Presenting Dfyn V2

This post was originally published on this site

AMMs — A walk down memory lane.

Dfyn has come a long way

  • Reached a peak TVL of $300 million
  • Introduced vDFYN vaults for the community to get fee-sharing from the protocol
  • Processed over $3 billion in trades
  • Launched on multiple chains, including Polygon, Fantom, and Arbitrum
  • Burnt 20% of the total supply to support tokenomics and prolonged the vesting schedules of team and investor
  • Integrated Router Protocol’s widget to offer cross-chain swaps within Dfyn

The Problem: Challenges with Uni V2

  1. Impermanent Loss: Impermanent loss happens when the price ratio of deposited tokens changes after you deposit them in the pool. The larger the change is, the more significant the impermanent loss. To compensate for the loss to the users who have deposited the liquidity, we have to give out more rewards as an exchange.
  2. Liquidity Mining: Liquidity is the most critical factor for an exchange in how AMM was designed. The more liquidity in the pool, the less slippage large orders may incur. That, in turn, may attract more volume to the platform. Users will park their liquidity where they will get more rewards. So to attract liquidity, we need to shill out more rewards.
  3. Market: Many Uniswap V2 clones were coming, and everyone was fighting for liquidity, shilling out more rewards. Also, with the launch of the Uniswap V3 concentrated liquidity model, it became even more challenging to compete with the current Dfyn model.

To overcome these challenges, we are launching Dfyn V 2.0

RFQ Styled Orders

Highly competitive prices with the same user experience powered by RFQ

Isolated Liquidity Pools for Market Makers

Concentrated Liquidity with Unified Pools

  1. Avoid Liquidity Fragmentation: — Multiple pools for the same pairs will lead to liquidity fragmentation, and that is not ideal as higher liquidity in a concentrated range provides lower slippage, which is good for users.
  2. Overcome Impermanent Loss: Volatile market conditions or volatile pairs lead to more Impermanent Loss for the users, so it makes sense to have higher fees for those LPs to compensate them for the IL. For stable market conditions. LPs can earn a good yield with a low risk of impermanent loss even with low fees. We have developed a proprietary model which adjusts fees based on pair and market conditions instead of having it constant. This enables us to keep the fee low in stable conditions and higher in volatile conditions.

Delegation Vaults — a win-win for everyone

On-chain limit orders

The Road Ahead

Dfyn Short-term Roadmap.

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