We are proud to share with our community we have launched the AllianceBlock DEX on Energy Web Chain’s Mainnet! You can check it out here.
We have felt the excitement from our community (and internally) as we have quietly built towards this moment of implementing the first phase of the staged launch of our decentralized exchange. The DEX is powered by a brand-new take on an automated market maker introduced by our team of researchers and built by our developers.
We recently shared our plans for the 100M ALBT Incentivization Program with Bonq, and we thank our community for giving initial feedback when we first discussed the proposal. With our launch, we are inviting our community to check out the DEX, take it for a spin, and let us know what you think!
In this article, we will discuss what sets the DEX apart, how it expands AllianceBlock’s end-to-end DeFi infrastructure and our launch on Energy Web Chain. In the next article, you will find all the details about the staged launch that will take place over the next few months.
Following our release of the whitepaper in November and the launch on the Testnets of Energy Web Chain (Volta) and Polygon (Mumbai), we have launched on Energy Web Chain’s Mainnet as the first layer one blockchain to support the DEX officially.
Our main goal for the first phase of the launch is to drive volume and liquidity on the DEX. This would allow a reduction of the weight in the pools, reduce impermanent loss further, and optimize for slippage.
However, as this is the first phase of our staged launch, you may encounter the occasional bug or error. Please report them via our renewed bug bounty program in return for rewards! We will share more details about the previous bug bounty on Testnet and how to participate in the new one on Mainnet in a separate article.
What sets the AllianceBlock DEX apart
AllianceBlock’s mission is to provide a DeFi end-to-end infrastructure to empower individuals, projects and businesses to accelerate their growth. We have shaped our solutions from the challenges we encountered as a blockchain project to fulfill this mission.
DeFi Terminal, our liquidity mining and single-sided staking solution, was built to make it easy to launch campaigns on multiple DEXes and networks. This multi-chain strategy was successful for us, and it led to the creation of our Bridge to access and support more networks. As our clients grew and we added support for more chains, we saw the challenge of impermanent loss for liquidity providers as they participated in liquidity mining campaigns.
This risk associated with IL and the lack of a compliant solution hamper the adoption of decentralized technologies and make DeFi unattractive for retail and institutional investors alike. Moreover, trading and execution are essential parts of any financial system.
What makes the DEX a key pillar of our infrastructure is that it will enable execution while providing a new and innovative AMM that we envision will drive innovation in the space. It makes it easy for projects and developers to get started and retail users to access a wide range of opportunities.
So what sets our DEX apart?
Reducing impermanent loss
Token liquidity on decentralized exchanges is a lifeline for blockchain projects and businesses. Liquidity is supplied through liquidity pools, where users can lend their assets and lock them in the pool. These assets can then be used for other functions in the exchange, such as trading. Token holders can provide liquidity by locking tokens (often in pairs), and they can earn yields in proportion to how much they have provided to the pool.
In current decentralized exchange models, liquidity providers are exposed to the risk of impermanent loss (IL). Impermanent loss describes the risk of acting as a liquidity provider to a pool compared to simply holding your assets. IL occurs due to diverging prices of the assets provided as liquidity. In cases of significant IL, you may have fewer tokens when you withdraw than when you added liquidity to the pool, which means an actual permanent loss in funds. Dealing with the risks of impermanent loss is a major issue for liquidity providers and hampers the DeFi ecosystem’s wider adoption.
Using a new mathematical model developed in-house, our automated market maker works to reduce impermanent loss. It takes a physics-inspired coupling approach to tether two AMMs together to balance liquidity pools and reduce the IL’s impact when prices of the token pairs diverge.
This mechanism helps to better protect liquidity providers from IL and potential losses if they need to exit the pool at any given time. The decrease in financial risk makes it more attractive for providers to provide deeper liquidity over longer terms. Creating an attractive, less risky environment is essential to draw liquidity into DeFi from companies within traditional financial markets that might otherwise find liquidity provision too volatile.
Institutional support through compliance
With the global cryptocurrency market cap reaching as high as US$ 2.9T in 2021, institutions are showing a substantial interest in participating in decentralized financial markets. While more and more institutions are offering cryptocurrency-related services as part of their services, there is still an untapped market for an integrated decentralized exchange that could also provide non-custodial access to compliant pools.
Compliance is essential for traditional institutions to operate with integrity and build trust with their partners and customers. Part of this is adhering to existing regulations and laws and setting up internal policies and frameworks that allow them to operate legally. Know Your Customer (KYC) and Anti-Money Laundering (AML) checks have been necessary for their operations. Current exchange solutions have restricted access to compliant pools via strict KYC procedures and custodial wallet solutions.
We are envisioning the DEX in the future to be a gateway to bringing in liquidity from institutions, and the first step to promoting adoption is to be able to provide a compliant solution. With the integration of our compliance layer in the later phases of the DEX staged launch, we will be able to support compliant pools.
True to our roots in DeFi, our approach to developing our compliance solution is to enable user verification and make sure they own their data. Users must control what information, how much, and whom they share it with. The future integration of the AllianceBlock Trustless IDentity Verification (TIDV) solution will allow users to go through the KYC process and have the option of participating in compliant pools on our DEX.
Our compliance layer will benefit both traditional institutions and DeFi users. Adding support for compliant pools mitigates the risk for traditional institutions that require strict compliance measures and promotes wider institutional adoption of DeFi technologies. DeFi users would have the option to undergo the KYC process and only share their data when needed, which is essential to participating in compliant pools. And even then, users will still be able to use the DEX and provide liquidity to other pools, even if they are not verified.
Privacy in mind for users and traders
When we deploy our compliance layer on the DEX in the later parts of our staged launch, it will support three categories of pools to be listed on the platform, depending on the KYC requirements and levels. The first category is full institutional pools requiring the strictest KYC and identity verification. The second is whitelisted pools that accept both institutional and regular retail users. The third is permissionless pools, typical ones we usually see on decentralized exchanges.
For users and traders, participation in compliant pools is optional. Once KYC’ed, you will always have the option to share only relevant information for providing liquidity. Alternatively, you can still participate in pools that do not have any additional requirements save for access to your chosen assets and wallet logins. You are entirely in control of what data you share, even having undergone KYC through TIDV.
These features will make the DEX an integrated gateway for access to pools ranging from fully-compliant pools important to traditional institutions to permissionless pools that have been the backbone of blockchain projects and businesses. The flexibility of compliant and permissionless pools will promote wider adoption by the traditional financial industry and empower blockchain projects and businesses starting at the early stages of their development. All while granting you access to all of these opportunities on an integrated platform that lets you control the data you share and ensure that your privacy is a priority.
Expanding AllianceBlock’s End-to-End Infrastructure
We’ve already mentioned how vital the DEX is to complete the foundational blocks of our end-to-end DeFi infrastructure for projects and retail users. We are in a pivotal time to launch the DEX to kickstart adoption. More importantly, to work in tandem and complement the solutions we’ve already launched and will be launching in the future.
For projects, their journey starts with their token generation. They can list on Fundrs, raise capital through private or public sales, or utilize a milestone-based financing mechanism. Once launched, they can list their tokens on the DEX to increase liquidity by offering liquidity pools and allowing retail users to swap their tokens with a reduced IL risk. They can also launch liquidity mining and single-sided staking campaigns, and much more, through the DeFi Terminal to offer more rewards and grow their communities. And through the Bridge, they can support multiple networks even at launch and take advantage of a multi-chain approach to cater to retail users across all supported networks.
For retail users, their journey starts with their assets. They can trade or swap on the DEX or take advantage of reduced IL risk when they provide liquidity on listed pools. They can then earn more rewards and show support for projects utilizing the DeFi Terminal by participating in liquidity mining or single-sided staking campaigns. They can also check out the startups launching on Fundrs and be early adopters and supporters of the projects listed there, offering guidance, support and feedback. And through the Bridge, their assets can be ported across all supported networks, diversifying their strategy and enabling them to access more chains.
ALBT is at the heart of the AllianceBlock ecosystem. And as we built these solutions with our protocols and technology stack, ALBT is utilized every step of the way. ALBT powers all of the transactions between them — directly or indirectly.
These are just a few of the potential journeys that projects and retail users can experience by participating in the AllianceBlock ecosystem. We will see increased integration between our solutions as we progress through developing and deploying the building blocks of our infrastructure. Strengthening the relationship between different parts of the ecosystem will further empower projects and retail users, incentivizing adoption in traditional and decentralized financial industries and creating more utility for ALBT.
Launching on Energy Web Chain
The deployment of the DEX on Energy Web Chain (EWC)’s Mainnet is the first phase of our staged launch. This makes EWC the first layer one blockchain solution to support the DEX officially.
Our partnership with Energy Web has steadily grown and expanded since we first announced support of EWC in the Bridge. The EWC community then adopted the Bridge as its preferred bridge solution across multiple chains. With the launch of the DEX, we are further solidifying our mutual commitment to provide decentralized infrastructures to incentivize adoption and growth in the DeFi and energy grid industries.
The launch on EWC is a strategic move for AllianceBlock for multiple reasons:
- EWC is a fast and inexpensive EVM-compatible blockchain. Launching there allows us to have cheaper gas fees for the complex calculations that our AMM algorithm performs.
- There is currently no reputable, professional DEX on EWC. We take advantage of this untapped potential to drive adoption from their strong community and ecosystem of institutional and energy partners.
- EWC is enterprise-focused. It is already home to a number of enterprise-run blockchain projects, such as Crowdfund for Solar, which leverages DeFi to accelerate clean and affordable energy access for all in Sub-Saharan Africa.
- EWC’s validators are reputable companies that utilize and hold large amounts of EWT. The DEX would offer their validators a reputable DEX for their transactions and a compliant DEX once we deploy our compliance layer.
AllianceBlock and Energy Web are also the first partners of Bonq. This decentralized, non-custodial, over-collateralized lending protocol allows users to borrow against their digital assets at ZERO recurring cost and at least a 120% collateral ratio.
We are utilizing Bonq to power the DEX Incentivization Program to keep the 100M ALBT locked and never released into circulation while providing a stablecoin as a reward to incentivize the use of the DEX. This program considers critical feedback our community has shared in releasing a large amount of tokens into circulation, especially with the current market conditions. You can read more about this here.
We will also integrate Bonq with more of our solutions in the future, such as our upcoming Single-Sided Liquidity Provisioning (SSLP) Protocol. We will share more in the coming months.
Launching on EWC will allow us to kickstart this process of validating and building the DEX further. And as we progress and adoption increases, we can better support projects at multiple lifecycle stages as they steadily build out their solutions.
Next Up: Staged Launch and Short-term Roadmap
With the launch of the DEX, we hope that we are able to make clear our vision of how it will play a part in our end-to-end DeFi ecosystem. We are not just introducing a new entrant into the space, but we are setting the path to push the industry forward and further.
We thank our community for being with us throughout this journey, and we are excited to get started on our staged launch, beginning with the deployment on EWC’s Mainnet.
You can check out the DEX now, and share your feedback in the upcoming Mainnet Bug Bounty. We’ll be sharing more news about that in the next few days, so stay tuned.
In the next article, we will cover all details regarding our staged launch and short-term roadmap of features. We encourage everyone to be part of our development process and send in your questions and feedback on our community channels and tag them with #AllianceBlockDEX.
Stay tuned for more announcements about events and AMAs regarding our launch, and we hope to see you on Telegram and Twitter!
About AllianceBlock
AllianceBlock is bridging the gap between decentralized finance and traditional finance, by remedying issues that exist in both spheres and linking them more closely together. They see the future of finance as an integrated system in which the best of both worlds can work together to increase capital flows and technological innovation.
Building this future by bridging traditional finance with compliant, data-driven access to new decentralized markets, DeFi projects and ecosystem-scaling tools such as funding and interoperability. As such, they are building a next-generation financial infrastructure that aims to provide regulated financial entities around the world with the tools they need to seamlessly access the DeFi space.
You can also find us on:
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