Let’s face it… In the heat of the moment when it matters most you want to be using the fastest, cheapest way to execute that critical trade. And when you trade on most DEXes, network congestion and the subsequent high gas fees impact your performance. Pay too low of a gas price and you’ll be stuck waiting around, sometimes only to have your transaction revert. So, your other option is to crank up the gas price and pay gas fees which add up over time, eating into your profits.
These limitations can lead to a less-than-desirable experience for traders, especially those coming from centralized exchanges. Over the past few years, countless hours of research have gone into creating layer 2 technologies that allow DeFi applications like DEXes to scale far beyond what’s possible on layer 1. DeversiFi has made it their mission to provide a professional trading platform for traders as the first exchange on Ethereum to adopt StarkWare’s Validium Rollups Layer 2 scaling technology.
DeversiFi in a nutshell
DeversiFi is a self-custodial layer 2 DEX capable of processing up to 9000 transactions per second by utilizing zero-knowledge transaction batching technology. The next chapter for DeversiFi and the Nectar ecosystem begins soon with the launch of Nectar Beehive V1, a liquidity mining initiative designed to further bootstrap the Nectar community and produce sustainable, long-term liquidity for the NEC ecosystem.
The Evolution of DeversiFi
When you hear the term ‘liquidity mining’ you probably think of fly-by-night food token farms, however NEC, the token of the DeversiFi ecosystem, is in a category of its own. DeversiFi and the Nectar ecosystem have been pioneers of liquidity mining in the DeFi space since 2017 and are backed by notable partners such as ParaFi Capital, D1 Ventures, BR Capital, StarkWare, Bitfinex, ConsenSys, and Infura.
Originally incubated by Bitfinex (now fully independent), DeversiFi began as Ethfinex Trustless, a decentralized exchange with a hybrid infrastructure with deep-liquidity from aggregated order books which access liquidity from exchanges like Bitfinex. Nectar (NEC) was introduced in 2017 as one of the first liquidity mining tokens as a way to reward Ethfinex users with a stake in the future development, governance and success of the platform. Ethfinex eventually closed its doors in August 2019 leaving behind 17000 ETH which was entrusted to NEC holders via the Nectar DAO, or NecDAO for short.
Piecing together DeversiFi, NEC, and NecDAO
Nectar’s original purpose was to incentivize liquidity on Ethfinex offering 50% of the centralized exchange’s trading fees. But after Ethfinex closed its doors, the remaining 17,000 ETH was passed onto the Nectar DAO and the role of NEC tokens has since expanded to become the governance and utility token of the Nectar and DeversiFi ecosystem. The primary goal of Nectar is to grow the world’s largest community of decentralized exchange users. NEC tokens can be staked to earn reputation and become a voting member of NecDAO. Learn more about Nectar DAO.
NEC is deflationary with the supply being reduced over time through a buy-and-burn model. Each week, up to 50% of the revenue from DeversiFi trading fees (based on daily trading volumes) are used to purchase NEC tokens through an open and transparent auction mechanism. These NEC tokens are then burned reducing the total supply.
DeversiFi offers unique trading fee discounts to NEC token holders. On top of the trading fee discounts DeversiFi users receive based on their 30d trading volume, Nectar holders will soon be entitled to additional discounts of up to 20% depending on the average amount of Nectar tokens that they hold (and have locked inside DeversiFi) for the past 30 days. For example, if a trader expects to do 10 million USD of trading volume every 30 days, buying and holding 100,000 NEC could save them ~$4000 in fees per 30 days.
You can see how DeversiFi and NecDAO have a symbiotic relationship. The more users trade on DeversiFi, the more NEC tokens are burned, the more valuable NEC becomes, the greater the value of the potential discounts NEC holders can receive. NecDAO and NEC holders benefit from generating proposals which improve DeversiFi and attract more trading volume. DeversiFi, in turn, has a dedicated community of NEC stakeholders that boost trading volumes and generally promote their platform.
Introducing Beehive, Nectar’s new liquidity mining initiative
Nectar Beehive V1 is a new community bootstrapping and liquidity mining initiative for the DeversiFi ecosystem that returns NEC to its roots of rewarding market makers.
Nectar Beehive will allow liquidity providers to stake their tokens and earn NEC and BAL token rewards, offering multipliers up to 2x for those who also trade on DeversiFi. Of course, APY varies and is subject to many factors such as the price of NEC tokens and total participation in Nectar Beehive. Inspired by other popular liquidity mining initiatives, NEC rewards will be vested for 1 year, limiting sell pressure on the market and producing a sustainable source of liquidity for NEC.
Nectar Beehive V1 officially launches on Tuesday December 1st, 2020. All the need-to-know details will be communicated in their Discord and Twitter. UPDATE: Learn more about Nectar Beehive V1.
DeversiFi offers a fast, smooth trading experience
We recommend you experience it for yourself to see how it compares to what you’ve come to expect from a DEX or even centralized exchanges. DeversiFi have recently added Hermez Network token offering a 10% kickback to the first 100 users who trade HEZ (details here). In the run-up to Nectar Beehive, various new token pairs will be added allowing Beehivers to trade their favourite tokens while earning NEC.
High throughput and deep liquidity
Why are rollups so cool? I’m glad you asked. I’m not going to get into all the technical details of how zkSTARKs or Validium rollups work. But in a nutshell, they allow DeversiFi to offer a super fast layer 2 experience while still rooting all security in layer 1, in this case the Ethereum blockchain. DeversiFi was the first DEX to utilize StarkWare’s transaction batching technology StarkEx which processes and settles trades at extremely high speeds (approx. 9,000 tps).
DeversiFi’s hybrid infrastructure features allows traders to tap into deep liquidity from aggregated order books including Bitfinex, resulting in self-custodial access to the best prices.
Gas-Free trading
No one likes paying high gas fees. They always seem to spike when you need to make an important trade. This typically happens because many traders are competing to “outbid” other traders to be included in the next block. DeversiFi users enjoy gas-free trading with instant finality thanks to its Validium rollups. Trades are processed in batches and securely submitted back to the Ethereum blockchain where customers’ funds are held. There is never any danger of trades being rolled back and rooting the transactions on-chain ensures customers would be able to withdraw their funds in the unlikely case where DeversiFi or StarkWare go offline.
Gas fees are only required to lock and unlock tokens; this is because these interactions take place with DeversiFi’s smart contract on layer 1.
Privacy-by-default
Don’t leak that sweet sweet alpha. Validium rollups is one of the only layer 2 technologies on the market that enables private transactions. Privacy let’s you make the most of opportunities in the market without exposing your strategy to the public blockchain where it can be monitored and reverse-engineered. And while leaking alpha is bad, your data potentially falling into more nefarious hands is worse.
Don’t underestimate the value of privacy when it comes to DeFi. Although the community is small now, DeFi is likely to grow into a wider mainstream market where bad actors may increasingly look to take advantage of personal data stored forever on the blockchain. As the saying goes: An ounce of prevention is worth a pound of cure.
DeversiFi’s roadmap aims to uniquely position the platform for the future
Composability between platforms is the major game changer of DeFi. Within the next few months, DeFi is likely to experience an explosive growth in the number of protocols available on layer 1 in addition to the new and existing services migrating to layer 2. DeversiFi’s hybrid architecture and history of adaptation makes it uniquely situated to capitalize on the potential composability between layer 1 and layer 2 platforms as well as the opportunities that arise from bridging decentralized and centralized services like CEXs/DEXs.
Let’s discuss some features coming up on DeversiFi’s roadmap. Head here for a full public roadmap.
Rapid Withdrawals and DeversiFi EARN
I haven’t met a person yet who enjoys the agony that is waiting for a withdrawal from an exchange. Previously, DeversiFi users would be required to wait until another batch of transactions is submitted to the blockchain in order to withdraw their funds. This can sometimes take a few hours depending on network congestion. With new rapid withdrawal functionality, DeversiFi users will be able to withdraw instantly, paying a fee and essentially “borrowing” liquidity from the DeversiFi EARN pool. Users can provide liquidity to DeversiFi EARN to earn fees for enabling rapid withdrawals. Both parties benefit from the arrangement: liquidity providers earn passive returns and traders have the option to skip the wait for a convenience fee.
Conditional transfers open the door for enhanced composability
Beyond fast withdrawals, conditional transfers open the door to many new possibilities and arbitrage opportunities for DeversiFi users. This upgrade would allow users to withdraw to new or different addresses, deposit from one address directly into their DeversiFi trading account, and it can even allow traders to make custom transactions directly interacting with other DeFi protocols on layer 1.
You can imagine how this lowers the opportunity cost of holding funds in DeversiFi. DeversiFi users benefit from being positioned to effectively seize potential opportunities across centralized and decentralized layer 1 and layer 2 DEXes, improving the overall efficiency of the market.
Exploring synergies between DeFi and centralized services
DeversiFi has been exploring a number of things that would further enhance DeversiFi’s hybrid architecture including zero-knowledge KYC and several regulatory licenses that would allow them to provide regulated products such as derivatives and leverage to even traders based out of the United States.
Closing Thoughts
DeversiFi has put a lot of time and effort into building a very uniquely situated trading platform. When you put all the pieces together, it’s easy to see DeversiFi and the Nectar community are dedicated to building a platform that is sustainable with long-term goals. Experience what layer 2 has to offer today by trading on DeversiFi. And don’t forget to mark your calendar for the launch of Beehive! Thanks for reading.
Disclosure: This post is part of our paid promotional DeFi Pulse Drop series; We’ve partnered with DeversiFi to help educate and inform the community about the DeversiFi and the Nectar Ecosystem. DeFi Pulse received NEC tokens as part of its payment. As always, we’re committed to providing the entire community with quality, objective information, and any opinions we express are our own.
