Stakenet’s vision: Part V — The Stakenet DEX
Welcome to part 5 of Stakenet’s vision series! In the last article, we talked about Atomic swaps and why we believe Lightning swaps are superior. Today we will take a deep dive into the benefits of Stakenet’s DEX.
Currently, the blockchain industry is struggling to cope with heavily congested networks, causing transaction/gas fees to rise to astronomical levels and making trading very expensive. This is where Stakenet offers a solution. The Stakenet DEX perfectly combines the strengths of Bitcoin & Lightning Network with ideas of its own.
Stakenet DEX
Stakenet has developed a true next-generation DEX that solves many of the problems that prevent current DEXs from scaling, such as ever-increasing costs and transaction times. Stakenet has built its DEX from the ground up using proven and reliable Layer 2 technologies such as the Lightning Network (LND) and Connext Network. From it, peers using atomic swaps via off-chain protocols can trade an extensive number of different coins with each other at high frequency. Lower fees, in turn, become incentives and profit for makers and takers.
Users are provided the ability to trade between BTC, ETH, and basically every ERC20 token in existence directly and virtually instantly on the second layer without the need for packaged assets such as wBTC and wETH. This means that Stakenet’s DEX is the first DEX to offer support for BTC / USDT and other stablecoin pairs. Our DEX will be integrated with the Multi-Currency Light Wallet, where users can retain full custody of their own funds and private keys at all times.
Key highlights of Stakenet’s Layer 3 DEX:
1. Speed and scalability:
It offers instant, straightforward trading across different blockchains. Every on-chain DEX is limited in its success due to its nature being on-chain. As Stakenet DEX handles the transaction off-chain, this makes it one of the first scalable decentralized exchanges ever. This makes on-chain limits for block time and block size a thing of the past.
2. Low transaction fees:
As there are no fees when sending a lightning transaction, the only fee that is left is the DEX fee when executing a swap. Stakenet DEX will offer a 0.25% fee/trade to complement its “taker pays maker” model, where users get a % of the traded fee back, resulting in negative fees. Read more about this here: https://medium.com/stakenet/hydra-dex-network-upgrade-proposal-4b00a3a3fb8
3. Liquidity:
Projects and users can run their own DEX hubs, which increase liquidity and provide dedicated support for specific cryptocurrencies. This is further enhanced with Stakenet DEX’s “Vortex” aggregator, which shares liquidity with other exchanges, both centralized and decentralized. It also provides arbitrage functionality between CEXs and Stakenet DEX, from which deeper and more complex arbitration markets can form as the trades execute within seconds and the liquidity of the markets is greatly increased.
4. Fee distribution
It runs entirely on the decentralized XSN masternode network. The Stakenet DEX will distribute a share of all fees earned from daily trading volume directly to the masternode owners' wallets. This results in an economic incentive for different users to set up an XSN masternode and therefore increase the decentralization of the masternode network. To read in detail about Stakenet DEX’s proposed fee distribution model, check it out here.
5. Privacy:
As trades are settled off-chain, there is no explorer to track the users’ trade history. The Stakenet DEX will also be using TOR by default to hide the users' IP addresses, making trading on the DEX even more private.
6. Native assets:
By using Connext and Lightning Network, you can trade native assets, without the need to wrap or peg them. Read more about the possible problems of wrapping here.
Professional trading tools can also be used for Stakenet DEX to open the door for high-frequency decentralized trading.
Stakenet DEX reduces an infinite number of expensive on-chain transactions down to just two: moving funds from the blockchain to Layer 2 and then back on-chain to the blockchain. Once off-chain, there are no blockchain/gas fees and transactions are settled instantly, making it ideal for high-frequency trading. An additional bonus is that once your funds are off-chain, they will stay off-chain for as long as you want.
As more and more users rely on Layer 2 (and Layer 3) solutions, the Stakenet DEX is a good choice due to its potential to connect all other chains directly, without any intermediaries or wrapped assets. Thanks to Bitcoin’s Lightning network infrastructure, we have ensured our long-term survival. Any other project that implements the Lightning network is immediately compatible with Stakenet.
With Stakenet DEX users can trade faster, cheaper and more privately, and more versatile than with any other DEX available today.
