A high level of liquidity is required for healthy market activity. Slippage may occur if there is insufficient liquidity. Low liquidity causes high fluctuation in the market’s asset prices.
Automated market makers are a component of decentralized exchanges (DEXs), which were created to eliminate the need for proxies in the buying and selling of crypto assets.
Automated market makers contribute to the establishment of a liquidity system in which anyone can participate. This eliminates the need for an intermediary, lowering transaction costs for investors.
Nevertheless, Automated Market Makers are bedeviled by some challenges, some of which have left traders hurt by high gas prices and poor execution.
Automated Market Makers are also isolated from one another and have next to no interoperability, pressuring traders looking for profound liquidity to implement funds across multiple protocols and blockchains or risk slippage and partial fills.
Developers have sought to address these issues by adjusting parameters and adding new features such as temporary loss coverage and third-party trade management interfaces. Nonetheless, they have had mixed results.
InstaDEX, a unique decentralized exchange built on Tezos is changing the narrative as it furnishes incredibly efficient protection against impermanent losses and single asset liquidity provision to liquidity providers and traders.
InstaDEX is one of Instaraise’s services that connects blockchains, marketplaces, and communities. InstaDEX also helps new projects to get off the ground seamlessly.
SO WHAT MAKES INSTADEX DIFFERENT?
InstaDEX eliminates the problems that affect many other Automated Market Makers and decentralized exchanges with its revolutionary trading features.
Built on a POW/POS/DEX mechanism, InstaDEX is focused on community development and transparency.
On a truly decentralized cross-blockchain network, InstaDEX also allows communities from different blockchains to make atomic exchanges.
The following characteristics of InstaDex eliminate the shortcomings of the conventional Automated Market Makers:
Insurance Against Impermanent Loss
This feature applies to liquidity providers that remain in the InstaDEX pool for at least thirty days as they are entitled to receive protection coverage for impermanent losses.
One day constitutes one percent of this plan. Hence to attain one hundred percent coverage of the impermanent loss, a liquidity provider must remain in the pool for one hundred days
Provisioning for a single asset’s liquidity
As a consequence of the outstanding features of InstaDex, liquidity providers no longer have to deal with the hassle of staking their favorite assets merely to join a liquidity pool.
Instead of staking two assets, a liquidity provider can simply contribute one to the pool and take a sole risk on that asset.
InstaDEX’s primary long-term use case is to create a safe network that is decentralized over a wide user base of nodes that are neither controlled nor maintained by a single party, using a master node and staking-based mechanism of the majority of the world’s existing financial currencies.
Instaraise is Tezos’ first decentralized IDO platform, empowering projects by allocating tokens through auctions. The platform makes it possible for projects to raise funds in a decentralized and interoperable manner.
The Instarise team can assist you with ideation and mentorship if you’re a project builder. For more information and collaboration, you can contact the CEO and co-founder — Dibyo Majumder Via Email at: firstname.lastname@example.org