QuokkaSwap
Decentralization Exchange Tokenomics
Introduction
The decentralized exchange (DEX) QuokkaSwap is a completely new platform for trading
crypto assets. Within the framework of the new platform, all transactions are carried out
using smart contracts, and not in a centralized trading system.
The QuokkaSwap DEX differs from centralized exchanges in that no user funds are stored
on the platform, and the exchange does not control transactions.
The principle is based on the fact that all assets are transferred directly from a user's wallet
connected to the platform. In addition, the platform excludes the procedure for user
verification.
Speaking of QuokkaSwap, it is worth noting that this is an exchange with a completely new
approach to modeling and implementation.
The platform has its own exchange model, and the improved tokenomics of the
decentralized exchange solves many problems and uses an exchange protocol based on the
concepts of game theory.
With QuokkaSwap, we are paving the way for BEP20. It is a standard token for Binance
Smart Chain, created on top of the Binance blockchain, which is used for instant
transactions. [1]
Analysis of the market of decentralized crypto exchanges
Most DEXs typically use automated market makers (AMMs). These are protocols that
provide liquidity to all assets in the market. Unlike traditional exchanges, assets are traded
automatically, according to pre-set mathematical formulas.
The emergence of decentralized exchanges is due to the shortcomings of centralized ones:
hacks, problems with the law, and fraudulent actions of the organizers of trading.
When analyzing the market, we found out that in recent years, many people prefer
decentralized platforms. One of the first fully decentralized exchanges was the BitShares
DEX, launched in 2014.
This exchange was designed to make transactions with guaranteed order execution at a
guaranteed price. However, there were no other functions that traders demanded on the
exchange. In this regard, the exchange did not take a significant share of the market.
Traders continued to use conventional centralized exchanges, despite all the risks involved.
But over time, decentralized exchanges evolved. In 2017, Waves DEX and EtherDelta
platforms began to appear, combining decentralized exchange with a centralized order book.
It is worth noting that on these exchanges, orders are not sent directly to the blockchain, but
enter the usual database of the exchange’s central server, where they are brought together.
As new types of exchanges emerged, the interest in the decentralized exchange grew, which
aroused even more interest among developers. Advances in technology have pushed for the
advent of margin trading solutions (dYdX), and exchange aggregators (1inch) in 2019.
These solutions give traders access to the liquidity of several platforms at once, and simply
new platforms with an improved interface and technological improvements.
Technology has not stopped developing, and so, in 2021, a decentralized exchange
appeared that offers fully functional options trading. We are talking about Delta Theta.
The story of DEX did not end there, and 2022 marks the launch of QuokkaSwap. It is a
fundamentally new solution for decentralized exchange. This project created an
over-the-counter market for decentralized cryptocurrency exchanges. [2]
1. Description of the problem
The new, fully decentralized exchange QuokkaSwap was created specifically for
cryptocurrencies and is designed for Quok ICO. The exchange solves several important
problems at once that affect legacy platforms. To do this, we used a completely new, modern
trading model, as well as the BSC exchange protocol. Thus, all transactions are not
managed and controlled by centralized intermediaries.
DEХ problems include the following:
1.1 Some DEXs are quite centralized.
The decentralization of supposedly decentralized exchanges is sometimes questioned by
researchers and users.[3-4]
Our DEX platform, powered by Binance Smart Chain, is built to increase trading volume.
1.2 Low liquidity
Decentralized exchanges have had low liquidity for many years. There are many reasons
why not many traders are using the DEX. Some people tend to have more trust in authorities
(like banks, etc.), so they feel better when they know that the service is under the control of
some organization.
Another reason is that DEXs use numerous protocols, and the average audience is not
always interested in finding out how a particular decentralized exchange works. At this time,
centralized exchanges tend to provide an intuitive interface.
Low liquidity becomes a problem that gets worse on its own as exchanges with low trading
volume attract fewer traders and liquidity gets even lower. Traders do not like to place orders
on an exchange with low liquidity because their trading strategy may not work under these
conditions. Also, low liquidity creates serious problems for users of the DEX. DEX prices can
differ drastically from those on centralized exchanges. Sometimes it takes time to find a
matching order. This fact poses additional risks.
In the case of QuokkaSwap, large-volume trading on the exchange makes sense. First of all,
this is due to the high liquidity of the platform. The high liquidity makes trading much faster
and safer because you are buying and selling at predictable prices.
By creating the first decentralized exchange for BEP20 tokens, we get the first closed
ecosystem exchange with BEP20 tokens.
2. Solution
2.1. The centralized order book model (CLOB)
We present in the new project a classic protocol that is used randomly in financial stock
exchanges. Thus, traders send their buy and sell orders to a central market maker, where all
these orders are matched according to the strategy. Finding matched buyer pairs and sellers
perform desired actions, respectively, through a proven protocol.
CLOB is one of the key methods that is used in the coordination of the market. With this
model, liquidity providers and traders easily find each other and know which orders are
pending. The operating principle of the method is based on the following principle:
Market makers send an order on the exchange to conduct an asset transaction. At the same
time, basic information about the price, the number of assets, and the direction of the order -
buy or sell - must be provided.
Then the exchange starts collecting all orders into the database. The platform then publishes
the order book to all of its users. In order to complete the transaction, the other party to the
transaction must give an agreement to conduct the transaction, accepting the price and the
amount of assets available in the order book.
The platform operator must match the acceptor's agreement (its trading order) with the
orders in the order book that respond to the acceptor's order at the best prices currently
available.
Then comes the key moment in this process - order approval. Many platforms based on this
model take a special approach in which they match buy and sell orders as soon as they are
compatible. If there are several orders with the same price, the model provides algorithms
for determining their priority. As a rule, this works according to the FIFO rule - first in, first
out.
2.2 Account-based vs. BEP20 model
At the moment, there are a huge number of platforms for the exchange of tokens based on
the account model, primarily those based on liquidity pool (LP) / automated market maker
(AMM). But this approach to creating concepts failed. In this regard, it became necessary to
consider different design options for blockchains based on accounts and BEP20 with new
update mechanisms.
BEP20 is very similar to BEP2, but this Binance Smart Chain token standard extends the
functionality of ERC-20 and BEP-2 tokens, allowing you to transfer your tokens between
different blockchains. [5]
Due to the high flexibility of the BEP20 standard, it is much more convenient for creating new
blockchains, which is why it is the choice of many developers. Moreover, Binance Smart
Chain is designed for the decentralized finance sector. [3, 5]
3. QuokkaSwap decentralized order book model
QuokkaSwap is built on top of BeP20 and is one of the first decentralized applications in
DeFi, playing a key role in the exchange ecosystem. The Binance Smart Chain token
standard is designed to transfer tokens between different blockchains. Due to its high
flexibility, the BEP20 standard is considered a more convenient tool for developing new
blockchains. This blockchain is considered one of the main competitors of Cardano.
Therefore, we created QuokkaSWAP, which is fully compatible with BEP-20 tokens based on
the BSC network, in addition to several cross-chain assets such as bitcoin, ether, and
litecoin.
Overall, QuokkaSwap can be described as a high-performance and scalable decentralized
exchange (DEX) built on the BEP-20 network. The platform uses CLOB, not an automated
market maker, to power its trading infrastructure.
3.1 Basic model
Traders can place buy and sell orders in a manner similar to the centralized order book
model. But the difference is that it's possible to maintain limited orders.
It is worth noting that orders are executed when a smart contract is invoked, locking a certain
number of tokens.
Under the base model, Binance Smart Chain and Binance Chain complement each other
with a dual architecture, but BSC is focused on serving decentralized applications to offload
the mainnet, which is optimized for ultra-fast trading. Much attention is paid to the
compatibility of the two chains. [5,6]
3.2 Problems with the basic model and our solutions
The main element of this DEX is that the exchange is aimed at solving the liquidity problem
that many centralized exchanges face today. The peculiarity is that providers become
liquidity providers, and within a decentralized user base, users pool assets to create a fund
to execute all trades.
The key annoying element of centralized exchanges is that users who are looking to buy a
particular cryptocurrency have to wait for someone to be willing to sell it. The ability to
introduce a new protocol to maintain liquidity, it is necessary to wait for the completion of
transactions. Thus, all orders are executed instantly when the pool has enough liquidity to
complete transactions. Listed below are all of the key issues with the base model and our
solutions:
Issue #1: Power of the matchmaker
The key goal of the underlying model is to convert the centralized order book into a
decentralized version. But at the same time, the concept is based on the fact that the project
develops around a single central subject that initiates and coordinates all exchanges.
Solution 1: Multiple matchmakers.
The only way to solve the problem is to have several entities. Everyone can take on the role
of matchmaker, for which you can receive a reward. That is the incentive to participate. With
each match, you can get a reward and this is what encourages you to make a sufficient
number of orders. And this decentralizes the process.
Issue #2: Contention around the best prices.
It is worth paying attention to the fact that matchmakers keep the difference between bets as
a reward. This allows you to maximize your individual profits by matching the highest
available rate to the lowest available. In this case, the stimulus will be the same for everyone
and the same for all matchmakers.
Issue #3: The choice of batch sizes
With regard to the choice of batch sizes, in this case, things are different. If rank, all
transactions were sent separately to match them. But it made sense to combine several
matches into one transaction in order to reduce the fee for each operation. When trying to
reduce the fee, each will be in a single transaction. In this case, you should not exclude
overlaps between the detected matches and this leads to an error.
Solving problems 2 and 3:
Despite the complexity of solving problems 2 and 3, it is quite simple to coordinate a group
of matchmakers. All matchmakers are interested in how to increase their own compensation.
Therefore, in order not to develop an intricate set of restrictions that are difficult to
implement, game theory was taken as the basis. According to this theory, if the
matchmakers know about the competitive game they are playing, then there is no chance of
winning. But if all matchmakers go for the best price, then they will block each other and
none of them will get the reward. [7]
4. Protocol participants
According to the proposed protocol, three actors take part in its execution:
● tradesmen;
● matchmakers;
● frontend operators.
The matchmaker and the client operator are responsible for providing the infrastructure for
the trader to make trades and have unique roles. Each participant has a unique economic
incentive.
4.1 Interface provider
The front-end supplier ensures that the trader has the infrastructure to place limit orders on
the smart contract. Therefore, for the trading interface, it is important to be able to indicate
your trading intention to the trade party, which is then used to create a smart contract. The
created smart contract allows sending an order to the blockchain. Once the order is
completed, the vendor receives a small fee.
4.2 Matchmakers
The task of this actor is to match orders that have been submitted to the smart contract. The
exact details of the mapping can be found in the protocol specifications. For any successful
match, the matchmaker gets a reward.
4.3 Modularity via independent operators
It is best when there are several external providers and several independent partners - this
creates an ideal environment. Regardless of the interface used, all orders go to the same
smart contract. In this way, matchmakers can match all placed orders regardless of the
frontend provider used. This is what makes the QuokkaSwap exchange model decentralized
and solves the problem of liquidity for all operators. [6]
5. Technical notes
The project has established fundamental principles that support our exchange. For example,
BEP 20 option is now available for major assets such as BTC, ETH, USDT, LINK, DOT, DAI,
EOS, LTC, XRP, XTZ, BCH, BAND, ADA, ONT, and other cryptocurrencies.
5.1 Short timeframes for asset transfers
Users will now be able to transfer the same asset in a shorter timeframe and at a noticeably
lower cost via the Binance smart chain (BEP20 token). The PoSA method also provides a
faster BEP20 transaction speed. Although the verification time for individual transactions
varies, on average, verification is around 3 seconds for BSC. This means that a typical
BEP20 transaction is likely to run 5 times faster than an equivalent ERC20 transaction.
5.2 Execution of large orders
When sending large orders, they are divided into several smaller units. This approach to
order fulfillment makes it possible to process even the largest orders quickly.
5.3 Platform security
BSC has only 21 validators selected to validate a block. In comparison, there are more than
70,000 validators distributed on the Ethereum network. The low number of validators in the
BSC can cause trust issues among potential users. But in our project, the issue of security
was resolved by introducing new protocols. [7]
6. QuokkaSwap ’s components
The plan is to use all of the described infrastructure components to make token trading
possible as soon as the QuokkaSwap protocol is released. The proposed components can
be regarded as independent actors.
6.1 Front-end
Within the framework of the project, it is planned to use 2 described infrastructure entities.
This is necessary in order to enable the trading of tokens immediately after the release of the
QuokkaSwap protocol. These two components can be seen as independent actors.
6.1.1 Interface
There are plans to launch an interface through which traders will be able to send orders to
the blockchain. The frontend will perform the "frontend provider" tasks described in the
protocol. However, it is planned to provide not only basic functions for placing an order but
also additional features.
6.1.2 Market monitoring
Traders get access to the real-time indication of the current market value and historical data.
Data review is possible with the use of charts, which will display the current dynamics of
prices and volumes for all pairs of orders.
6.1.3 Market order
Only limit orders are supported in the protocol specifications so that traders can send
something similar to market orders.
6.2 Matchmaker exchange
Matchmaker is a standalone component managed by the exchange. The main task of the
off-chain component is to find a match for all submitted orders. Finding this optimal match is
similar to the challenge facing centralized exchanges.
The matching engine is essentially the main mechanism of a digital exchange that matches
bids and offers to execute trades. They work with one or more algorithms that keep a record
of all open orders in the market and generate new trades if two orders can be closed one
after the other. Thus, within the framework of the project, it is possible to use existing
algorithms obtained as a result of research to create the QuokkaSwap system. The most
famous algorithm used in the project is the "price/time" and proportional distribution
algorithms.
The choice of an algorithm is one of the important parts of the trading mechanism, so we
paid special attention to it and plan to open the source code of the algorithm used. The
matching engine supports different types of orders such as limit orders or market orders, can
have a unique API, and offer a wide range of other features.[7, 8]
7. The main advantage of QuokkaSwap DEX over CEX
On centralized trading platforms, the CEX platform owner is only considered to be the
intermediary who is responsible for holding and managing all funds traded on the platform.
CEX is usually an intuitive and accessible platform with high liquidity and a wide variety of
trading tools. And also these kinds of sites are a gateway between fiat currency and
crypto-assets.
But any crypto enthusiast knows that there are some risks of centralization and loss of trust
in middlemen. Therefore, DEXs were created to eliminate middlemen. In decentralized
platforms, you can simply provide the infrastructure for the buyers of an asset to find sellers
and vice versa, bypassing all the prohibitions that are characteristic of CEX.
The main advantage of DEX over CEX is obvious:
Reliability. There is no need for an intermediary anymore. This allows users to be
responsible for their funds themselves, without intermediaries.
Anonymity. All trading operations are anonymous, as there is no supervisory and controlling
body.
Universality. And, more importantly, any type of exchange between assets can be done in
the DEX, so you are not limited by the conditions for listing instruments, as in CEX.
No KYC verification required. KYC/AML verifications are required for many exchanges.
For a number of reasons, users are required to provide proof of identity and verify their
address. This is a privacy issue for some and an accessibility issue for others. But when
there are no necessary documents and no time to go through this procedure, DEXs come to
the rescue. Decentralized exchanges are public, no one verifies your personality. To get
started, you just need to start a cryptocurrency wallet.
However, there are a number of legal requirements due to which the DEX is partially
controlled by a central authority. If the order book is centralized, then the user must meet
these requirements.
No risk of third-party intervention. DEX is attractive due to the fact that they do not store
client funds. That is, even in the event of serious attacks, assets will not be at risk and all
confidential information will not be transferred to third parties. [9]
It is very easy to start trading on a decentralized exchange and it is possible even with the
minimum entry threshold. Moreover, on the one hand, decentralized exchanges are much
safer and more reliable than traditional ones. However, there are still some difficulties in
development for beginners.
In the case of QuokkaSwap, you can count on this platform to become a full-fledged
analogue of centralized ones, but not everywhere, due to the peculiarities of legislative
regulation in different countries. But this does not take away the prospects for further
development, because our exchange is focused on other tasks than traditional exchanges.
8. Promo
Project promotion is planned at the expense of QUOK's own token. As part of promoting the
project to attract users, it was proposed to cancel the commission for exchanges for 1 year.
Only a commission is possible to pay the profit to users who add liquidity.
Project name - [Link] - Decentralized Exchange Tokenomics
CONTRACT - 0xDf34f62a90717bAc9067A1b9eb49f5e7419FdC7f
TOKEN NAME - Quokka
TOKEN SYMBOL - QUOK
TOKEN TYPE - BEP-20
DECIMALS - 18
TOTAL SUPPLY - 1 000 000 000
Quokka PRICE 0.004 USD
The following distribution of assets is planned within the project:
300 000 000 Public Sale
200 000 000 Development Team
180 000 000 Liquidity
150 000 000 Staking
50 000 000 Rewards
45 000 000 PARTNERS & ADVISERS
40 000 000 DEVELOPERS
35 000 000 Marketing
The project ecosystem is closed, the token attracts new users to the exchange, and the
exchange ensures the reliability of the token. The feature is that the ICO token has its own
decentralized exchange.
Conclusion
DEX QuokkaSwap is one of the first exchanges to offer users the opportunity to exchange
assets in a completely decentralized way. The creation of a new platform was the right step
in the direction of cryptocurrency and served as an impetus for the development of DeFi.
The platform has minor shortcomings, for example, some cryptocurrencies are not available
for trading. But a notable benefit for all users will be trading without commissions for one
year.
Thanks to its user-friendly interface, QuokkaSwap is a more accessible DEX. Due to this, as
well as due to lower fees and other opportunities, a new project may be of interest to many
investors.
In conclusion, it is also worth adding why you should work with DEX. One of the main
advantages is asset security, which many cryptanalysts will agree with. When working with
QuokkaSwap DEX, the user makes transactions directly from his wallet, and not from an
exchange account, which is essentially controlled by a third party.
Ultimately, decentralized trading platforms will fully replace traditional crypto exchanges and
QuokkaSwap as well. However, this cannot happen at the current stage. First of all, the
problem is the relatively complicated interface, less popularity and an insignificant set of
financial instruments. But by creating QuokkaSwap, many of these problems will be solved,
and the project has all the prospects for further development, which will bring DEKS to a new
level.