DeX on the Hub discussion

There exists some discussion about DeX on the Hub subject in telegram and discord channels. I would like to sum up the status and make this discussion continues in more constructive way.

Why DeX on the Hub

  1. more activities and growths directly on the hub
  2. potential value added to ATOM
  3. benefit zones around cosmos ecosystem by providing DeX utility on the hub

DeX on zones

  1. they does not directly benefit ATOM value
  2. they have less representativeness and much less staked security

What prevents DeX on the Hub

  1. impact on security of the hub
  • DeX as a native module in SDK : relatively more security risk and difficult to manage
  • DeX as a permissioned CosmWasm contract : relatively less security risk
  1. regulatory constraints on AiB and ICF
  • they cannot fund DeX projects
  • community fund is an alternative approach

Market potential

  1. DeX is very competitive market
  • it might be difficult to bring significant use-case considering current competition
  1. Ethereum oriented DeX is the center of the market
  • how can we attract traders in Ethereum ecosystem?
  • it is relatively indirect to connect the Ethereum network than DeXs on Ethereum
  1. market timing
  • is it too late to pursue DeX application market?

Important qualities of DeX on the Hub

  1. performance
  • block time and tps of the hub is not an enough figure to utilize competitive DeX
  1. privacy
  • no privacy protected at all
  1. liquidity
  • need to figure out how to bring liquidity to the DeX

Miscellaneous

  1. UX
  2. technological design of the DeX
  • automated market making like uniswap
  • plain on chain order book exchange
  • other type?
  1. DeX on a zone secured by ATOM via shared security
  • more customized blockchain application and performance
  • less impact on security of the hub
  • still economically benefiting ATOM holders
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Without going into detail, I love this idea. A more radical (and hence controversial) viewpoint is Cosmos Hub HAS TO BE a DeX. If Cosmos Hub is the most decentralized, public, open and secured hub (at this moment), it should work as a DeX for the tokens in the ecosystem.

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hi terence. thanks for the reply.

so you mean the hub should itself possess the DeX module inside the gaia so that it should provide DeX application all by hub self?

as a context of this, the reason why this matter is controversial is that we really don’t want to congest or risk the stability and scalability of the hub by utilities other than IBC transactions.

I am curious how other community members think about this matter. If we really need a hub DeX, should it be directly on the hub? or implemented as a second layer to protect the hub from noise created by DeX application?

Yup. This is controversial but also interesting. I may have conceptual misunderstanding but I don’t mind sharing my view:

When we talk about decentralized exchange, it is about the exchange between two tokens (selling token A and buying token B). To me, interchain-communication should also cover the exchange between different tokens where their chains are connected by IBC.

I expect the security for a DeX in Cosmos should be as high as Cosmos Hub due to the close relationship between exchanging tokens and inter-chain communications. So far, this is not achievable as validators’ resources are limited and a lot of base layer protocols are competing for the very limited validators’ attentions.

By directly implementing DeX on Cosmos Hub, we can

  1. save a lot of effort to cultivate the validators community for the DeX and hence more focused on building a great DeX
  2. improve the value of atoms and hence improve the economics of validators which will in turn increase the security budget of Cosmos Hub to cover the DeX functionality.
1 Like

Another feature/benefit of this proposal is that chains built with the cosmos SDK would enjoy instant liquidity.

I think that this would bring many projects into the ecosystem.

If having a DeX on a hub, impacts the security of the hub, and there isn’t not enough funding/resources (team) available.

Why not focus on supporting cosmos projects such as Kira Ex, which has the privacy, open source and decentralization and which will provide value to atom and make staked tokens tradeable?

or is the aim to put everything on cosmos hub and weed out other projects. It would be better to support projects that have the same values of cosmos and benefit cosmos.

e-money is going to be the first one.

Then Kira maybe the second one.

Dex native in cosmos is not ok.
Dex in zones yes.
Build your DEX and unisawps in Cosmos SDK or use cosmwasm

Binance is running Binance Dex long time ago.
Check daily volume and orders books.