Although while Decentralized 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) was known SmarDex has emerged, with the capacity to carry the Decentralized 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 crypto 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 Decentralized Finance world: impermanent loss. Impermanent loss is a Decentralized Finance phenomenon referring to a change in the price of crypto tokens compared to when a market participant deposited those crypto tokens in the pool. Traditional protocols of Decentralized Finance have allowed most users with funds to become market makers, thereby earning trading charges. On the other hand, the danger of a change of price in crypto tokens betwixt when a user deposits them and thereafter on when they withdraw them is whole lot of. The greater the change in price of the crypto tokens, the greater the danger of impermanent loss. Impermanent loss is was 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 this is why try to counteract it by trading charges and other bonus, but the danger remains to market makers in a Decentralized Finance system such as UniSwap.
How SmarDex Works
SmarDex manages the challenge of impermanent loss by controlling liquidity using fictive reserve (FR). By using the traditional DEX model but changing the so- was known k constant rule, SmarDex manages liquidity differently, aiming to sustain equilibrium over the longstanding while not only reducing impermanent loss, but potentially generating impermanent profits as well.
SmarDex’s liquidity pools, like those throughout the Decentralized Finance space, make it possible for users to supply liquidity by depositing crypto tokens. Similar to other Decentralized Finance protocols, it likewise allows users to generate passive income by staking and farming. And once users buy crypto 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.
SmarDex’s pools automatically calculate which crypto token is growing in price in this case and sell less of it up front. By selling the growing crypto token at a higher price thereafter, liquidity providers can mitigate losses and potentially even see impermanent profits. On the other hand, that’s not all of it: SmarDex likewise bonus Liquidity Providers with charges and bonus, offering users advantages they won’t find elsewhere.
When it comes to SmarDex, the primary crypto token is SDEX. It can be staked by users to be able to earn passive income because of 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 reports by weight.
SDEX’s total supply is 10 Billion crypto tokens, with half allocated to the preliminary liquidity pool that have already been purchased by the public, 37.5 percent set aside for longstanding farming yield and staking bonus over the 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)
In addition of that, SDEX will become deflationary soon, as a part of the supply will be burned on every chain other than Ethereum (ETH), for each transaction.
SmarDex provides the 1st true revolution in the Decentralized Finance or DEX space in years. By mitigating or even reversing the challenge of impermanent loss, SmarDex has the capacity to take over all other preexisting DEX’s.