The current exchange landscape in crypto finance is highly fragmented.
- Liquidity and latency issues plague the current decentralized exchanges. This makes volatility a natural occurrence when entering the cryptocurrency space and typically stems from thin order books and a lack of adequate liquidity.
- Centralized exchanges are heavily prone to hacks and exit scams. With many examples to draw from, such as the significant loss from the Mt.Gox hack of 2014 (473 million, early 2014 value), as well as more recent hacks like Kucoin (150 million, September 2020). In 2019, a total of 292,665,886 worth of cryptocurrency along with 510,000 user logins were stolen from over 12 different centralized exchanges.
- KYC is required in many circumstances on centralized exchanges. This contradicts a founding principle of Bitcoin, and cryptocurrency in general, where anonymity and privacy are promised to end-users.
- Current DEXs are limited to their own networks. Current solutions lack interoperability and have blockchain boundaries that can't be crossed inserting limitations on cross-chain value transfer.
- Uneconomical collateralization requirements. In the current state, synthetic asset backing is hyper-collateralized making it unattractive for anybody retail customer or institution to provide substantial liquidity.
Create a decentralized, user-friendly, multi-asset brokerage with low latency and community governance.
- Incentivize users to add liquidity by introducing game theory. By mixing game theory in the native token supply and staking mechanics, we anticipate a number of benefits for the community while keeping the economy motivated and within symmetry.
- Introduce various decentralized finance opportunities. Multiple DeFi solutions for native token stakers are a necessity to provide users with several earning opportunities.
- Allow the protocol variables to be governed by the community. By holding a substantial stake in tokens, end-users will be able to participate in the voting and governance process in modifying certain protocol variables.
- Utilize XCMP to exchange assets across multiple networks. Cross-chain message passing using Substrate will enable Sigmadex to be in communication with other parachains enabling the exchange of assets from Ethereum, Cosmos, and other blockchain networks.
- Introduce the Sigma Risk Index to regulate synthetic asset collateralization. Market risk and volatility assessment algorithms will adjust collateralization requirements dynamically.