Market Making
đźź Status: Vision
This page outlines a conceptual feature under development. It describes the market making mechanisms planned for the 0Fx ecosystem and their integration with the protocol’s internal liquidity structure.
Market Making
An Inclusive Liquidity Infrastructure for a Fairer Ecosystem
Market making in the 0Fx ecosystem is designed as a foundational mechanism to ensure liquidity, efficiency, and accessibility across all token markets. Unlike traditional DEXs relying on bilateral liquidity pools (e.g., 50/50 token pairs), the 0Fx protocol introduces a model based on single-token liquidity pools, unlocking market participation without requiring upfront total value locked (TVL).
Strategic Design of Token Markets
Ethereum-Based Collateralization
The 0Fx token and ecosystem tokens are collateralized through wstETH (Wrapped Staked ETH), an Ethereum staking derivative issued by Lido Finance. This enables holders to benefit from:
Ethereum price performance
Compounded staking yields
Full DeFi compatibility and deep liquidity
This architecture allows token markets to operate with yield-bearing collateral while enabling arbitrage and value routing through 0Fx-native liquidity systems.
Market Making Mechanics
Fixed Launch Price
Each token enters the ecosystem at a predefined launch price. No prior liquidity is required. Initial tokens are directly added to a dedicated single-token pool, allowing for price discovery to be driven by market activity rather than seed liquidity.
Dynamic Liquidity Injection
Liquidity is organically generated: when users buy tokens, the capital injected automatically builds the pool. There’s no requirement for external LPs or large holders to “seed” a pool.
Flexible Pool Structuring
Using advanced AMM models like Uniswap v3, the 0Fx protocol configures:
Unilateral pools: liquidity concentrated around strategic price bands
Custom depth: tailored exposure according to expected volatility
Efficient rebalancing: reducing impermanent loss risk and enhancing capital efficiency
Fee Collection and Redistribution
On-Chain Transaction Fees
The protocol collects fees from all trades involving 0Fx and ecosystem tokens. This includes swaps, rebalancing events, and market movement within internal AMMs.
Redistribution to Holders
After protocol operations and development costs, 100% of net trading fees are redistributed to token holders. Each token captures the value it generates:
0Fx token collects fees from its own markets
dApp tokens collect fees from their own usage
This redistribution is automated, transparent, and traceable on-chain.
Internal Arbitrage Exploitation
The protocol actively performs arbitrage between internal markets (before external markets capture those spreads), ensuring:
Better price discovery
Fee retention within the ecosystem
Additional revenue for redistribution
This gives smaller holders access to value creation typically monopolized by institutional bots and private exchanges.
Breaking the Centralized Exchange Paradigm
Traditional exchanges capture massive value from liquidity—often up to 20% of ecosystem volume—with no redistribution to users. By contrast, the 0Fx protocol:
Eliminates rent-extraction from middlemen
Enables user-owned liquidity
Automates fair redistribution of exchange-generated value
This model transforms each user into a stakeholder of the trading infrastructure—not just a passive trader.
Conclusion
The 0Fx market making system redefines how liquidity is created, traded, and rewarded. By leveraging single-token pools, dynamic pricing, and automated redistribution, the protocol ensures that every trade strengthens the ecosystem and rewards the community.
This is not just a technical improvement. It's a structural evolution toward user-owned market infrastructure—designed for scale, fairness, and decentralization.
Last updated