This article is compiled from “DeFi The World AMA” No. 2
Theme: “DEX3.0: Breakthrough Point of Liquidity”
Digital currency users should have traded on exchanges, and the mainstream is still the centralized exchange (CEX), despite its widespread criticism.
In contrast, DEX not only does not need KYC, has good anonymity and interoperability, but also can dispel users’doubts about self-theft, market manipulation and network disconnection. This solution is also considered the inevitable direction of the future.
After several years of development, we believe that DEX has reached the stage of DEX 3.0. The key is to pursue better performance and experience, as well as better mobility.
In the second issue of DeFi The World AMA, we invited the co-founders and CMO Jay of ONEROOT CMO Zoe Xiong and Loopring to talk about DEX 3.0 and their views on shared liquidity.
The following is the full content of live broadcasting.
1. Please introduce yourself first, and how do you enter the block chain industry?
Zoe Xiong ：Hello, everyone, I am currently ONEROOT CMO, former Guotai Jun’an, Yinke Holdings Securities Analyst; I joined ONEROOT at the beginning of the project in 2017, ONEROOT is an infrastructure provider focusing on the sector chain, dedicated to the realization of digital currency trading freedom. We independently developed the de-centralized trading protocol R1 and helped Bithumb build a de-centralized exchange based on R1. Traditional financial transformation sector chain industry.
Jay：I am the co-founder and Chief Market Operating Officer of the Road India Agreement. With rich experience in online payment, wind control management and financial innovation. Previously, PayPal, Ernst & Young, a cross-border payment company, worked in several departments. It is also a member of the world economic forum Global Shapers Community, and also serves as CS359B mentor for block chain courses. From 2013 to 2014, a colleague around Paypal started digging BTC, and then brainwashed, digging BTC first and buying it directly on the exchange. Before the establishment of the Road Printing Agreement, our team also made a central exchange, which IDG invested. Then I think there are many problems in centralized platform: security, circulation, order transparency can not be solved very well. Decentralized platforms can solve these problems very well. So we began to make the Road Print Agreement in 2017.
2. Can you give us a brief introduction of the project? Including Relayer, DEX, wallet and other ecological structures?
Zoe Xiong ：R1 protocol is a de-centralized Token exchange protocol based on ETF. Its ecological architecture is divided into three layers: the R1 intelligent contract layer is deployed on the ETF block chain; the Relayer layer is an order relay system, which interacts with the R1 intelligent contract, is responsible for submitting the upper chain and order matching, and the Relayer layer provides OpenAPI to the outside world, allowing third-party exchanges to submit orders to the matching engine. Through the R1 protocol, different exchanges can become part of the distributed business system, share order data and liquidity, and bring users better trading depth and experience. These are the main features of the R1 protocol. At present, we have implemented ONEROOT DEX and BIthumb DEX exchanges based on the R1 protocol.
The picture above is easy for you to understand our Relayer and DEX order system. As for wallet ecology, we should first talk about the natural hostility between CEX and wallet. One thing CEX and decentralised wallet users are actually doing is fighting for control of money. CEX wants to control money in its own hands, so it has made a variety of attractive games. Old drivers in the currency circle know how risky the centralized exchange is. However, users often do not have enough security awareness, the exchange as a wallet, assets directly stored in the central exchange, resulting in various problems do not need to be described. Decentralized wallet users control their money in their hands. We call their products DEX one-stop APP in their wallets. Decentralized exchanges do not have any hacker risk problems, as long as they keep their private keys properly.
Jay：This road print is a little different. Ha, we focus on DEX, not Wallet at present. Another 3.0 is based on zero-knowledge proof (I later used the abbreviation Ha: ZKP) to put part of the work under the chain. Road Printing Protocol 3.0 is a decentralized transaction brokering protocol based on ZKP technology. It not only has a set of open intelligent contracts for executing transactions and brokering operations, but also has a group of participants under the chain to browse and broadcasting orders. Roadprint agreements use de-centralization technology to provide a zero-risk token exchange model, and allow multiple exchanges to compete for the same order for out-of-chain matching and on-chain settlement. Road India is not a de-centralized exchange. It is an agreement. It can connect projects into an ecological agreement. Through road India, various encrypted currency related projects can be integrated, thus forming a de-centralized trading ecology. Relay is a very important part of the road signature protocol ecosystem. It matches the orders of various traders, and then broadcasts the successful orders to the block chain. Trading should be smooth, a large part of which is relay network based on road prints.
3., you can share the latest development of the project. Is there any interesting news? What is the most energy spent at present?
Zoe Xiong ：We will release a new ecological plan, which is also the first time to disclose to the community the – R1 protocol. The core of the optimization plan is that Pick Global Top Quality Projectors join all the exchanges cooperated by the R1 protocol, which can share the liquidity through the R1 protocol, and fundamentally solve the liquidity problem of high quality projects on DEX. MakerDAO, our partner in the first phase of the Optimum Plan, is the provider of the stabilized currency Dai. Now it has landed on ONEROOT DEX and opened a DAI-based trading area. DAI will also be landing on the exchanges cooperating with R1 agreement such as Bithumb DEX to share liquidity with several exchanges. At present, we are still concentrating on the development of business at the infrastructure level of the block chain and more in-depth research and development at the technical level.
Jay：The contract code and zero knowledge proof circuit code of 3.0 beta 3 version of road print have been developed completely. By streamlining the cost model, we optimize the original four-party settlement to three-party settlement, which greatly improves the generation speed of zero-knowledge proof. Based on this optimization, TPS (number of transactions per second) increased from 290 to 350 after opening the data availability on the chain; TPS increased from 5200 to 6150 after closing the data availability on the chain. Although throughput may be further optimized, the current performance of 3.0 should be close to the ETF limit. With the upgrade of Istanbul, there is no need to change any code. The throughput of the road protocol 3 will automatically rise a lot: opening data availability, throughput will be about 1400 (each transaction costs about 385 gas); closing data availability, throughput will be about 9350 (each transaction costs about 57 gas). Currently, efforts are focused on relay development, internal testing and security audit feedback upgrade. Chain data availability means that all the original transaction data will be packaged and uploaded to ETF, and users can get these data by directly parsing the TX of ETF. These data can be used to reconstruct the state of the whole tree.
4. If we say that DEX 1.0 stands for Etherdelta and DEX 2.0 stands for Ox, how should DEX 3.0 be defined? What is the general trend of DEXX development?
Jay：In my opinion, one of the core subtexts of DEX 3.0 development trend is “trusted computing”. In other words, we need technology to prove that the code logic that runs outside the chain is 100% trustworthy. This trust is mainly aimed at the corresponding intelligent contract in the chain. Only the calculation results outside the trust chain of the intelligent contract can make the transfer on the chain. If the calculation results of intelligent contracts trust out-of-chain, then users should be able to trust the calculation results of relay, and then trust the decentralized transaction technology as a whole. DEX 3.0: A DEX contains a set of intelligent contracts in the Ethernet workshop to verify the proof of trusted computing and make charge-and-cash transfers when necessary; it also contains a large tree in a centralized relay system that contains all the important information about the DEX.
5. We say that DEX can be divided into three classical modes: IDEX and ddex, uniswap and bancor, dutchx. What do you think of these three different types of DEX? Which / DEX-like products are you more concerned about recently?
Zoe Xiong ：The order book model, the automated market making model and the auction model have their unique advantages and advantages and disadvantages. I still focus on the order book mode. In the end, DEX should do the following things: 1. Quick completion of the transaction and prompt arrival of accounts; 2. Price and centralized exchange prices are good; 3. Low handling fees and assets are completely in its own hands, without any KYC and registration system. This is a very convenient product.
Jay：Order book model: For example, IDEX, IDEX is the first distributed intelligent contract trading platform based on ethernet, providing real-time transactions. IDEX enables users to trade continuously without waiting for processing, to process multiple transaction orders at the same time, and to cancel orders without cost. Capital pool model: Uniswap, for example, is actually a market maker to provide liquidity model, but this market maker is a mathematical algorithm. It automatically calculates the price of each transaction through a price curve according to the amount of the market-making fund pool and the amount of purchase and sale. Uniswap’s liquidity and price range depend on the size of the market-making fund pool, and the larger the size, the smaller the price fluctuation. Auction mode: DutchX is a transaction mode based on the auction mode, and determines the final transaction price through the pre-set price curve and the participation of the buyer. Compared with road print, DutchX guarantees that the transaction will be completed within a specified time, but does not guarantee the specific price of the transaction. Road print, as an order matching mode, guarantees the price, but does not guarantee a certain transaction or transaction time.
6. As DEX, the essence is to provide transaction function for assets. From the asset side, what do you think are the high-quality assets at present, and how can DEX obtain more liquidity? (For example, cross-chain assets?) From the perspective of transaction attributes, what other modes of innovation, technological innovation and imagination do you think about “trading”?
Zoe Xiong ：We get more liquidity by accessing our own R1 protocol through decentralized exchanges, and now we are building our own version of DApp. We have already cooperated with many excellent wallets and will share traffic together.
Jay：Quality assets: Bitcoin, Ethernet and other mainstream encrypted currencies, or underlying asset backed assets in the future. Cross-chain is also a direction we will study later. In addition, portfolio assets such as Set seem to be a solution right now. Currently DEX acquires liquidity: Bancor, for example, is a self-regulating protocol whose smart tokens automatically maintain liquidity. Bancor has its own internal liquidity mechanism to ensure that any ERC20 tokens are exchanged with other tokens without the need for market makers. There are several differences between Kyber Network (KNC) and Bancor. First, liquidity is provided by physical token, which is derived from fund managers, agents and token teams. As a result, Kyber has market makers and is motivated by spreads to provide liquidity for the network. Create a free market between reserve providers to generate the most attractive exchange rate. Innovative words such as the current trading model: bars trading, margin trading, futures contracts.
7. Do you think the shared liquidity of DEX is a false proposition?
Zoe Xiong ：Of course, this is feasible. The market has not yet reached the point where big fish eat small fish. It is also the direction that ONEROOT and Bithumb are working towards. The R1 protocol, which shares liquidity characteristics, is the most appropriate answer to this question. In essence, DEX is still serving for transactions, so we need to meet the liquidity needs of users. We define liquidity as the degree of convenience for quick liquidation of assets, providing users with a good sense of experience and depth. At present, the liquidity of DEX is not good, and the depth will only be more scarce if each company competes with each other for the flow cake. As a solution provider for decentralized exchanges, the solution for shared liquidity is to build a decentralized exchange ecosystem composed of digital money brokers, Relay matching layer, liquidation layer and their own communities to share all the data accessed to third-party exchanges on our protocol layer. And we also communicate with some exchanges based on 0x protocol. We are very tolerant about this.
Jay：It’s not a false proposition. User orders can be matched by multiple relays at the same time, so liquidity can be decentralized and shared.
8. what do you think is the ultimate vision of Dex and what is the biggest predicament facing it now?
Zoe Xiong ：Let everyone know what DEX is, what is the use and how to use it is our work and our goal. The biggest dilemma now is that there is no broad audience and low acceptability, and there is no match between products and people.
Jay：There are three possible directions for the development of DEX technology: one is the generalization of DEX 3.0, which provides a general scheme for the expansion of DEX. More specifically: this technology can be used not only to expand DEX, but also to expand almost all types of DApp. Direction 2: Supporting cross-chain de-centralized trading protocols. Direction 3: Relay or de-centralization of the state-of-the-world tree itself. The biggest dilemma: It is necessary to increase throughput and reduce transaction costs in order to compete with the most mainstream centralized exchanges.
9. what is missing from large-scale DeFi application? How to solve it?
Zoe Xiong ：According to DeFi. review, DeFi transactions totaled less than $1.2 billion a day, and the de-centralized lending market accounted for $1 billion a day, and its own lending was not as high as speculation. At present, DeFi mainly focuses on the Ethernet shop, and there is no new capital in the market. In the early stage of the industry, the construction of industry infrastructure is slowly and slowly, and the road is long.
Jay：DeFi is booming, but it is still in the early stage of exploration. From many dimensions, there are still a series of problems that need to be solved urgently. Otherwise, it is difficult to have enough real and effective demand to support the market. For developers and businesses, because DeFi project is built on the block chain, product development will be constrained by the technical performance of the existing block chain. For example, the development of DeFi project based on ETF will be limited by the limited throughput of ETF; for market users, there are many landing problems of DeFi products, and still face the problems of unfriendly user interface and high user access threshold. At present, DeFi applications are still at the expense of user experience in exchange for privacy, asset security and asset management freedom. At this stage, the advantages of DeFi de-centralization are not completely natural, which is similar to the early Internet e-commerce, and needs continuous improvement of infrastructure and cognition. However, with the maturity and liquidity of DeFi technology, a very low-cost, transparent and untrustworthy liquidity and lending market will soon come.
10. DeFi projects can be divided into two categories: transactions and assets. DeFi is essentially a smart contract. What about DeFi interoperability?
Zoe Xiong ：Now we all develop our own API interface according to the protocol of ETF or their public chains. The data format interface standard has not yet formed the industry standard. In the future, there will be industry integration. When there are industry standards, each company can develop its own API according to the standard. All DEX applications can call these interfaces to meet their application needs.
Imagine that if all these tools and protocols could be linked and operated, creating a huge financial center could overthrow existing banks and credit institutions step by step, and make cheaper transactions truly inclusive finance. Talking about interoperability, can we work together to develop industry standardization as a de-centralized exchange alliance?
Jay：Interoperability in DeFi is one of the most difficult challenges in block chain technology. Different block chain networks have different communities, consensus and hashing algorithms, which make standardization and collaboration difficult. However, if we can continuously improve user experience and take advantage of network effects by creating interoperable block chain solutions, we can only unlock the real value of block chains in DeFi. In an interoperable ecosystem, if another user sends you a digital asset or token from a different block chain network, you should be able to identify, identify and interact with it without mediation. Unfortunately, block chain networks are highly decentralized and disconnected. With the development of the industry, it has become an increasingly important issue, because each block chain network has a highly specialized specific function. According to a Deloitte study, “Standardization can help companies collaborate in application development, validate conceptual proofs, and share block chain solutions.” In the back end, interoperability enables enterprises and developers to effectively build applications and foundations. The growth and diffusion of these developments may lead to network effects, leading to higher growth.
11. What are the advantages and disadvantages of doing profi on Ethereum? Will ETH 2.0 solve these problems? Will DeFi have a better smart contract platform and public chain environment?
Zoe Xiong ：Traditional market money is good for finance, bad for fraud, DeFi transparency is the biggest advantage. Actually, I don’t feel that there are disadvantages in Etaifang’s DeFi products. People outside the circle can’t come in to know that there are too few users of DeFi products. It’s just the current situation. If one day Etaifang’s own capacity can’t be carried, it’s really a great progress in the industry, and then there will be a better public chain environment.
12. How big do you think DEX and the whole DeFi market are and how do you increment users?
Zoe Xiong ：At present, the main user groups of DEX can be divided into these types: 1. Self-management asset users 2. DeFi users 3. Anonymous demand users. It is mainly about DeFi, which is still in its infancy. The de-centralized lending market is the most popular DeFi application at present. The emergence of DeFi in the fully open lending market itself is a fundamental progress in the financial market. Intelligent contract technology combined with block chain can better solve the trust problem in financial transactions and serve users. While protecting the security of users’assets, more people can get real inclusive financial services from the popularization of block chain technology. So Open finance is the ultimate goal. Block chain technology is only to achieve. An important way is that good DeFi products allow participants to meet their own needs while creating greater value. If they can be combined with traditional finance, and traditional capital, they will be a big market.
Jay：Personally, I think the killer DeFi application is still a DEX with excellent user experience. This DEX must be clear, intuitive, and able to solve user experience and threshold issues.
13. what do you think the killer application of DeFi will be like?
Zoe Xiong ：Look at the strong demand for CDP in the subdivision area, such as in the securities industry. The most familiar business is securities trading, which is now operated by securities firms. But with DeFi finance, many individuals can directly participate in lending securities to earn interest.
Jay：This is the relay service to ensure stability.
Dai Shi Chao:Did you just talk about trusted computing, computing results outside the chain of trust, which refers to oracle?
Jay：Cluster services = Relay should say so. We use ZKP and then ZKP is one of the trusted computations.
Dai Shi Chao:You have just emphasized expansion and tps. Do you think the performance of DEX or public chain TPS is a big problem? Do you think the performance of DEX or public chain TPS is a big problem? Don’t pursue TPS too much. Do you agree with this statement?
Jay：TPS will never be enough. In other words, the expansion scheme of ZkSNAKRs and TPS of Road Print V3.0 are all to solve the liquidity problem of DEX. This is also a problem for all DeFi products. The higher the TPS, the greater the imagination space. Four gigabytes are enough, but five gigabytes can do more.
Dai Shi Chao:I understand that the idea is to supply first and then find demand. 0x is also doing ZKP. Have you talked about this? Or what is the difference?
Jay：Ox is a partner up or an investor in Starkware in Israel, doing zkSTARKs, which their own team has not done. We have exchanges, and then Starkware will make a Starkware DEX, which is expected to be launched by the end of the year or early next year. Friends of zkSTARKs & zkSNARKs who are interested can also learn about the concerns. We are exploring zkSNARKs on several projects such as Matter Labs. Https://matter-labs.io/They took millions of Ethereum wave grants. In fact, DAO can continue to explore anything, and we should try it from different aspects.
Shared Liquidity Protocol
Community enthusiasts:Can you talk more about the protocol of shared flow?
Zoe Xiong ：Https://rex.plus/docs/protocol is open source. We welcome anyone to build their own DEX based on our protocol.
Community enthusiasts:What do you think is the difficulty of linking all kinds of liquidity at present? What kind of methods do you have to deal with? Are token incentives considered to motivate market makers to provide liquidity? For example, market-making or mining?
Zoe Xiong ：0x is doing its own mesh liquidity sharing. We feel that directionality is definitely right. The difference between our liquidity sharing is that all data is matched on our own relay faster. When we reach a certain benchmark with existing Bithumb DEX users, external users are the biggest attraction. We are planning our own token incentive plan, but we prefer to build industry infrastructure than to build C-end users. Thank Zoe Xiong and Jay for sharing your thoughts and insights.
On DOS NETWORK
DOS Network is a scalable two-tier network that implements decentralized predictors, providing data up-link services and computing power for mainstream block chains. It links the intelligent contract of block chain with real-world data and events, and provides verifiable computing power for block chain, so that more application scenarios can be implemented in block chain. It can support various mainstream block chains, such as Ethereum, EOS, TRON, ThunderCore, Ultrain, QuarkChain, etc.
Join DOS community or have problems, please add little sister dosnetwork001.
Official website: https://dos.network
Chinese telegraph group: https://t.me/dosnetwork_cn
English Telegraph Cluster: https://t.me/dosnetwork_en