This technical lightpaper outlines the core components behind the Sigmadex liquidity protocol.
The framework is assembled using Smart Contracts, DeFi Incentives, Community Governance, and includes an inflationary/deflationary medium to balance the token ecosystem. Sigmadex is engineered to be an autonomous liquidity gateway that allows users to purchase or sell tokens seamlessly with cross-chain capabilities.
Transcending from traditional models of liquidity pools and order books is no easy task. While researching, developing and being involved on market making frontlines over the past 3 years, we propose a liquidity layer like none other which blends the computation of game theory with human psychology.
The Sigmadex protocol is vastly different from traditional solutions in several ways:
Sigmadex is initially built on scalable foundations and proposed to be migrated to the Substrate framework, which is by default, low latency and also inherits security properties from the Polkadot network. The core design is simplified to avoid excess computational requirements.
Transaction fees are distributed with liquidity providers as well as token inflation rewards for long term providers. This model enables maximum liquidity injection by the community.
Game theory allows impermanent loss insurance pools to be on standby for replenishing heavily unbalanced liquidity pools. Combined with a dynamic transaction fee arbitrage incentivization model, SDEX liquidity providers will be able to hold their assets without having to worry about losing out on market gains.
Governance is done at the system level through the election of a proposal contract by native token voters. The proposal itself is the smart contract that has been empowered by the native token voting to gain administrative access for protocol variable changes.