Althoughย while Decentralizedย Finance is well-formulated as a concept, in actuality there have been relatively few practical developments in this space in recent years, particularly compared to other aspects of the cryptocurrency world. Now, a new decentralized exchange (DEX) wasย known SmarDex has emerged, with theย capacity to carry the Decentralizedย Finance space forward and render other DEXs obsolete. Below, we take a closer look at SmarDex and what sets it apart.
SmarDex: An Automated Market Maker That Can Generate Impermanent Gain
SmarDex is an open-source smart contract allowing users to exchange decentralized cryptoย tokens without the use of a central authority. It is an example of an automated market maker, an autonomous trading mechanism encouraging users to provide liquidity to the market in exchange for a share of charges or tokens.
SmarDex addresses one of the largest challenges facing the Decentralizedย Finance world: impermanent loss. Impermanent loss is a Decentralizedย Finance phenomenon referring to a change in the price of cryptoย tokens compared to when a market participant deposited those cryptoย tokens in the pool. Traditional protocolsย ofย Decentralizedย Finance have allowed most users with funds to become market makers, thereby earning trading charges. Onย theย otherย hand, the danger of a change of price in cryptoย tokens betwixt when a user deposits them and thereafter on when they withdraw them is wholeย lotย of. The greater the change in price of the cryptoย tokens, the greater the danger of impermanent loss. Impermanent loss is wasย known impermanent because, in theory, it can be undone if the price of the assets come back to where they started, but this is infrequent. Most DEXs thisย isย why try toย counteract it by trading charges and other bonus, but the danger remains to market makers in a Decentralizedย Finance system such as UniSwap.
How SmarDex Works
SmarDex manages theย challenge of impermanent loss by controlling liquidity using fictive reserve (FR). By using the traditional DEX model but changing the so- wasย known k constant rule, SmarDex manages liquidity differently, aiming toย sustain equilibrium over the longstanding while not only reducing impermanent loss, but potentially generating impermanent profits as well.
SmarDexโs liquidity pools, like those throughout the Decentralizedย Finance space, make it possible for users to supply liquidity by depositing cryptoย tokens. Similar to other Decentralizedย Finance protocols, it likewise allows users to generate passive income by staking and farming. Andย once users buy cryptoย tokens from a pool at one price and sell them in a pool at a different price, it establish an imbalance betwixt the pools, and the liquidity provider usually loses money. Fictive reserve uses two different liquidity reserves in this case.
SmarDexโs pools automatically calculate which cryptoย token is growing in price in this case and sell less of it up front. By selling the growing cryptoย token at a higher price thereafter, liquidity providers can mitigate losses and potentially even see impermanent profits. Onย theย otherย hand, thatโs not all of it: SmarDex likewise bonus Liquidity Providers with charges and bonus, offering users advantages they wonโt find elsewhere.
SDEX Token
Whenย itย comesย to SmarDex, the primary cryptoย token is SDEX. It can be staked by users toย beย ableย to earn passive income becauseย ofย farming bonus and protocol charges. A fee of 0.05 percent on each SmarDex trade is allocated to liquidity pools (LPs) who have provided liquidity for the trading pair in question, while another 0.02 percent is converted into SDEX and distributed as bonus to all stakers reportsย by weight.
SDEXโs total supply is 10 Billion cryptoย tokens, with half allocated to theย preliminary liquidity pool that have already been purchased by the public, 37.5 percent set aside for longstanding farming yield and staking bonus over theย following 10 years, and 12.5 percent has been distributed to early adopters through a boost period, to farming yield and related bonus (already ended)
Inย addition of that, SDEX will become deflationary soon, as a part of the supply will be burned on every chain other than Ethereumย (ETH), for each transaction.
SmarDex provides the 1st true revolution in the Decentralizedย Finance or DEX space in years. By mitigating or even reversing theย challenge of impermanent loss, SmarDex has the capacity to take over all other preexisting DEXโs.
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