Market Making
An Inclusive Approach - In the dynamic landscape of the 0Fx ecosystem, market making is a pivotal component ensuring the fluidity and efficiency of internal markets. Unlike traditional decentralized exchanges (DEX) that rely on 50/50 liquidity pools, our approach involves the use of single-token liquidity pools, revolutionizing how markets are introduced and sustained within our ecosystem.
Unique Exchange Pairs
The token of the 0FX protocol is itself based on a derivative version of Ethereum, the Wrapped Liquid Restaking Ethereum Token (weETH) from the EtherFi protocol. This strategic positioning allows users within the ecosystem to benefit from the performance of Ethereum, including revenue from the stacking of the Ethereum Proof-of-Stake network, as well as points awarded by the EtherFi and EigenLayer protocols through the restacking of this position. These advantages are independent of facilitating token listings within the ecosystem and are made possible by single-token liquidity pools, which eliminate the need for Total Value Locked (TVL) for listings.
Mechanics of Market Making
Token Launch Price Fixation
The introduction of new tokens within our ecosystem follows a unique mechanism. Token prices are initially fixed based on the launch price, and only tokens from decentralized applications (dApps) are added to these liquidity pools. This approach enables market creation without the need for pre-existing total value locked (TVL) in liquidity pools.
Fees and Redistributions
Fees from Internal Ecosystem Trade: The 0Fx Protocol captures daily trading fees from on-chain transactions. These fees are collected from all trades within the ecosystem’s token markets.
Redistribution of Fees: 100% of the fees collected from on-chain transactions on the 0Fx token and tokens within its ecosystem, except for the portion used by the protocol itself for development, are entirely redistributed to the community. This fee structure enables the 0Fx protocol to exploit arbitrage opportunities between different exchange points of the 0Fx token and tokens within its ecosystem on behalf of protocol users even before they become available to external actors. This operational model represents a significant advancement in the benefits afforded to users of decentralized solutions, where small holders or investors typically do not have access to arbitrage opportunities, which are often monopolized by established market actors with significant technical and financial resources, along with transaction fees collected by exchanges, allowing them to capture increasingly larger portions of the overall market over time.
A Paradigm Shift in Crypto Exchanges
Traditional players in crypto exchanges often absorb a significant portion of the market — estimated to be nearly 20% — by privately benefiting from exchange fees without any redistribution. By adopting such solutions, we inadvertently contribute to the gradual loss of an ecosystem that should rightfully belong to its users, instead falling into the hands of centralized institutions.
In contrast, the 0Fx ecosystem champions a paradigm shift by redistributing exchange fees to users by the 0Fx token or by dApp tokens, fostering an environment where benefits are collectively shared. Through this inclusive approach, we empower users to be true stakeholders in the ecosystem's growth, ensuring a fair and sustainable decentralized future.
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