EthCash（ethcash.fi）introduces Automated Market Makers (AMM)for synthetic assets platforms
How is EthCash Different from other projects trading synthetic Stocks?
The terms of Automated Market Maker (AMM) is very familiar for early players in DeFi field. The AMM model was implemented by Bancor at first, and Uniswap has practiced in successfully way. It is a new transaction approach comparing to the traditional exchange’s market maker model. AMM is relatively innovation for traditional order book system. The order book system is widely used in many exchanges, such as Binance in CEX, 0x, Serum and Injective in DEX, Dydx in derivatives platforms, Deribit, FTX, Opyn in options platforms. It all relies on traditional order system for transaction. Trades only happen when you match a buyer and seller to execute the trade, thus, determining an asset’s price.
Poor liquidity might be the main issue of order book system. Any market may not have enough organic liquidity to support active transactions. Literally, market maker is the agency who alleviate the problem by facilitating transaction that will not occur in these markets. Sometimes, user require the order book, each transaction need users to bid even on the decentralized exchanges, and counter-party participate to complete it. Many assets listed on centralized exchange on Ethereum network. The price will different from exchanges. In this case, there will be arbitrage space. The arbitrageurs will participate to narrow the price gap, and the token price will back to normal level.
The order book issue will be obviously among synthetic assets. Synthetic asset allows users to trade any assets such as stocks, gold, oil and indexes in reality. Hence, the liquidity of single asset is more difficult to aggregate together. To seek price will be more difficult. In contrast, EthCash uses a real-time, live external price oracles feed, oracles that constantly update and give the genuine and exact price from the original asset the synth represents. Therefore, each synthetic asset on EthCash represents an asset on a much larger exchange with ample liquidity and relatively stable price.
Orders large or small are always ready to buy and sell on EthCash Exchange as instead of the old-fashioned order book system we use an Automated Market Maker (AMM) system. This is one of the key benefits to using EthCash over Injective or other derivatives platforms. You’re able to buy as much as you want, whenever you want, without having to hope there is someone else ready to sell to you. Now, how is it possible that you can buy without there being a ‘token-holder’ willing to sell to you?
Thankfully, in contrast, EthCash Exchange uses real-time, live external price feed, oracles, that constantly update and give the genuine and exact price from the original asset the synth represents. Therefore, every synthetic asset on EthCash represents an asset on a much larger exchange with ample liquidity and relatively stable price.
As the decentralized platform, EthCash protocol has DeFi’s advantages, including:
Open and transparent transaction/ smart contract execution process
All users and smart contract execution all on the blockchain, people can enquiry it, and avoid the black box of centralized platform.
Elimination of intermediaries
Users can directly interact on smart contract without intermediaries’ fees, and transaction costs are lower.
High safety
Once code has been audited by many parties, as it launched which the process is completely controlled by the smart contract, it is not controlled by any centralized organization, and users do not need to worry about funds safety.
Low entry level
Anyone can participate for connecting with Internet.
Besides, EthCash has an outstanding feature, it is a revolutionary AMM mechanism for deploying on the synthetics business. The business model is Multi-Asset Single Pool (MASP).
MASP model is a liquidity mechanism that combines oracle price feed model and AMM mechanism. The innovation part is integrating different assets into a liquidity pool, for providing security deposit and liquidity support for transaction.
On the whole, EthCash’s MASP model is extremely innovative. It provides different assets and liquidity into a liquidity pool, for providing sufficient liquidity support for transactions. It is undoubtedly solving the current derivatives transactions pain point. The sufficient liquidity and brings a rich type of synthetic assets.
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