A Defi Automated Market Maker, Built by Traders for Traders 💣
EXCAVO brings together a team of independent financial analysts, traders, asset managers, economists, and IT developers, led by CEO Eugene Loza, a TradingView top trader and advisor to various blockchain projects with a following of over 100,000 members of the trading community.
After five years of research and development, EXCAVO has built a decentralized exchange (DEX) solution to the antithetical centralized exchanges (CEXs) so dominant in the crypto space, without requiring intermediaries or custodians to facilitate trading.
Initial DEX solutions struggled to compete with their centralized counterparts for fast settlement times, large trading volumes, and liquidity. That has changed, and DEX solutions using Automated Market Maker (AMM) models like Uniswap, Curve, Balancer, and now EXCAVO can deliver innovative DEXs capable of disrupting the CEX platforms, helping to drive forward the decentralized finance movement.
🧰 What Are Automated Market Makers?
Automated Market Makers (AMMs) allow digital assets to be traded in a permissionless and automatic way using liquidity pools rather than traditional order books of buyers and sellers.
While original DEXs removed the issue of centralized intermediaries, allowing for token swaps with minimal fees, order books were still required, and liquidity problems persisted. The AMM DEX model does not need users to put in ask and bid orders for an asset.
Instead, AMMs fix this problem by creating liquidity pools and offering liquidity providers an incentive to supply these pools with assets for liquidity mining. This incentive fee is generated by traders who then interact with the liquidity pool to make trades. Recently, liquidity providers have also been able to earn yield in the form of project tokens through what is known as yield farming.
So, participants supply liquidity pools with tokens, and a formulaic approach is used to determine the price of an asset according to the ratio between the two tokens in a pool, managed by arbitrageurs. This means that the price of an asset only moves when a trade occurs and is less susceptible to external manipulation. By tweaking the formula, liquidity pools can be optimized for various purposes and have become a vital instrument in the DeFi ecosystem.
⛓ The EXCAVO DEX and Protocol
The EXCAVO DEX is an Ethereum-based on-chain system of smart contracts with a convenient, intuitive UI and set of trading tools, compatible with most Ethereum wallets. Traders and liquidity providers can interact with the EXCAVO platform to swap ERC20 tokens, provide liquidity, redeem Liquidity Tokens, and claim rewards.
The EXCAVO Protocol is the Automated Market Maker (AMM) based on a constant product formula for inventory management specially built for professional traders. The constant, calculated by multiplying the amount of each token in a pair, means there is a constant balance of assets determining the price of tokens according to their ratio in a liquidity pool. Each EXCAVO platform trading pair stores and provides liquidity to pooled reserves of the two tokens, maintaining the total constant value.
There are currently two types of pools with either ETH or USDC quote currencies. Users can create their own liquidity pools or add to existing ones. Traders then pay a 0.4% fee on trades, adding interest to those pools. Liquidity providers contribute to the liquidity pools with two types of tokens of the same value on each side, calculated by the current pool’s price. They then receive the Liquidity Tokens, minted proportionally to track their share in the pool’s liquidity. Liquidity Tokens are pool-specific ERC20 tokens that are transferable and can be redeemed at any time with interest paid as soon as they are redeemed. Therefore, liquidity providers may withdraw their liquidity with an additional surplus from the trading fees earned through this liquidity mining.
The platform also provides users with two additional types of tokens to farm; EXCV and CAVO.
The EXCAVO platform offers a unique type of tokens in addition to each pool’s Liquidity Tokens. This is primarily to reward early adopters to raise liquidity and reduce price slippage, creating a positive feedback loop. Traders can reduce trading costs with reward tokens that can be bought from liquidity providers, incentivizing traders to trade more often and liquidity providers to add more liquidity to the pools.
Briefly speaking, liquidity providers own part of a continuously growing supply of EXCV tokens as long as they participate in at least one of the liquidity pools. Users may claim their part at any time and sell it or add it to the ETH/EXCV liquidity pool to farm CAVO tokens. CAVO tokens can then be sold to traders. The demand for CAVO tokens is influenced by their trading perks.
EXCV is an ERC20 token that can be earned by a liquidity provider as additional income, with a total supply of 1 billion. EXCV tokens represent the entire platform’s liquidity. However, as different pool liquidities are measured in different units they need to be converted to a single unit, xEXCV. By owning xEXCV tokens, each liquidity provider obtains a share of profit in all platform pools. The function of the intermediate xEXCV token is similar to Liquidity Tokens and its amount increases proportionally to the ETH/EXCV liquidity pool.
By adding liquidity to a pool, users can simultaneously receive Liquidity Tokens and xEXCV tokens. EXCV can then be claimed by burning xEXCV and sold at one of the EXCAVO pools or added to the EXCV/ETH liquidity pool for additional rewards.
CAVO is an ERC20 governance token in EXCAVO Protocol. It is a synthetic asset that may adjust its supply depending on the price movements. Following a change to its tokenomics in December 2020, its total supply was reduced to 18500 tokens with the entire supply expected to be distributed over the vesting period of 36 months. Daily token distribution depends on the CAVO price in the CAVO/ETH pool. If the price is lower than the threshold no additional tokens would be minted and distributed that day.
By adding liquidity to one of the EXCV/ETH liquidity pools, users can simultaneously receive Liquidity Tokens and xCAVO tokens. CAVO can then be claimed by burning xCAVO and sold on the platform to traders. Traders can then reduce fee percentage costs by burning CAVO tokens for a single trade. Alternatively, staking reduces the fee percentage proportionally, as long as CAVO tokens stay staked.
DEXs solved the issue of centralized intermediaries and associated fees, though liquidity and slippage problems remained. Now the AMM DEX model is providing a solution to that too, creating a system of incentivized, permissionless, and truly decentralized trading.
While there are still challenges and AMMs carry risks such as impermanent loss, EXCAVO mitigates this through its liquidity mining earnings potential and several yield farming opportunities.
EXCAVO’s AMM decentralized technology, therefore, creates a new method for exchanging assets anonymously without an intermediary, fully embodying the ideals of crypto as no entity is in control, everyone can participate, and anyone can build on top of it.
EXCAVO.FINANCE DeFi AMM 👇🏻