Traditional decentralized exchanges (DEX) require a healthy pool of liquidity to trade.
Liquidity pools must be filled by liquidity providers.
This can be done by anyone willing to provide the tokens needed for a specific trading pair, but providing liquidity carries the risk of (un)permanent loss.
In order to attract liquidity providers, an incentive must be created. Liquidity providers earn a portion of trading fees, but for this to be an attractive incentive, trading volume must be high (low trading volume means liquidity providers need to earn low fees).
When liquidity is low, traders cannot make large volume and high-value trades, which means that liquidity usually has to be healthy first before large numbers of traders start using a DEX.
To attract initial liquidity, liquidity providers can often generate additional revenue by farming liquidity tokens.
Plenty DEX was recently launched their new version, which added bribes as an added incentive.
Although many different DEXs and designs have varying levels of success in achieving liquidity, creating and maintaining liquidity pools remains a challenge.
To get around this problem, the latest Tezos-based DEX “Batcher” took a different approach. Batcher is designed without the need for liquidity pools.
batcher creates a batch every ten minutes in which all trades are bundled and matched and executed if possible.
“Users can deposit tokens during a deposit window; All deposits made during this window form the “Batch”. Once the deposit window is over, the “batch” is “closed”.
The batch will remain closed until Batcher receives an oracle price for the specified pair.
Receiving the oracle price triggers the clearing of the orders and the results of the swaps are stored in the stocks and can be paid back to the user’s wallet.”
The downside of the design is that you need a counterparty (or multiple counterparties since trades are stacked) for each trade, which is not required for a DEX that uses liquidity pools.
Batcher allows trades in $tzBTC to $USDT/$EURL and vice versa, these token pairs are designed to be composed with Sirius DEX: tez -(Sirius DEX)-> tzBTC -(Batcher)-> USDT/EURL .
Watch the tutorial video explaining how to place an exchange order and redeem holdings.
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