FIS Utility on rDEX V1
DEX is the offshoot of a decentralized exchange. It is a cryptocurrency exchange that promotes peer-to-peer financial transactions in the cryptocurrency space without the need for a middleman; they use smart contracts to execute transactions. Several DEXes cater to the crypto space, allowing users to obtain liquidity for their token easily. Since its inception, the goal of the StaFi protocol has been to solve the DeFi space’s liquidity staking problems. StaFi has been able to greatly reduce users’ liquidity staking problems by inventing usable reward tokens or rTokens, which are obtained when users stake their native tokens (specifically, BNB, ETH, FIS, MATIC, KSM, DOT, ATOM, and SOL for now) on the StaFi App.
However, this raises another issue: the liquidity of rTokens. Numerous DEXes provide rToken trading services, but it necessitates cross-chain activity, not to mention the issue of high transaction fees. StaFi rDEX V1 was initiated as a result of this. StaFi announced the launch of rDEX V1 on their testnet on January 18th, 2022, following extensive internal testing. As an AMM DEX, rDEX provides liquidity native rTokens on StaFi including (rETH, rBNB, rFIS, rDOT, rKSM, rATOM, rSOL, rMATIC). Users’ native rTokens can be traded directly on rDEX for increased liquidity. There will be no need for cross-chain migration to Ethereum or other ecosystems due to this.
StaFi is the first DeFi protocol that allows staked assets to be liquidated. Users can stake PoS tokens via StaFi and receive rTokens in exchange, which can be traded while still earning staking rewards. StaFi issues rToken as a synthetic staking derivative to users who stake their PoS token via the rToken App on StaFi Protocol. When users stake their PoS tokens, StaFi issues a rTokens associated with its staking rewards. Users can trade the rTokens and also transfer as they please.
What exactly is rDEX?
StaFi’s rDEX V1 is a DEX that aims to find a possible solution to the problem of rToken liquidity. The initiative will provide decentralized transaction services for all StaFi Chain-based rTokens. rDEX V1 is deployed on the StaFi chain as an important component of the StaFi rToken ecosystem. Users’ native rTokens can be traded directly on the DEX for increased liquidity. It eliminates the need for cross-chain transactions to Ethereum or other ecosystems.
Advantages of rDEX
StaFi rDEX V1 is built on Thorchain’s Continuous Liquidity Pools (CLP) model. StaFi chose this because it has the following advantages over Uniswap’s AMM model:
- A mechanism to prevent slippage: Slippage is reduced when the user’s transaction scale is small compared to the pool liquidity scale. On the other hand, if the transaction scale is relatively large compared to the pool liquidity scale, transaction slippage will be significant. As a result, whales will be unable to drain rToken’s liquidity.
- Increase liquidity: Because each trading pair must use FIS as the primary transaction asset; each pool can establish significant liquidity through FIS. Every pool can use FIS as a medium to facilitate the exchange of rToken assets or rToken assets with Native Tokens.
- Assist in the liquidity of any single currency or dual token deposit ratio: Users can deposit a single token type or two different kinds of tokens in any ratio to support the transaction’s liquidity. There is no need to deposit two assets simultaneously at a 50/50 split, as in the case of Uniswap. There is a case of impermanent loss protection for long-term liquidity providers with one month or more maturity.
The FIS Utility
FIS is StaFi native token, and it fuels the system. It prevents a large amount of spam from entering the system. In the StaFi system, FIS serves as a medium for value capture (mainly provides value for the liquidity of rToken). StaFi’s Staking Contracts provide Staking services to
Stakers and guarantees liquidity. rDEX V1 will significantly promote FIS Utility in the following ways:
● The rToken’s basic transaction assets in rDEX V1 are all FIS, which will become an important medium for promoting rToken liquidity.
● Because rDEX V1 is deployed directly on the StaFi chain, users must pay FIS as a gas fee when using rDEX V1.
● FIS will be used to motivate Liquidity Providers by establishing an Impermanent Loss Protection Fund Reserve.
● FIS will provide liquidity mining incentives for rDEX V1.
● Community members will use FIS to vote on the liquidity mining weight of each rToken pool.
● The Treasury will collect the rDEX V1 transaction fee income and use it to buy back and burn FIS.
It is clear that the StaFi protocol, with the creation of rDEX for the elimination of barriers to rToken liquidity will remain a force to be reckoned with in terms of staking solutions. According to the team, rDEX will see more changes and improvements in the future, including an avenue to support the cross-chain of other native tokens to the StaFi chain and the use of native token/FIS trading pairs on the StaFi chain. Users who participate in FIS liquidity mining will be rewarded as a form of encouragement and allow liquidity providers to vote with FIS to be distributed among various rToken pools. The StaFi team will see to the possibility of listing rTokens to allow users to purchase rTokens at a discount using their native tokens.
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