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Decentralized Finance is growing exponentially with the equivalent increase in Total Value Locked in DeFi protocols. Despite the fact that the DeFi ecosystem is growing, there are persistent issues with the ecosystem, such as front-running, miner extractable value and failed transactions. Since the birth of Decentralized Finance, front-running, high gas prices and slippage are significant concerns that have never been entirely resolved.
The Hybrid liquidity design of IDEX can protect its users from all these issues of DEXs and generate higher yields for liquidity providers.
Most of the decentralized exchanges can be classified into two categories, Automated Market Maker and Orderbook-based. Automated Market Maker DEXs use a simple mathematical formula to price the assets, and these are organized into liquidity pools. On the other hand, Orderbook-based DEXs operate an order book where the traders can ask for the price of the assets.
There are a few shortcomings of AMM DEXs, such as limited order control, gas wars and failed trades, while the Orderbook-based DEXs typically offer limited liquidity and are often slow.
Hybrid decentralized exchanges aim to resolve the shortcomings of the existing decentralized exchanges by leveraging a trading engine that matches the trades using the best possible combination of Automated Market Maker and limit orders.
The IDEX v3 hybrid liquidity DEX combines the Automated Market Maker and order book liquidity pools and hence protects the users from the issues faced by AMM based models. It executes the trades instantly with the best combination of pooled liquidity and limit orders.
The IDEX v3 was launched on Polygon, and the reason behind its launch on Polygon is said to be the avoidance of high gas fees on transactions. Polygon is the Layer 2 scalability solution, and the transactions of Polygon are much cheaper compared to the Layer 1 solutions on Ethereum. The aim of IDEX v3 is to provide the users with an ideal trading environment with low slippage and high throughput.
The platform utilizes an advanced mapping system to quantize the AMM curve into discrete orders. These discrete orders sit on the book along with the traditional limit orders. The trading engine matches automatically against the best combination of pooled liquidity and limit orders as soon as a new order is submitted, thus ensuring the lowest cost execution.
The platform is pretty powerful and can benefit both the traders and the liquidity providers.
It provides better pricing, advanced order types, instant trade execution to the traders, complete freedom, strong incentives, and higher LP APY for liquidity providers.
Not only this, the platform has many exciting launch incentives to offer, which are available for providing liquidity and for trading.
The Decentralized exchanges based on Automated Market makers are growing, and the launch of the Hybrid Liquidity Model by IDEX is an innovation in the field. The Hybrid liquidity DEX, IDEX v3, attempts to solve the issues such as high gas fees, high slippage and failed transaction along with maintaining the non-custodial nature.
In a nutshell, this launch by IDEX will provide its users with an experience similar to that of centralized exchanges, with maintaining the platform non-custodial.