Setting a new industry standard, AllianceBlock DEX's novel mathematical model synchronizes two automated market makers to reduce impermanent loss
ZURICH, Nov. 22, 2021 /PRNewswire/ -- In line with its mission to bridge the gap between decentralized and traditional finance, AllianceBlock has deployed the AllianceBlock DEX Testnet on renowned blockchains Polygon and Energy Web Chain.
Liquidity providers are the lifeblood of decentralized exchanges (DEXs). However, crypto's volatility puts liquidity providers at high risk of losing some liquidity if price changes occur after staking, resulting in impermanent loss. For many, this risk of loss is a barrier to entry and can result in decreased profits. Designed to reduce impermanent loss, the AllianceBlock DEX is underpinned by a combination of two Automated Market Makers (AMMs).
The DEX is grounded in a new mathematical model designed by an innovation team led by AllianceBlock's CEO and Co-Founder Rachid Ajaja; Chief Research Officer, Houman Falakshahi, who holds a Ph.D. in Quantum Mechanics from the University of Paris-Saclay; and Head of Quantitative Analytics, Matthieu Mariapragassam, who holds a PhD in Applied Mathematics from the University of Oxford. This novel approach lowers risk for investors and creates a safer environment for high volume liquidity providers, in particular those who may have a low risk tolerance.
Commenting Rachid Ajaja, Co-Founder and CEO of AllianceBlock, said: "The DEX market is becoming increasingly competitive. Right now, there are more than 100 DEX solutions out there. However, most of these solutions are forks of established platforms, meaning they are simply variations of existing offerings. The AllianceBlock DEX aims to go a step further and improve on some of the existing limitations such as impermanent loss. Though there have been incredible developments in the space, especially when it comes to Automated Market Makers, impermanent loss remains a huge challenge. For the DeFi ecosystem to reach its full potential, access to adequate liquidity is key, which is why we have developed AllianceBlock DEX, which relies on a mathematical formula for addressing the key issues faced by Automated Market Makers. Our unique proposition for a DEX also helps institutional investors access opportunities in DeFi, when combined with our upcoming trustless KYC framework."
AllianceBlock DEX launches with the support of two long-term partners and leaders in blockchain and DeFi, Energy Web, a public enterprise-grade blockchain platform for the energy sector, and Polygon, a protocol for building and connecting Ethereum-compatible blockchain networks. While Polygon is renowned for its near-instantaneous transaction speed, low transaction costs and ever-increasing use by investors and DeFi projects alike, Energy Web Chain is a leading layer 1 blockchain for some of the biggest players in the energy industry, making these two blockchains perfect for the testnet rollout of the AllianceBlock DEX.
Now in Testnet, the DEX will undergo rigorous code auditing and security testing over the coming months before going live on Mainnet next year. Once verified, it's anticipated that this solution will be integrated and utilized across a host of other AllianceBlock products including its white label liquidity mining and staking solution, LMaaS, to facilitate a wider ecosystem of innovative solutions that will be essential to bridging the gap between traditional and decentralized finance.
AllianceBlock DEX is the culmination of months of intensive research and technological innovation. Houman Falakshahi, Head of Research at AllianceBlock, said: "Over the past number of months, our research and quantitative analytics team have worked on innovative methods to tackle the issue of impermanent loss reduction. Inspired from physics, more precisely from coupled systems where energy is transferred from one system to another, we combined two different Automated Market Makers. This has shown the coupled system of AMMs to be able to absorb the impermanent loss of one another and therefore optimize the impermanent loss profile. We hope this can positively contribute to the research in the field and open new possibilities for future improvements."
For more information, visit: www.allianceblock.io
AllianceBlock is bridging the gap between decentralized finance and traditional finance, by remedying issues that exist in both spheres and linking them more closely together. They see the future of finance as an integrated system in which the best of both worlds can work together to increase capital flows and technological innovation.
Building this future by bridging traditional finance with compliant, data-driven access to new decentralized markets, DeFi projects and ecosystem-scaling tools such as funding and interoperability. As such, they are building a next-generation financial infrastructure that aims to provide regulated financial entities around the world with the tools they need to seamlessly access the DeFi space.