We are several protocols into our deep dive into the Radix ecosystem, and while we’ve stumbled upon two or more decentralized exchanges, we’ve not come across anything quite like today’s focus.
For the guys at AlphaDex, there is a proliferation of DEXs on Radix, but very few are focusing on a scalable on-chain ledger order book. And if that’s the case, the next step would be to build one, right?
And so, in light of the above, AlphaDEX is being built as an order book exchange built on the Radix network to facilitate fair, organized, and rewarding DEX trading.
AlphaDEX provides a central order book and matching engine that can be seamlessly integrated into a wide variety of applications, from a simple token swap widget to a sophisticated trading platform designed for professionals.
Trading on AlphaDEX
AlphaDEX includes perks in its trading aimed at enhancing the trading experience and providing liquidity on the exchange.
Some advantages of trading on AlphaDEX include the following:
- Get paid to trade
To encourage liquidity provision on the exchange, traders will earn fees. They must place limit order trades that are not immediately executed on the order book to earn. When the order is matched with a subsequent order, the LP will earn a fee of up to 0.35% of the value of the trade. This means it’s possible to earn for trading on AlphaDEX.
That’s not all; there’s more.
- Earn from arbitrage opportunities
Aside from earning LP fees, traders can leverage and profit from arbitrage trading opportunities on AlphaDEX, given a large number of pairs on the exchange. This involves profiting from differences in token prices across different pairs on the AlphaDEX exchange or other exchanges.
Still on earning, there’s more.
- Save on trading fees
Traders can set up their platform on AlphaDEX for submitting trades, thereby saving on the platform fee they would pay if using another platform/app. However, this approach is better suited for experienced traders who are knowledgeable about connecting with the AlphaDEX API or directly with the on-ledger components of AlphaDEX.
- Seamless token swapping
Users can swap between any two tokens listed on AlphaDEX. However, before executing any swap, AlphaDEX provides a quote for the swap, showing the expected average price, expected price slippage, and the cost of each swap. This way, the user knows beforehand what swap will happen.
If a direct pair does not exist for the two tokens, AlphaDEX will display what swaps are required to proceed.
Is there a native token?
For now, no.
Rather than issue tokens that will give holders a share of the profit of the exchange, AlphaDEX would share the majority of fees earned on trades with the participants on the exchange.
The team believes this not only helps to avoid some complicated legal issues associated with holding tokens but also to eliminate the possibility of having a small collection of very large token holders who earn most of the profits from the exchange and use their control to maximize earning, often to the detriment of the majority of the exchange users.
AlphaDEX’s orthodox plan to reward all the participants who trade on the exchange means that up to 90% of fees earned will be returned to participants.
Their fee structure reflects this.
AlphaDEX fee structure and rewards
The fee a user (the person submitting a matched order, also called the market taker) will pay for trading on AlphaDEX would be anywhere between 0.05% and 0.5% of the trade value. This fee will be distributed as follows:
- Liquidity fee — up to 0.35%: As already discussed above, the liquidity fee is paid to LPs (market makers) whose limit orders were already on the exchange and match the order of the market takers. The liquidity fee for each pair will depend on the trade volume in that pair. The higher the volume of trade, the lower the liquidity fee.
- Platform fee — up to 0.1%: This fee is paid to the platform/app through which the order was placed. For example, when a user places an order from a third-party swap or exchange app. The platform owner may specify their fee for every order, but it’ll be between 0% to 0.1%.
- Exchange fee of 0.05%: This is a fee for using AlphaDEX, and it will go towards the running and continuous development of the exchange.
AlphaDEX is made for builders. Here is why.
Building on AlphaDEX
AlphaDEX provides all the functionality expected from a modern order book exchange to make it possible for developers to integrate this functionality into their apps. Once integrated, they will earn a fee when their users trade on the exchange.
Our thoughts on this
We’re truly intrigued by what Fred and his lads are building, especially because integrating with other dApps will make AlphaDEX a central hub for liquidity.
This would allow all external dApps to contribute and benefit from the exchange and prevent the creation of multiple small liquidity pools and low-volume exchanges that are commonly found in the crypto space.