in need to exchange tokens and/or integrate a price feed can make use of the DutchX.
An Example Use Case: A Decentralized Token Lending Contract
To showcase a potential use case of the DutchX as a platform, we have created an example for a decentralized token lending contract that is built on top of the exchange. The interaction happens on two levels: Firstly, the contract uses the DutchX price feeds to calculate the value of two particular tokens in relation to one another. Secondly, in case either the value of one token falls below a certain level or the borrower does not return the token within the defined time, the collateral token is automatically liquidated on the DutchX. Read a more technical description and check out the contract code here. The code of course is open source and can be used by anyone.
Next Up
We’ll be in touch about our research progress on future decentralized exchanges, and thus part two of the DutchX vision: to become a fully decentralized exchange, governed by a DAO. Currently, we are designing the governance mechanisms and voting rights of the DAO. We see a strong necessity to give those who facilitate liquidity in the DutchX adequate compensation.
Interface providers could use the DutchX to add additional functionalities such as margin lending, pre-scheduling transactions, or providing curated token lists, for which they could charge users a liquidity contribution. An interesting opportunity could also be the hosting of an interface specifically geared towards bidders.
We are excited to announce that the DutchX will actually be part of the next GnosisX challenge — encouraging platform use cases. More information on timing, judges, prizes, and extent of the challenge will follow soon, as well as more technical info about the DutchX and its upcoming release! Stay tuned!
Special thanks to Christiane Ernst, Product Manager of the DutchX, with whom this article was collaboratively written.🙏❤️ Learn more about the DutchX in Chris' great talk at EthCC! 📹
