Editor's Note: This article comes fromDecentralized financial community (ID: China_DeFi), reprinted by Odaily with authorization.

Editor's Note: This article comes from

Decentralized financial community (ID: China_DeFi)

, reprinted by Odaily with authorization.

summary

Kwenta currently supports trading in three different categories of derivative products, including cryptocurrencies, foreign exchange, and commodities such as gold and silver. Due to the way the protocol works, Kwenta's automatic transactions must be carried out between Synthetix derivative products (called "Synths"), which increases the transaction process and at the same time, due to the complexity of the Synthetix protocol, Kwenta's Gas is somewhat high. It will take time for Kwenta to become a mainstream solution.

• Synthetix proposes the concept of synthetic assets, which is a very interesting DeFi protocol. If you look at the Twitter of the founder of Synthetix, you will find that he is a person with high quality of thinking. On November 19, he released the Kwenta decentralized derivatives exchange based on Synthetix, which solved a common slippage in DEX. Question, this has measurable value for both "large-value transactions" and "high-frequency small-value transactions" that occupy most of the trading market.

• If we refer to the development status of traditional finance and the centralized digital currency trading market, it is almost inevitable that the transaction volume of decentralized derivatives will exceed the volume of spot transactions. However, according to history, when the market is in a downward channel in the cycle, the trading volume of derivatives is more likely to surge, so Kwenta may be a longer-term project. But on the whole, given that the current spot DEX market is already mature with fierce competition, I personally would like to participate in projects like Kwenta, and I will also think of the possibility of combining this with UBI.city.

• summary

• Kwenta is a decentralized derivatives exchange with unlimited liquidity based on the Synthetix protocol.

Trading Comparison of ETH and BTC on Uniswap and Kwenta

The results show that Kwenta can save users money even for transactions as small as 1 ETH or 1 BTC.

The advantages of Kwenta become more pronounced at larger transaction sizes, saving thousands to hundreds of thousands of dollars.

Over time, these savings have a significant impact on the performance of a portfolio, large or small.

Kwenta has a unique feature: it has unlimited liquidity.

As a result of having unlimited liquidity, there is 0% slippage on all Synth-to-Synth trades. When trading on Kwenta, the conventional rules of the traditional order book model and automatic market maker model (AMM) can be completely bypassed. Even if the trading volume is too large, it will buy the available liquidity from the initial trading price, thereby pulling prices, and then be forced to incur higher costs for the remainder of the transaction.

On Uniswap, the most popular DEX, the slippage varies for each token, depending on the amount of funds provided by the liquidity provider. Popular tokens have less slippage for small transactions, but will have significant slippage for larger transaction sizes. The following is an example of LINK/DAI on Uniswap. Taking 10,000 LINK to trade DAI as an example, more than 1% of the transaction value will be lost due to slippage.

Kwenta solves this problem by using the Synthetix protocol.

With Synthetix, users can leverage a peer-to-peer contract transaction model. In this case, the contract is a pool of Synthetix debt backing the value of the synthetic asset (Synth). The price per Synth is determined by the decentralized Chainlink oracle network. As the Synth price fluctuates, Synthetix's debt will be the counterparty's gain or loss, providing a reliable method of trading that has no impact on the underlying market that the Synth represents. Once a synthetic asset is created, it can be directly exchanged for any other synthetic asset at the market price 1v1. The slippage for a single sBTC transaction is the same as for a 100 sBTC transaction, 0.00%.

Therefore, compared with mainstream exchanges, Kwenta and other services built on the Synthetix protocol can save a lot of transaction costs. To illustrate how much money users can save by using Kwenta, a simple experiment was conducted.

In this experiment, we compared similar transactions on Uniswap and Kwenta and analyzed the results.

Experiment 1: Uniswap's ETH/DAI and Kwenta's sETH/sUSD

Experiment 2: Uniswap's WBTC/DAI and Kwenta's sBTC/sUSD

Explanation of the experimental results:

At first, it seemed to favor large traders. A 1000 ETH transaction saved $7000.10 on Kwenta, and a 100 BTC transaction saved $28,767.32 on Kwenta. For large traders, not trading with Kwenta seems like a huge loss.

Smaller traders also save less, but there are still advantages to using Kwenta. Even trading 1 ETH, Kwenta saves $6.30. For 1 BTC, Kwenta was able to save $113.77. Although these savings are small compared to whale traders, the advantages of using Kwenta are clear. Typically, traders with smaller volumes trade more frequently than whales.

What if, say, both small and large traders would use Kwenta for a period of a week and a year, with smaller traders more actively managing their portfolios?

Experiment 4: BTC continues to be traded on Kwenta

Fee Description

savings

in conclusion

The graph below shows the amount saved for the 1 BTC trader in the graph above over the course of a year. That would save the BTC trader nearly $60,000 by the end of the year.

Uniswap and Kwenta charge the same 0.3% for BTC and ETH trades.

use

in conclusion

Kwenta, and other Synthetix-based projects, can have huge advantages in cost savings. Even small traders can save a lot of money. In a large number of transactions, Kwenta's transaction yield will increase significantly as the transaction size increases.https://t.me/joinchat/HQDhVUtxiKarZsswu43ZKw。

With the launch of Kwenta's advanced charts, futures, limit orders, etc., Kwenta may soon become the most competitive project in the entire market and bring stronger trading capabilities to professional traders and new traders .https://twitter.com/kwenta_io。