DeFi Liquidity is fragmented, can Omniston bridge the gap?
Since the early days of crypto trading, exchanges played a major role in facilitating the buying and selling of assets. In these early days, most users saw the distinction between centralized and decentralized exchanges (DEXs) as trivial. What’s the need for segregation if both perform the same function?
However, as the crypto trading landscape began to take shape, this distinction became very obvious. Based on the experience of using both protocols, DEX has an edge over CEX in terms of
Aligning with the basic idea of blockchains — Decentralisation & anonymity, eliminating the need for an intermediary. (more details below).Exposing users to a broad market of tradable assets.
The whole time, these 2 features have helped peak DEX usage. DeFi users sent $224 billion in on-chain value to DEXs from April 2021 to April 2022, — outgrowing a centralized exchange like Coinbase. With this market size, more DEXs have been developed and deployed across different chains.
The downside is that more DEXs give an average user a mental model of isolation in DEX operations. This isolation is the main cause of the biggest problem in DeFi: Liquidity Fragmentation.
This article is written to show the current state of Liquidity in DeFi and where there’s a need for improvement. Furthermore, this piece will give a primer to StonFi’s latest protocol Omniston built to address this fragmented Liquidity. Our coverage will include;
Decentralized Exchanges and the ProblemAn Introduction to OmnistonBenefit to Users.
Decentralized Exchanges and the Problem
In their latest educational hub update, Chainlink describes a decentralized exchange as a peer-to-peer marketplace where users can trade cryptocurrencies in a non-custodial manner without the need for an intermediary to facilitate the transfer and custody of funds. Liquidity pools locked in smart contracts enable these Token exchanges.
The problem — Liquidity fragmentation, simply means that the amount of tradable tokens is split around different DEXs within the same chain and/or across separate chains. This problem reflects in daily trade as
High Slippage. A high difference between the expected price of a trade and the price at which the trade is executed when a large order is executed but there isn’t enough Liquidity in the exchange, causing the executed price to increase.Negative price impact. Normally, price impact measures the influence of the user’s trade over the market price of an underlying asset pair. Fragmentation of token pairs favours a negative price impact. For example, a negative price impact of -40%, means that the trader will be paying 40% more than the current market price (if he proceeds with the trade he loses 40% of trade value) for that swap.
An Introduction to Omniston
Now, because Stonfi is not immune to this Liquidity issue either, they have launched a Unified Decentralised Liquidity Protocol called Omniston.
Omniston unifies liquidity from multiple DEXs and resolvers (liquidity providers) to offer the best price across the blockchain and execute the trade. The protocol will find the best offers from resolvers for you. The efficiency difference between Omniston and traditional swaps through available liquidity pools is phenomenal.
Take a sneak peek here;
Omniston – Liquidity Aggregation Protocol for TON Blockchain
Benefit of Omniston to Users
Omniston by Ston.fi, is all about Liquidity aggregation and Abstraction. Its journey to the mainstream will change how STON.fi feels by simplifying DeFi interactions for new users.
Through Aggregated Liquidity, Omniston gives users seamless and rapid swaps sourcing liquidity across multiple DEXs and resolvers.
The result? All trades are executed easily with small spreads whether or not the asset’s liquidity is available on Ston.fi, Omniston will find the most efficient trading route for the proposed transaction. Additionally, interacting with this protocol would mean interacting with all of TON’s liquidity in one convenient application.
Aggregated liquidity is just a scratch on the surface of what Omniston offers. More outstanding benefits of Omniston include;
Speed, Security, and Low Fees:
Transactions with Omniston are a mix of Onchain and Offchain computation. RFQ protocol is the only off-chain component that deals with only transaction information. User funds never leave the blockchain. Smart contracts for on-chain computations are fully audited and verified.
The combination of on-chain and off-chain components gives Omniston speed and security. Low fees are also attributed to the off-chain operations of the RFQ protocol. While the protocol searches for the best deals across DEXs and resolvers, it does not attract any additional cost on the user.
Easy Integration into any DeFi Application
Modularity is the current trend across DeFi and blockchain development. As a developer of a TON-based project sourcing liquidity and swap rates across multiple DEXs may impact negatively on your dApp development process.
Instead, Omniston, helps you focus on developing your dApp core features to perfection while liquidity is outsourced from Omniston. The deep liquidity from Omniston will be the foundation to attract a broad user base.
Wrapping Up
Omniston will continue to evolve, with ongoing development to enable cross chain interaction and onboard average users. This developement ensures that Omniston integrated dApps can always offer interactions for users across a number of ecosystems.
Currently cross-chain interaction is directed towards the Tron network, afterwards, expansion to EVM compatible chains. Omniston is at the gateway of ushering in deep liquidity, user-friendly dApps and security to TON blockchain.
Get started today with the SDK Repository, API Repository, and Documentation.
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Omniston by STON.fi: Solving DeFi’s Biggest Problem. was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.