rDEX: A Solution to Liquidity Issuance on the rToken App
Staking Finance (StaFi) is a platform that offers Liquid Staking solutions for all PoS chains. This has greatly reduced staking risks while also increasing users’ profitability. The team is focusing on delivering more rToken liquidity solutions to establish a synthetic, reward-bearing, and tradable rToken.
To do this, StaFi confirmed the ERD solution (rSwap V1) and rDEX V1 ideas in November to construct multi-scenario rToken liquidity solutions. Although the introduction of rATOM, rBNB, and rDOT on rSwap has alleviated some immediate liquidity issues, rTokens still require extra liquidity to meet big exchanges. Upon implementation, the rDEX will collaborate with rSwap to tackle the liquidity problem of rTokens.
While rSwap V1 will support swapping of rATOM, rBNB, and rDOT, with the hope of adding other rTokens to rSwap V1 as time goes on, rDEX V1, built on the StaFi chain, is an AMM DEX for rToken/FIS pairs that allow users to deposit any single token or dual tokens asymmetrically to create liquidity. In the first quarter of 2022, Stafi is expected to release rDEX V1 on the mainnet.
StaFi has remained open with the community, discussing and describing the issues faced as they develop rDEX and how they intend to address them before releasing the DApp.
StaFi is the first DeFi system to allow staked assets to be liquidated. StaFi allows users to stake PoS tokens and obtain rTokens in exchange, which may be traded while still receiving staking rewards. When users stake PoS tokens through the StaFi rToken App, they receive rToken, a synthetic staking derivative produced by StaFi. Users’ staked PoS tokens and the related staking incentives are used to anchor rTokens. At any time, rTokens can be transferred and traded.
The rDEX Solution
StaFi introduced the rDEX V1 solution, an AMM DEX for rToken/FIS pairs constructed on the StaFi chain, on November 25th. rDEX V1 is an ideal decentralized exchange that was created to address the issues with rToken liquidity. It is meant to provide decentralized transaction services for rTokens built on the StaFi Chain. rDEX V1 will be put on the StaFi chain because it is an integral feature of the StaFi rToken ecosystem. Users’ native rTokens can be traded directly through the DEX for increased liquidity. As a result, the necessity for cross-chain to Ethereum or other ecosystems will be eliminated, as well as provide efficient liquidity for all rTokens and an impermanent loss protection reserve for rToken holders.
StaFi also maintained that rDEX V1 will be the next major application constructed for the StaFi rToken ecosystem which will be released in the first quarter of 2022.
The following are some of the key characteristics of rDEX V1:
- Implementing the AMM CLP market maker approach will result in low slippage in both small and medium-sized transactions.
- Users’ assets will be protected from Impermanence loss, in which the Liquidity Provider’s loss is compensated by the FIS token.
- To increase liquidity, FIS will be used as the primary trading asset for all rToken trading pairs.
- As against the likes of Uniswap Dex, a single or a dual-currency approach with varying ratios can supply liquidity.
The rDEX V1 Liquidity Provider Fee is easy and also modifiable by the slippage generated by the user during the transaction. As a result, as the transaction size grows greater, the slippage increases, and more Liquidity Provider Fees are imposed.
This model is beneficial because historically, a fixed Liquidity Provider Fee, like Uniswap 0.3 percent, has not been sufficient to motivate Liquidity Providers to actively supply liquidity when large-scale transactions occur. This approach, on the other hand, will be able to accomplish so. A slippage-based Liquidity Provider Fee mechanism is used to provide higher returns to liquidity providers in the case of large-scale transactions in the pool, as well as to encourage more liquidity providers to join. Also, as small and medium-sized transactions will be promoted, transactions on a large scale will no longer be profitable.
Who are the Participants
As an entirely functioning rDEX database, traders and liquidity providers are important participants in the rDEX V1: A trader can use rDEX V1 to swap one token for another at a price established by the liquidity pool ratio. Liquidity Providers are required to provide rToken or FIS tokens to their relevant rDEX V1 pair pool to earn liquidity provider fees or liquidity mining incentives.
While the rDEX is an important development to the StaFi rToken ecosystem, the team has stated that rDEX V1 is only the beginning of the StaFi’s efforts to increase liquidity for rToken holders. Hence, following the release of rDEX V1, StaFi will continue to investigate the following areas:
First, create a FIS liquidity mining reward pool to incentivize users to vote for the allocation of the FIS liquidity pool across other rToken pools using FIS.
Second, investigate the IDO of new rToken assets so that, in the future, when a new rToken is launched, users of rDEX V1 can directly acquire rToken assets using Native Tokens at a discount.
And third, establish Native Token/FIS trading pairings to support Native Token cross-chain to StaFi Chain. Users can swap rTokens and Native Tokens on this basis.
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