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MetaVault.Trade:The Next-Generation Spot & Perpetual DEX

April 21, 2023

In conclusion

Srinivasan, angel investor and tech founder says Bitcoin will hit a million US dollars per unit in exactly 90 days! He’s not alone as the Ark invest research report also supports the $1m per bitcoin prediction but with a much longer timeframe, set for 2030. 

Irrespective of how “meme-able” these predictions are, the only way to actively keep tabs on the prices, in the expectation of $1m per Bitcoin, is to trade away all of our portfolios either on a CEX or a DEX. 

—Oops! Certainly not a CEX — that’s just soooo 2022 ain’t it? At least, not after the stunt “baby face” Sam pulled on us with FTX, right? right? 

Thankfully, with the success of GMX and other protocols,  decentralized exchanges (DEXs) have become essential to the trading ecosystem, allowing users to trade cryptocurrencies without relying on centralized exchanges like Binance and gang. 

Yet, the current generation of decentralized perpetual exchanges fall short in their quest to replicate CEX-like trading experiences, in a lot of areas such as transaction fees which are still relatively high on DEXs, limited liquidity, and scalability issues.

Per usual, we’ve brought to your attention a project called Metavault attempting to overcome through a novel approach that combines on-chain and off-chain solutions, the challenges mentioned earlier as well as other ones. 

Perhaps, if I were to be some sort of a mind reader, I would guess what’s on your mind: 

“What the heck is a Metavault?” 

[Enter] The Metavault Ecosystem

Metavault.Trade is a novel type of Decentralized Exchange that aims to offer an extensive selection of trading functionalities, along with high liquidity for numerous significant cryptocurrency assets.

Built on Polygon by the team behind Metavault DAO, which fuels a whole ecosystem of blockchain and technology projects, the Metavault.Trade code is a clean, friendly fork of GMX already audited by ABDK Consulting and additionally by Techrate.

Image source: Messin with Cryptos

Metavault.Trade’s ultimate vision is to become the user-friendliest derivatives hub for traders who want total ownership over their funds and want to trade like they’re finding themselves on a CEX - however, remaining in full self-custody. Metavault.Trade offers various trading features such as:

  1. Spot trading, which includes swaps and limit orders.
  2. Perpetual futures trading, where traders can take long or short positions with leverage of up to 50x.
  3. Binary options Trading (Recently added with the help of Buffer.FInance Infrastructure)

Aside from these, Metavault.Trade distinguishes itself over other existing DEXes, providing: 

  • Extremely low transaction fees.
  • No price impact, even for large order sizes.
  • Protocol own liquidityProtection against liquidation events, such as sudden price changes (known as “scam wicks”), which are smoothed out by the pricing mechanism.
  • An extremely user-friendly trading interface
  • CEX features (Trailing stop)

Built to enable trading without price impact — The Metavault.Trade multi-asset pool

Metavault.Trade’s key innovation is its multi-asset pool, which enables shared liquidity across all supported assets. When a liquidity provider deposits x assets into the pool, an equivalent dollar value of index tokens, MLVP, is minted. This enables withdrawal by burning MLVP in exchange for any asset in the pool. As a result, the platform allows for large-volume swaps without any price impact.

To illustrate, suppose the pool consists of BTC, ETH, MATIC, USDC, and DAI in equal proportions of 20% each. If a trader buys 50% of the BTC supply with USDC, the transaction executes at the platform’s exact price without any price impact. The state of the pool changes, with BTC dropping to 10%, USDC rising to 30%, and other assets unchanged. The price of BTC remains the same before and after the swap despite half the supply being purchased.

Each swap alters the pool’s balance, requiring liquidity providers to deposit in-demand assets and avoiding excess assets to rebalance the pool. The platform offers infinite liquidity at a fixed price, making ordering books unnecessary for most traders. Metavault.Trade aims to give traders full control of their funds without compromising their data.

Chain Preference and Oracle Structure: 

As mentioned earlier, Metavault.Trade currently only sits on the Polygon network, they are in the process of expanding to more chains such as zkSync Era. The platform presently supports seven large-cap assets and three stablecoins: BTC, ETH, MATIC, LINK, UNI, AAVE, USDC, DAI, and USDT and stMATIC.

Why Polygon first? You may ask. Polygon transactions are fast and inexpensive. Secondly, on-ramp/off-ramp options for exchanges make it easy to onboard users. Lastly, Chainlink provides a plethora of price feeds on Polygon, which are crucial for the platform’s pricing mechanism and the listing of new assets.

Meme source: Reddit

The pricing mechanism on Metavault.Trade is based on the aggregation of Chainlink and Time-Weighted Average Price (TWAP) pricing from major DEXes and CEXes. This mechanism significantly benefits leverage traders by reducing the risk of liquidation from temporary wicks that can be found on some exchanges, often due to whales manipulating the order books to liquidate other traders.

Liquidity incentivisation? Check!

In Q1 2022, the monthly trading volume in crypto markets reached trillions of dollars, with about $100 billion coming from perpetual trading on DEXes. Metavault.Trade is poised to capture a share of this market, where its competitors earn between $5 million and $60 million in monthly fees.

The platform requires a multi-asset pool with substantial liquidity to operate smoothly. To achieve this, Metavault.Trade offers a generous incentive program, with 70% of platform fees distributed to liquidity providers who minted MVLP by pooling their crypto assets.

MVLP can be thought of as a “crypto majors index” stabilised by stablecoins. The incentive program makes it attractive for liquidity providers to switch from similar traditional pools to MVLP, such as the aTriCrypto Curve pool.

MVLP also serves as a counterbalance to leverage traders on the platform, with their losses flowing back into MVLP. Data indicates that traders tend to lose money more frequently than they win, which benefits MVLP, acting as a house edge.

Oh, I see your excitement now, but that’s not all there is to this protocol. There’s more.

Meme source: DeFi Dives

MVX — Governance and utility token

Yep, you guessed it. Metavault.Trade has its own governance and utility token, MVX. And this is why it’s cool:

  • Holders of MVX are incentivised to stay in for the long run
  • MVX stakers will receive 30% of the platform fees collected in the form of the network’s native token, MATIC, on Polygon
  • MVX stakers will also be rewarded with “escrowed MVX” (esMVX), a non-transferrable token.

The escrowed MVX can be used in two ways:

  1. Stacked: Staking esMVX earns the same rewards as staked MVX, including MATIC rewards from platform fees, more esMVX, and multiplier points.
  1. Vested: esMVX can be unstaked and vested to be distributed as MVX. Vesting esMVX unlocks linearly over one year, and MVX is produced and distributed out of each vesting period. You cannot earn staking rewards on Vested esMVX.

Earn more with MVX Multiplier Points (MP)

One added benefit to staking MVX is the Multiplier Point feature which enables holders to earn rewards from protocol fees. Each MP makes the same amount of MATIC as a single MVX token. And because it’s an exponential multiplier, the longer an MVX holder stakes their tokens, the more MPs they accumulate.

Hell yeah.

If an MVX or esMVX holder unstakes their tokens, they will lose the same amount of MPs as the tokens they unstaked. For instance, if you unstake 30% of MVX held, you lose the equivalent in the number of accumulated MPs — 30%. Unfortunately, if you turn around to restake your token, MP starts zero. So we advise you to only stake tokens you’re willing to let stay locked for a long time.

Excited yet? Hold that thunder a minute longer. Let’s take a look at some exciting products by Metavault. 

Products

Perpetual Trading 

Metavault.Trade Perpetual trading offers a safer level of securely trading digital assets for prolonged periods. Trading does not require registration or KYC checks. You simply connect with your MATIC-loaded Wallet and start trading.

With Metavault's plans to launch its Perpetual trading on zkSync, things are about to get more interesting for MVX holders and MV liquidity providers (LPs). That's because when Perp trading goes live on zkSync:

  • 30% of the application's revenue will be distributed to MVX holders. That includes fees collected on Polygon and zkSync.
  • 70% of the revenue will go to LPs of the MVLP pool. The LPs on the MVLP pool on zkSync will receive the zkSync rewards while the MVLP pool on Polygon will only receive Polygon rewards.

0xBets

0xBets is a decentralized casino that Metavault plans to roll out soon -- a fantastic solution to the problems with traditional online betting. 

0xBets' contracts are decentralized and verified on-chain, guaranteeing a fair and transparent betting experience. It will utilize Chainlink's VRF on Polygon, and RandomizerAI’s VRF on the Arbitrum chain to ensure trustless and secure betting, with random results that are transparent and untampered. Overall, it's a hub for various casino games, PvP games, and sports betting with a 2% house hedge allocated to bettors. 

As 0xBets' liquidity does not come from the MVLP pool, its holders will not receive any rewards. MVX holders on the other hand will receive a portion of players' losses.

Binary Options

Metavault's binary option contracts are less complex than at-the-money contracts, offering only two possible outcomes based on the option holder's prediction - whether the underlying price will increase or decrease. 

To ensure fair distribution of liquidity, each user in the pool has trade size limits. The overall utilization limit of 40% sets a cap on the total liquidity utilized by all trades to prevent a few large trades from dominating the pool, while the asset pair-specific limit of 0.2% restricts the amount of liquidity locked in for a specific asset pair, ensuring no single trade dominates the pool for that asset pair. 

The maximum liquidity limit for a particular asset pair is 0.2% while the maximum trade size available to the user will be based on this limit. 

Metavault recently launched binary options dApp on Polygon through collaboration with Buffer Finance. The revenue generated from this trading on this network will be distributed in two ways:

  • Metavault and Buffer will split the initial revenue equally at 50/50. 
  • From Metavault's 50% share of the earnings:
  • 100% will go to MVX stakers, whereas 
  • 0% will go to MVLP, as the liquidity for binary options was sourced from the MVX treasury, rather than the MVLP pool.

Our Bias 

Since launching late last year, the protocol has been on a growth curve, bagging a range of integrations and partnerships to improve the protocol.

  • They integrated Chainlink Price Feeds and Chainlink Keepers to make available reliable financial data on Metavault.Trade’s perpetual trading platform allowing users to post various limit-order trades.
  • By integrating with Socket Infrastructure, Metavault.Trade on Polygon enables easy onboarding for users from over seven chains with seamless liquidity flow.
  • Exodus Wallet was added to the DApp to expand the self-custodial wallet options.
  • Their latest integration with Beefy Finance, the multi-chain yield optimiser, serves to Boost stakers’ earnings on the protocol.

Metavault has proven that they’re ready for the challenge in how swiftly they’ve responded to include new features and updates, including a proposed move to ZkSync.

Some new partnerships include: 

  • Integration with Buffer as an infrastructure layer for the implementation of Binary Options on Metavault. 
  • Liquidity provisioning partnership with Quickswap
  • Additional yield for MVLP holders through a strategic partnership with Olive. Other relevant partnerships can be found on their twitter timeline. 
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