Introduction

The Value DEX is a decentralized system created for trading cryptocurrencies (ERC-20 Tokens) on the Ethereum, BNB Chain, BASE, and programs on SOLANA. The protocol is established through a series of persistent, non-upgradable smart contracts, prioritizing censorship resistance, security, and self-custody without the need for trusted intermediaries.

Currently the Value DEX V1 is under development.

How does the Value DEX differ from a traditional market?

In order to grasp the differences between the Value DEX and a traditional exchange, it's beneficial to first examine two aspects: how the Automated Market Maker design differs from traditional central limit order book-based exchanges, and how permissionless systems contrast with conventional permissioned systems.

Orders Book VS AMM

Most publicly accessible markets operate using a central limit order book style of exchange, where buyers and sellers create orders organized by price level that are progressively filled as demand shifts. Those who have traded stocks through brokerage firms will be familiar with an order book system.

The Value DEX takes a different approach, using an Automated Market Maker (AMM), sometimes referred to as a Constant Function Market Maker, in place of an order book.

At a high level, an AMM replaces the buy and sell orders in an order book market with a liquidity pool of two assets, both valued relative to each other. As one asset is traded for the other, the relative prices of the two assets shift, and a new market rate for both is determined. In this dynamic, a buyer or seller trades directly with the pool, rather than with specific orders left by other parties. The advantages and disadvantages of Automated Market Makers versus their traditional order book counterparts are under active research by a growing number of parties. We have collected some notable examples on our research page.

Permissionless Systems

The second departure from traditional markets is the permissionless and immutable design of the Value DEX. These design choices were influenced by Ethereum's fundamental principles and our dedication to the ideals of permissionless access and immutability as essential elements of a future where anyone worldwide can access financial services without the fear of discrimination or counterparty risk.

A permissionless design means that the protocol's services are entirely open for public use, with no ability to selectively restrict who can or cannot use them. Anyone can swap, provide liquidity, or create new markets at will. This differs from traditional financial services, which usually restrict access based on geography, wealth status, and age.

The protocol is also immutable, meaning it's not upgradeable. No party can pause the contracts, reverse trade execution, or alter the protocol's behavior in any way. It's important to note that Value Governance has the right (but not the obligation) to divert a percentage of swap fees on any pool to a specified address. However, this capability is made known to all participants in advance, and to prevent abuse, the percentage is limited to between 10% and 25%.