BSC Project Talk #DeFi: MCDEX — a permissionless perpetual swap protocol

Hi everyone, I’m Cindy from BSC Project, the host of the BSC Project Talk #DeFi tonight. Great pleasure to be here with Jean Miao, co-founder and CMO of MCDEX and talk about MCDEX.

Today’s AMA is divided into 2 parts. First part is presentation. Jean Miao prepared a sufficient content to talk about MCDEX.

Then in the second part, we collected some questions from enthusiastic community members. Our guests will answer them one by one.

Jean Miao:

Hi everyone!

I’d love to take this opportunity to talk about MCDEX — a permissionless perpetual swap protocol.

First, Let’s start with some key features of our MCDEX V3, which just go live.

As shown here, V3 has 3 killer features 1)high capital efficiency.

We’ve been working hard on the innovations on AMM, which we believe is a hardcore competency. Whether liquidity providers can make money and whether the slippage is small enough to trade all depend on AMM pricing formula.

The V3 AMM will be 1000 times better in terms of capital efficiency than the constant product formula. The methodology is similar to Uniswap V3 — Concentrate more liquidity around the index.

For example, in our current USDC pool, we got two trading pairs — ETH / USDC and BTC / USDC. If there are $80M USDC in the pool — which is easy once the liquidity mining program is live, trading 7000 ETH / 300 BTC without any slippage at all ( spread 0.2%).

The second feature is permissionless.

Anyone can create any perpetual market. This is crucial because when a new DEX born, one of the key competencies is to have some markets that other exchanges don’t have yet. So permissionless is the key. We are empowering individuals/institutions to fulfill this mission together.

Third feature, composability.

Other smart contract can build on top of us to expand the participants of our ecosystem to widen the participants of MCDEX ecosystem. The all 3 features together is to solve the painpoints of DEX users.

Now, about the AMM mechanism.

Our AMM is even 10x — 50x more capital efficient than Uniswap V3.

As shown in the table, when there are $280M in both Uni V3 and our V3
within 10 bps, the liquidity of Uni is 10 ETH, while on MCDEX is 6160 ETH,
much more liquidity there. So this is the key competency of MCDEX V3.

Now about featured media.

We’ve been mentioned by the top tier media of DeFi, like Delphi, who is also our investor and Messari.

Also the mainstream media benchmark us against dYdX and Perpetual.

Our mainnet went live one month ago.

Here are some data that we’ve achieved. We are already both live on Arbitrum and BS.

Regarding the roadmap, we got the multichain deployment strategy.

MCDEX V4 will be launched next year.

Currently, there is a massive trading mining program going on with 80k MCB reward which is about $5M with current MCB market cap. This is the most massive program that we run for now.

The participants need to do 3 things 1. trade 2. hold the position for a while, have the open interests 3. staking MCB

This is to create a positive loop — attract the traders — more trading volume — more transaction fee paid — LP revenue go up — attract more LP — better liquidity to attract traders

The current epoch will end on Oct. 31 .

Check details here:

Here is the tokenomics of MCB

MCB holders can govern on how to use the assets in MCDEX DAO treasury. MCDEX DAO treasury is continuously capturing the value generated by MCDEX protocol, 0.015% -0.02% of the volume on MCDEX.

Here is the previous fundraising.

As you can see, we are backed by the top tier investors, Delphi, Alameda , Multicoin, DeFiance, DeFi Alliance, Fenbushi , etc.

That’s all from my side.

Host Cindy:

Thank you for sharing. I think some guys get many inf via Jean Miao’s sharing. Next part will be the questioning part.

Before the start of the BSC Project Talk #DeFi, we have collected a wide range of questions on Twitter/Discord. For some questions submitted by some community members, let’s invite Jean Miao to answer .

Q1.How is the impermanence loss of AMM Liquidity Mining stake calculated? Are there specific calculation methods and examples?

Jean Miao:

First of all, there is no impermanence loss being an LP on MCDEX. Since as LP, you only need to deposit one asset.

But you do take other risks.

Let start with the mechanism of AMM. Liquidity providers (LP) are generally the counter-party of traders, so LPs will take market-making profits and risks.

For example, if all positions from traders in the market combined are longing ETH, the AMM will be the counter-party and take short positions. In this case, if the ETH price drops, LPs will make profits; if the ETH price increases, LPs will suffer losses.

LPs do take risks when providing liquidity. But the risks is not impermanence loss, it’s market making risks. Here are the breakdown –

LP Potential Risks: Positions holding related risks AMM bankrupt losses.

So to sum up, being an LP on MCDEX : you only need to provide one assest, currently on BSC, it’s BUSD or ETH or BTC. you have multiple sources of revenue you take the market making risks.

LP Revenue Sources:

A portion of the transaction fees
Market-making profit from the spread
Liquidation penalty
Extra mining rewards if the liquidity mining program is live

Host Cindy:

Q2. MCDEX has been deployed on arbtrium at the beginning, and now it is deployed on BSC. It seems that it is also a form of preparing for multi-chain development. Then, is there any other plans for MCDEX? What are the new development and ideas in the future?

Jean Miao :

Yes, we do have a multi-chain deployment strategy.

I guess this page answers the question.

In the rest of this year, we will deploy on more chains and launch some ecosystem porjects that build on top of us. Next year, we will launch MCDEX V4 — with the new features. That will be the general plan for the near future.

Host Cindy:

Q3. What other protocols are built on MCDEX (leveraged tokens? stablecoins?), and when is it expected to go online?

Jean Miao:

Right now we are working with two — Lemma Finance and Akro.

Lemma is a DeFi product that allows cryptocurrency holders to generate yield on their ETH (and soon USDC) via basis trading. And they are also building a stable coin based on our inverse ETH contract.

Akro is also a protocol doing basis trading. Akro is expecting to launch in Nov.
Meanwhile we are in contact with some more protocols that will build on top of us, which is really exciting. With the composability, we are able to boost the ecosystem.

Host Cindy:

Q4. How to design a plan for mining on different chains at the same time and providing different issuance rates?

Jean Miao:

Yeah we may have multi- chain deployment and trading mining program in the near future.

Design mining on multichain or on a single chain is actually the same methodology for us. Currently we are having the massive mining program on BSC, maybe later we will have it on Arbitrum or other chains.

We need to define several key factors — what’s the goal, who is the target, some anti cheating behaviors, etc.

Host Cindy:

Q5. Can you elaborate on how the Operator introduced by MCDEX AMM reduces the risk of liquidity providers and maximizes their returns?

Jean Miao:

Actually introduction of the operator role can not achieve that goal. The role operator is to fulfill the goal of the creating perp market without permission. To achieve the goal of reducing risks of LP and maximize their return relies on proper risk parametres.

So that’s why currently we have two categories under the market: certified and uncertified.

Certified pools are those owned by DAO or other partners.

Uncertified pools are those created by others.

LPs are traders need to be cautious with the risks involved when in uncertified pools.And actually AMM algrithm has done most of the work to maximize LP returns, since i mentioned, we are super capital efficient.

Host Cindy:

Thank you for participating in the “ BSC Project Talk #DeFi-MCDEX ”.

BSC Project Talk #DeFi is finish now. Thank you again for your time and listening, we will see you in the next issue.

Source : bscproject.medium

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