Dexvers

Blockchains have been revolutionary in democratizing the ownership and transfer of assets across open financial networks without the need for a trusted third party to process transactions. Blockchains, by design, are decentralized so there is no single point of attack or failure. This decentralization helps ensure information remains safe in millions of devices on the blockchain network and that no one actor has complete control over transactions, and prevents censorship. Decentralized finance (DeFi) is a foremost development in the blockchain industry and a term used to describe the cluster of applications offering decentralized financial services. DeFi, contrasted with traditional centralized financial services, operates without centralized intermediaries (i.e. cryptocurrency exchanges, traditional Wall Street securities exchanges); financial transactions can take place directly between users. Such peer-to-peer (p2p) transactions are mediated utilizing trustless transparent protocols known as open-source smart contracts (smart contracts); automatically enforced rules embedded in blocks along the blockchain and built/maintained by a community of developers. In turn, smart contracts enabled the creation of p2p marketplaces where digital assets move in a secure and frictionless environment. While smart contracts mediate p2p transactions, traditional financial services use cases (e.g. stablecoins issuance, lending/borrowing, trading, peer-to-peer payments, portfolio management, etc.) are transacted on the blockchain via Decentralized Applications (DApps) or protocols. These developments in, and increased use of, DeFi ecosystems have resulted in significant interest in Decentralized Exchanges (DEX) to transact across various blockchains. DEXs replace centralized exchange order matching systems and order books by incorporating Automated Market Maker protocols (AMM) to define the price of digital assets and provide liquidity on a blockchain. Compared to centralized exchanges (CEX), DEXs remain closer to DeFi intentions and have a devout following due to trustless p2p transactions on the blockchain. DEXs incorporating innovative AMM solutions (AMDEX) are better able to increase widespread adoption via greater liquidity and accessibility. AMDEXs employ incentives and algorithms to increase exchange efficiencies via liquidity pools and a purely mathematical approach to pricing. As an asset reserve, a liquidity pool promotes stability and attractiveness to users by fulfilling a liquidity reserve of crypto assets that users can trade against. Such trades have asset pricing pegged to mathematical formulas rather than transactional agreements. The main components of AMDEXs include actors, assets, dynamics, and economics.