AMM Dex (Automated Market Maker Decentralized Exchange) – Decentralized exchange using an automatic market maker is the first link of an entire ecosystem. A place to attract cash flows to provide liquidity for projects built within that ecosystem.
However, due to the unreasonable tokenomic mechanism and the harsh winter of the market, most of these projects have decreased by 80% compared to the ATH created from "DeFi Summer". After a while of monitoring and sifting, HoldStation today introduces some potential Dex AMMs to watch out for and make sound investment decisions now and in the future.
The largest AMM Dex in the market currently has a market share of over 60% of the total trading volume. Provides liquidity for the majority of projects built in the Ethereum ecosystem.
In addition to Ethereum, UniSwap also supports networks like Polygon, Optimism, Arbitrum, Celo. This makes it very likely that UniSwap will benefit from the upcoming The Merge.
In addition, UniSwap is ambitious to enter the NFT market with the help of SudoSwap - the leading platform for NFT AMM mechanism that is attracting significant attention from the community. The trading volume of this "newbie" recently accounted for more than 10% of the market share of the "old man" OpenSea.
The project's revenue in the past 3 months has remained stable at 800k$ - 3M$, a pretty big number during the Crypto Winter. Besides, the number of Active Users tends to increase from about July gradually.
Read more: Does UniSwap Still Have Growth Potential?
In May of this year, PancakeSwap updated tokenomic 2.0. In this renewal, the project has limited the total supply of $CAKE to 750M tokens with a stronger Burn Token mechanism and increased the power of $CAKE with useful features such as Voting (vCAKE), Boost APR (bCAKE) for Yield Farming, and increase allocation in IFO User Offerings (iCAKE),....
The team also shared that $CAKE will reach the maximum total supply within 3 next years with much more restrained inflation than before. It is estimated that there are about 340M $CAKE in circulation in the market (about 45.3% of the total maximum supply).
The first step in increasing the rate of Burn Token has been practical when the inflation of $CAKE has decreased from June till now.
PancakeSwap also has many features for users to choose from, such as Limit Orders, Leverage Trading, lotteries, NFTs market, and regularly has trading contests to attract Traders,... with the increase of the rate. Burn rate from transaction fees, the more transactions happen on the platform, the more $CAKE is burned.
As the largest AMM Dex of the BNBChain ecosystem, dubbed "CZ's backyard," the number of transactions per day on PancakeSwap is very large. Recently, projects that are sold IFO on Pancake also attracted a lot of attention from a typical community such as $PEEL, and $WOM.
The platform's revenue in Downtrend is also very stable, constantly fluctuating at $ 500k-700k per day from about the end of June until now. In particular, the amount of revenue shared by liquidity providers accounts for about 68% of the platform's total revenue.
In terms of communication, PancakeSwap is a project that is quite active on Twitter and has regular updates on the status of the project. Especially the tweets announcing the Burn Token.
Trader Joe's decentralized exchange aims to be a one-stop shop that aggregates many trading tools related to decentralized finance. Trader Joe- a top AMM Avalanche- offers extensive trading features such as stacking, lending, liquidity pool, farming, and launchpad.
Keeping up with the new trend with the development of AMM (automatic market maker) and the Real Yield model, Trader Joe has also been launching related trading mechanisms.
For the development of AMM, to eliminate the disadvantages that the liquidity pool has such as inefficiencies when taking advantage of capital, as well as the risks of facing temporary loss (Impermanent Loss), Trader Joe introduced the Liquidity Book mechanism.
Read more: Trader Joe Liquidity Book
Simultaneously, with Real Yield, Trader Joe has similar application mechanisms used in integrated tools. By staking JOE tokens, users will receive sJOE tokens, and interest will be paid in stablecoin USDC.
To make use of Trader Joe's veTokenomic-enabled optimization protocols, users can fully continue to use the platform's stake token sJOE as a tradable token, thereby creating liquidity for their tokens. another pool, using the Real Yield mechanism. A typical trading tool that supports the sJOE token is the Steak Hut, which provides liquidity to other trading pools with the sJOE token.
A glimpse of TraderJoe's tokenomic - $JOE
JOE tokenomic has not yet shown the great potential of Trader Joe. Currently, the total circulating supply is approximately 320 million tokens or 64% of the total supply. There is still a large number of tokens that have not been released to the market. Simultaneously with the incomplete project paying tokens to the Dev team and initial investors, JOE will still have the risk of price manipulation, thereby reducing its ability to reflect the market's interest.
50% of the total supply is dedicated to paying the liquidity provider. The issuance of JOE tokens is also deflationary, with the token being issued every second. However, the release will decrease significantly every month. (e.g., from 07/03/2021, 30 JOE will be issued every second, until 08/03/2021, every second the issuance will decrease to 20 JOE, continuously until January 2024).
This level of deflation partly shows the potential of the JOE token and of the project as a whole. Investors can thoroughly consider participating but also need to be aware of the potential risks in tokenomic.
For the revenue paid to liquidity provider with Real Yield
It can be seen that from March, the turnover of the floor has tended to decrease. Conversely, 80-85% of the revenue goes to liquidity providers. This is a large number that shows the attractiveness of the exchange to liquidity providers in particular and investors in general.
For projects with the Real Yield mechanism, with the investor's profit partly also coming from the floor's income, this directly brings more profits to users.
'The Merge' event creates an opportunity for ETH-related platforms to grow for layers 2. Quick Swap, as the largest AMM of layer 2 MATIC, will also benefit directly from the event.
Notable data from QuickSwap
QuickSwap currently pays liquidity providers up to 85% of the exchange's total revenue. Similar to the JOE token, this is an impressive number, especially for a large revenue exchange like QuickSwap. Real Yield is currently still showing great potential in the above exchanges.
QUICK's Tokenomic- as fair as it gets
90% of QUICK tokens are distributed to liquidity providers. This is impressive, with most benefits focused on investors and participants, with only 3.25% for the founding team and advisors and 0.75% for marketing.
The reward for mining QUICK will be paid in 4 years. However, token issuance will simultaneously slow down and decrease during this time. This encourages early user engagement and will continue supporting community growth over time.
QUICK's Tokenomic shows that the team's priority is toward user experience and project development instead of focusing on making profits. This is a potential platform for investors to look to in the long term.
Above are the top 4 AMM Dex projects of each ecosystem that are assessed as having potential in the future. Determined by deflationary factors, the effectiveness of the project helps bring real value to the liquidity provider.
Most projects' tokens still have a certain level of inflation but will gradually decrease in the future. Investors can consider and allocate appropriate capital to hold and generate sustainable profits by providing liquidity.
However, investors need to monitor the project situation during the "Crypto winter" to make the most correct investment judgment.