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RXDex
Building a Capital-Efficient AMM for Synthetic Assets
Project Overview
Transforming vision into reality
Client Information
Organization
REAX
Website
reax.proProject Timeline
Start Date
October 2023
Completion
September 2024
Duration
11 months
Project Overview
A comprehensive case study detailing ChainScore Labs' development of RXDex, an innovative Automated Market Maker (AMM) protocol designed specifically for synthetic assets on the REAX ecosystem. We engineered a flexible platform with capital-efficient liquidity pools, offering minimal slippage and reduced impermanent loss compared to traditional DEXs. The protocol features stable and variable pools, single-sided liquidity provision, veREAX yield incentives, and advanced risk management systems to ensure optimal trading and liquidity experiences while maximizing capital efficiency.
INTRODUCTION
Reimagining AMMs for Synthetic Assets
Traditional Automated Market Makers (AMMs) face significant challenges when applied to synthetic assets, including capital inefficiency, high slippage, and substantial impermanent loss. RXDex was conceived to address these limitations by creating a specialized AMM protocol designed specifically for the unique properties of synthetic assets in the REAX ecosystem. This case study details how ChainScore Labs engineered a flexible, capital-efficient liquidity protocol that optimizes the trading and liquidity provision experience for synthetic assets. By implementing custom pool designs with specialized mathematics and incentive structures, we've created an ecosystem where users can trade with minimal slippage and provide liquidity with reduced impermanent loss risk, all while maintaining the composability that makes DeFi powerful.
POOL-ARCHITECTURE
Specialized Pool Architecture
RXDex features a multi-pool architecture with specialized designs for different asset classes and trading requirements. Each pool type implements custom mathematics and parameters to optimize for specific trading scenarios and user needs.
- Stableswap Pools: Engineered specialized pools for stable synthetic assets that use curve-based mathematics to provide deep liquidity near the peg while minimizing slippage for large trades between assets of similar value.
- Variable Pools: Implemented traditional constant product pools with enhanced features for volatile synthetic assets, optimized to balance trading efficiency with acceptable impermanent loss levels.
- Weighted Pools: Designed flexible weighted pools that allow custom token ratios, enabling optimized exposure to synthetic assets based on market demand and strategic requirements.
- Hybrid Pool Innovations: Created innovative hybrid pool designs that combine elements of multiple pool types to address specific trading needs across the synthetic asset ecosystem.
4+
Pool Types
Specialized for different assets
Customizable
Pool Parameters
Per pool type requirements
Optimized
Trading Efficiency
For synthetic assets
RXDex Pool Selection Interface
LIQUIDITY-PROVISION
Flexible Liquidity Provision
RXDex revolutionizes the liquidity provision experience by offering multiple options designed to accommodate different user preferences and risk profiles. These flexible entry points make it easier for users to participate in liquidity pools without the traditional complexity.
- Single-Sided Liquidity: Implemented innovative mechanisms allowing users to provide liquidity using just one token in the pool, automatically balancing the position internally to reduce friction and lower barriers to entry.
- Multi-Asset Deposits: Supported traditional balanced deposits of multiple assets, optimized to reduce slippage during the deposit process and maintain pool stability during large liquidity events.
- Dynamic Deposit Routing: Created intelligent routing that analyzes deposit composition and pool conditions to minimize slippage and optimize the deposit path for maximum capital efficiency.
- Position Management Tools: Developed comprehensive tools for monitoring and managing liquidity positions, giving users clear visibility into performance metrics and simplified rebalancing options.
Multiple
Deposit Methods
For different user needs
Minimized
Entry Friction
Through single-sided options
Comprehensive
Position Metrics
For informed decisions
RXDex Liquidity Deposit Interface
VETOKEN-INCENTIVES
veREAX Yield Incentives
Aligning Long-term Participation
RXDex implements an innovative yield incentive system centered around the veREAX token, designed to reward long-term liquidity providers and align incentives across the ecosystem. This mechanism creates sustainable liquidity while giving participants governance rights.
- LP Token Staking: Engineered a staking mechanism for liquidity provider tokens that unlocks additional yield through protocol fees and emissions, encouraging users to maintain their positions for longer periods.
- Vote-Escrow Model: Implemented a vote-escrow system where users can lock REAX tokens for veREAX, gaining boosted yields, governance rights, and fee sharing proportional to their lock duration and amount.
- Yield Boosting: Designed dynamic yield boosting that amplifies returns based on veREAX holdings, creating a flywheel effect that rewards the most committed ecosystem participants.
- Gauge System: Created a flexible gauge system allowing veREAX holders to direct emissions to different pools, enabling community-driven incentive allocation based on perceived importance and utility.
- Fee Distribution: Implemented transparent fee distribution where a portion of trading fees is directed to veREAX holders, creating sustainable passive income for long-term participants.
RXDex LP Staking Interface
Multiple
Yield Sources
Trading fees, emissions, boosts
Flexible
Lock Duration
Up to 4 years
Up to 2.5x
Boost Potential
For maximum commitment
TRADING-EXPERIENCE
Optimized Trading Experience
RXDex delivers a superior trading experience optimized for synthetic assets, with a focus on minimizing slippage, providing accurate price information, and enabling efficient execution of both small and large trades.
- Smart Order Routing: Implemented intelligent routing algorithms that analyze multiple pools and paths to find the most efficient execution route for trades, minimizing slippage and maximizing output.
- Flash Swap Integration: Engineered flash swap capabilities that enable advanced trading strategies and arbitrage opportunities without requiring upfront capital, increasing overall market efficiency.
- Price Impact Visualization: Developed clear price impact indicators that give traders transparent information about the expected slippage for their trades, enabling informed decisions about trade sizing and timing.
- MEV Protection: Implemented mechanisms to protect traders from maximal extractable value (MEV) attacks, reducing the risk of sandwich attacks and other harmful front-running practices.
Optimal
Route Options
For minimal slippage
Transparent
Price Impact
Clearly communicated
Maximized
Execution Efficiency
Through smart routing
RXDex Trading Interface
YIELD-FARMING
Comprehensive Yield Opportunities
RXDex provides multiple yield generation opportunities designed to reward different forms of participation while maintaining sustainable economics. The layered approach to yield creates compelling returns without risking protocol stability.
- Trading Fee Yield: Designed the core fee structure to direct a significant portion of trading fees to liquidity providers, creating sustainable, market-driven yield that scales with protocol usage.
- Emissions-Based Incentives: Implemented strategic token emissions to bootstrap liquidity in key pools, with emissions that adjust over time to balance immediate incentives with long-term token sustainability.
- Lockdrop Promotions: Created periodic lockdrop events that provide boosted initial rewards for users committing to long-term liquidity provision, accelerating pool depth for new synthetic assets.
- Yield Tracking Dashboard: Developed comprehensive yield monitoring tools that give users clear visibility into their current returns, historical performance, and projected earnings across all active positions.
Multiple
Yield Tiers
Based on commitment level
7-day trailing
APR Calculation
For realistic projections
Available
Compounding Options
For maximized returns
RXDex Yield Monitoring Interface
RISK-MANAGEMENT
Comprehensive Risk Management
Protecting Liquidity Providers and Traders
RXDex incorporates advanced risk management systems designed to protect users from the unique risks associated with synthetic asset trading and liquidity provision. These mechanisms help maintain protocol stability while safeguarding user funds.
- Impermanent Loss Mitigation: Designed specialized pool mathematics and incentive structures that reduce the impact of impermanent loss, particularly for stable asset pools where traditional AMMs suffer significant inefficiencies.
- Oracle Circuit Breakers: Implemented safety mechanisms that can temporarily pause trading during detected oracle price feed irregularities, preventing exploitation during periods of market instability.
- Gradual Parameter Adjustment: Created systems for careful adjustment of pool parameters like fees and weights, ensuring changes occur gradually to prevent disruption to existing liquidity providers and traders.
- Liquidity Concentration Controls: Developed mechanisms to monitor and manage liquidity concentration, preventing potential manipulation by large position holders while maintaining efficient price discovery.
- Risk Visualization Tools: Built intuitive interfaces that clearly communicate potential risks to users, including impermanent loss projections and other metrics to enable informed decision-making.
Real-time
Risk Monitoring
With automated alerts
Multiple
Safety Mechanisms
Layered protections
Gradual
Parameter Governance
For stability preservation
INTEGRATION-WITH-REAX
Seamless REAX Ecosystem Integration
RXDex is designed to work as a core component within the broader REAX ecosystem, with deep integrations that create a seamless user experience and enable powerful cross-protocol strategies.
- Synthetic Asset Flow: Developed seamless pathways for users to move between minting synthetic assets on REAX, trading them on RXDex, and using them as collateral on RXLend, creating a complete synthetic asset lifecycle.
- Shared Tokenomics: Implemented a unified tokenomics model where the REAX token and its escrowed variant (veREAX) provide coherent incentives and governance rights across all ecosystem protocols.
- Cross-Protocol Strategies: Enabled sophisticated multi-protocol strategies like leveraged liquidity provision and yield optimization that utilize the unique capabilities of each protocol in the ecosystem.
- Unified Interface: Created a consistent user experience with shared design language and authentication across all REAX ecosystem protocols, reducing friction and cognitive load for users.
Comprehensive
Protocol Integrations
Across REAX ecosystem
Seamless
Cross-Protocol Flows
For unified experience
Multiple
Composable Strategies
Enabled by integration
Security Architecture
Protecting User Assets and Protocol Stability
- Formal Verification: Applied formal verification methods to critical pool mathematics and swap execution logic, mathematically proving the correctness of key functions to prevent unexpected behavior.
- Incremental Testing: Conducted extensive testing with incremental parameter adjustments to validate pool behavior under various market conditions, including extreme volatility and liquidity events.
- Sandboxed Deployment: Implemented a phased deployment approach with initial caps on pool sizes and gradual increases as security confidence grew, limiting potential impact during the early protocol lifecycle.
- Economic Simulation: Performed agent-based economic simulations to identify potential attack vectors or exploitable conditions, ensuring the incentive structure remained robust under various scenarios.
- Independent Security Audits: Engaged multiple specialized security firms to conduct thorough code audits before launch, with all identified issues addressed and verified through follow-up reviews.
- Governance Timelock: Implemented time-delayed governance actions to allow community review of proposed changes and provide window for emergency action if malicious proposals are detected.
- Emergency Shutdown System: Designed graduated emergency controls that can pause specific functions or trigger an orderly system shutdown if critical vulnerabilities or exploits are detected.
- Bug Bounty Program: Established an ongoing bug bounty program with significant rewards for identifying security vulnerabilities, incentivizing responsible disclosure from the security community.
Metrics
Roadmap and Future Vision
$5M+
Protocol TVL
Target for first quarter
$20M monthly
Trading Volume
Projected growth
Quarterly
New Features
Continuous innovation
Cross-chain
Ecosystem Expansion
Future development
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