Dfyn, the gasless multi-chain AMM.
Crosschain liquidity is key for a multi-chain near future.
What is Dfyn?
Dfyn is a decentralized exchange with a crosschain automated market maker system. Dfyn protocol is focused on certain key features for their DEX like transparency, liquidity, scalability, user experience, speed, and seamless multi-chain interaction.
The development of cross-chains bridges can achieve notorious liquidity improvements. This ‘liquidity supermesh’ can solve the common problems associated with a traded pair that is present over different blockchains, which is fragmented liquidity and higher trading costs due to slippage and blockchain transactions fees. As a result of a blockchain agnostic protocol the users can benefit from cheaper fees due to Dfyn’s trading design for smart order routing and the gas optimizations of the Biconomy technology, advertising even gasless transactions. Moreover, the access to trade an assets pair from several blockchains into a single interface enhances greatly the user experience by making the complete process easier and more direct for the users.
At the moment the supported blockchains to trade on Dfyn are Polygon and OKExChain. Cross-chain liquidity is provided by Router protocol and is currently in beta with support for Ethereum Kovan, and Polygon testnets. IntoTheBlock’s upcoming analytics release is focused mainly on the Polygon network.
The Dfyn team plans to deploy nodes on other chains such as BSC, Polka, Avalanche and Solana. These nodes are expected to go live by the end of August 2021.
Router protocol <> Dfyn architecture.
Dfyn is composed of four main elements. Lets review them from a bottom-up perspective:
- Nodes — composed by AMMs that are present both on Layer 1 and Layer 2 blockchains.
- Bridges — links between different nodes. These allow asset transactions between layers/blockchains.
- ParaRouter — every chain that has a Dfyn node on top of it will have a bridge contract known as ParaRouter implemented. In case of cross-chain asset transfers, the ParaRouter can lock a stablecoin and broadcast an event that can be picked up by the listener associated with the Central Router to take action.
- Central router — a central mechanism to validate ParaRouter transactions and forward them to the destination blockchain.
Several blockchains like Tezos, Cosmos or BSC are planned for future releases. This architecture enables the users to trade an asset pair from the overall cheaper blockchain or layer, as the protocol compares data on several blockchains and calculates and chooses the cheapest possible transaction, including asset price and transaction fee costs.
App use cases.
- Asset trading: Dfyn seeks to provide a way to exchange layer 1 assets (wBTC, wETH) with tokens and stablecoins any kind of asset. Between any stablecoins (UST, USDT, USDC, DAI), popular coins such as BTC or ETH, or even less popular ones like ICE, MATIC, LUNA or their own token DFYN.
- Liquidity mining: is one of the integral use cases of Dfyn and its token with a vibrant ecosystem behind it. They include more than 50 farms that can be classified in different kinds: Ecosystem Farms, Dual Farms, Single-Asset Vault and Pre-Staking Farms. Many of them last a certain amount of time and can earn DFYN token rewards as well as other tokens of projects partnered with the Dfyn protocol. Their blog includes extensive documentation about their farm projects.
Key Metrics.
Dfyn stands in the top 50 of DEXes by traded volume, averaging daily numbers similar to other protocols like Loopring, Kyber, or Secretswap. Dfyn currently stands as one of the Top 5 most popular exchanges on Polygon with a cumulative traded volume superior to $1.5 billion and a total value locked of more than $200 million on the Polygon network. With more than 5 million transactions the protocol has been able to achieve more than $4.5 million in revenue. It is positioned in the top 5 of DEXes by the biggest of traded pairs offered.
In the Dfyn Insights page we offer the historical values of each of these metrics as well as a ranking of Top Pairs showing which are the pairs that contain most of the liquidity. Another advanced metric as return on liquidity (ROL), represents the earnings obtained by liquidity providers, excluding liquidity mining rewards.
Furthermore, we provide more metrics per each traded pair. Traders are interested in trading pairs with a wide liquidity. Our liquidity comparison metrics show the amount of coins that the pools contain, and its historical variation.
Liquidity providers are motivated by the fees generated on each pair to choose where to park their coins. Fees per liquidity is an interesting metric for that, tracking the APY that can be gained by liquidity providers. We offer the possibility to choose between different APY timeframes, from 1-hour APY up to 24-hour APY. In the example above we show the data for the pair UST-USDT:
Additionally our impermanent loss calculator can be used to gain invaluable insights about the net gain or loss of each pair when providing liquidity. We provide a comparison with the amount gained by just holding the assets:
Development activity, team credentials, security and investors
Dfyn team founders are also involved in the creation and development of Router protocol. The team is growing and as far as we know they account for around 20 members. The founders have been involved in crypto since more than 5 years ago and previously have been working on different exchanges. Previously to Crypto, his CEO was involved in finance and technology renowned companies as MIT, Moody, or Deloitte. Dfyn DEX code has been audited by QuillHash Team and the Dfyn smart contracts are public on their Github.
The Dfyn roadmap lays out future plans that include a cross-chain Layer 2 launchpad where users of the protocol will be able to release tokens in a trustless and decentralized manner (IDO), have the tokens listed on Dfyn directly as well as being able to provide stake/farm from the same platform. This follows the successful launch of Sushiswap’s MISO IDO platform from Sushiswap, which initially their unique product was an AMM DEX as well. IDO platforms are on the surge and the Dfyn release could make a dent in a market dominated by platforms like Polkastarter or Binance Launchpad. In the near future there are plans to add Dfyn nodes on other blockchain as BSC, Polkadot or Avalanche as well as integration with the Router Aggregator. Furthermore, a prediction market has been released in beta stage.
Dfyn partnerships and collaborations include names like Terra Money, Algorand, Elrond, Chainlink, Avalanche, Polytrade, Router, Hashflow, Mantra DAO, IG Galaxy, Zokyo, Umbrella, Union, Bonded Finance, Dafi, Biconomy, Razor, Glitch, Nord Finance or Frontier. The initial Dfyn rise accounted for $2.4 million from investors including CMS Holdings, QCP Capital, DFG, GBIC, Spark Capital, Signum, AU21, Black Edge, Faculty Group, Shima Capital, Morningstar Ventures, Amesten Capital, Blockpact, Moonrock Capital, DeFi Capital, Genblock Capital, Lotus Pool, Rarestone, Krypital, MGNR, CryptoDorm Fund and Sandeep Nailwal of Polygon, among others.
Competitors
The direct competitor that comes to mind in the Multichain DEX ecosystem is Thorchain. Although currently the Thorchain network is halted due to recent security flaws, it is helpful to account for their pre-halt figures and compare them with Dfyn. Currently Thorchain’s token RUNE is valued at a market cap of $2.1 billion, which is 75 times more than DFYN market cap at $27 million. Furthermore we can assess the utilization of the protocol related to appreciation of the token protocol with the Market cap / TVL ratio:
The medium term future of DeFi will most likely be multi-chain and actors that are able to provide an easy and effective way to interact between chains are destined to be key projects and attain a considerable market share. It is expected that cross-chain use cases will be provided by not only a single DEX but by multiple ones.
The near future is likely to be multi-chain because mass adoption of cryptocurrency use cases requires the capability of a blockchain to onboard billions of users and millions of daily transactions. Such figures are really difficult to achieve in a secure and decentralized way for a single blockchain due to technological limitations. Additionally the development of bridges between blockchains is a reality and are currently on a functional stage. These bridges are the technology that enables seamless integrations and smooth interactions of users with several blockchains.
Tokenomics.
Dfyn released the ERC-20 $DFYN governance with two main use cases in mind:
- Governance: $DFYN token holders can get involved in the governance of the protocol by voting with their tokens for the decisions of new proposals. At the time being no proposals have been started nor a proposal forum can be found, so this feature is expected to launch in the near future.
- Revenue sharing: for each trade performed on the Dfyn platform, a standard 0.3% fee is charged. This is divided between 0.25% for the liquidity providers of each pair and 0.05% for the protocol treasury. This treasury is in charge of the gas subsidies and token buybacks. Dfyn team also mentions that in the near future this fee allocation will be rewarded to Dfyn stakers similar to how Sushi does for xSushi.
The token has a deflationary nature and the maximum number of tokens is 250m. The token allocations can be examined in the next table:
The IDO from the $DFYN token was held on Polkastarter on May 10th 2021, allocating 3.25m tokens at $0.094. The private sale had a price of $0.08 with 18.75m tokens, and the seed round consisted of another 18.75m tokens with a price of $0.048. Currently the $DFYN token is trading at around $1.24, with a market capitalization of $26m. Its fully diluted value stands at around $310m, which is a relatively modest valuation that signs that the project is not overvalued right now. The circulating supply is around 21m $DFYN at this moment, 9% of the total supply. As spotted in the Defyn blog, monthly token burns have been recently introduced to increase the scarcity and increase the token value of $DFYN.
