Conversation with COSOSWAP: How cross-chain DEX aggregators can unlock liquidity potential
As applications on the public chain network grow, the variety of Tokens representing governing interests is increasing, the variety and number of DEXs (decentralized trading applications using an automated market maker model), the venue for circulation and trading, is growing, while the track continues to enhance the user experience with version iterations and new products.
DEX represents innovation in cryptocurrency trading, and just last year the activity of these decentralized, non-custodial platforms dwarfed that of CEX, but since then DEX has caught up and within months surpassed the volume of centralized services trading, giving users better control over their assets and new types of transactions. The CEXs that continue to grow appear to be those exchanges that offer the widest variety of assets, which makes them attractive to the most active traders.
This includes the familiar Uniswap, SushiSwap, and Bancor, but also DEX Curve, which deals with trading stable assets, LBP (Dutch-style) auction platform Balancer, and others. To be fair, either one of them is an innovation in the industry and a pick-up of the traditional economy. Regardless of the evolution and subdivision of functions, the DEXs in the chain have adopted the model of automatic market makers (AMM), where users provide various Token trading combinations to inject assets into the liquidity pool for exchange users, and users who provide liquidity are rewarded with native Tokens from the application, which is called "liquidity gain farming".
"The first of these is the use of AMA, which causes high slippage in player transactions, high wear and tear costs for user redemptions, and unfair market phenomena of pre-emptive trading due to the emergence of professional traders using bots. The second is the liquidity fragmentation, even the same asset in different DEX appears a large price difference, users want to get the best price, need to constantly switch DEX, increasing the operation steps, but also wasted on-chain Gas fee, and the cryptocurrency market changes too much, liquidity providers most of the time can not always pay attention to the price range of LP and adjust, but lead to the occurrence of unpredictable losses. Even the high volatility of new assets can cause the situation of "losing money if you don't sell in time". This is one of the reasons why Uniswap V3 has not yet surpassed Curve. To address this problem, COSOSWAP's three models address the following pain points.
1.COSOSWAP: solves the liquidity problem of stable coins and anchored assets in the Uniswap V3 interval.
2. COSOSWAP: solves the problem of low returns for liquidity providers in Uniswap V 3 by allowing users to provide liquidity with a dynamic price range.
3. COSOSWAP: Maximizes the reduction of impermanent losses by opening Liquidity Mining with half of the LP token (e.g. USDT) and depositing the other half (project token iZi) into COSOSWAPLiquidBox for pledging.
The current new version of COSOSWAP is able to protect liquidity and with this feature the liquidity within the protocol is rapidly increasing, but it is still not able to expand its market share. Therefore, the team will continue to focus on solving the impermanent loss as a starting point, while further expanding the liquidity to make the protocol better positioned in the DEX space.
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