Staking Finance (StaFi) just launched the testnet of its decentralized exchange for the trading of rTokens. While it’s a welcome development, there are ongoing debates regarding the necessity of such a move.
StaFi Protocol has partnered with several DeFi projects such as Curve, Uniswap, Quickswap, and more, providing rToken holders with the opportunity to trade, lend and stake their synthetic derivatives for a more significant ROI. Thus, the proposal to launch the rDEX came as a surprise to many.
In this piece, we intend to dissect the launch of the rDEX, helping users decide if this launch by the DeFi protocol is a wrong move or a masterstroke.
What Is The rDEX?
This is an automated market maker (AMM) decentralized exchange that will support the trading of rToken and FIS pairs in one place. With this dex, StaFi brings trading of rTokens under one roof.
Besides being able to access multiple trade pairs in one place, rDEX has other benefits, which we will look at later.
The synthetic derivatives exchange has recently gone into testnet, with the team requesting community members to put the rDEX to use.
Is rDEX Launch a Masterstroke?
The question many are asking is if the move to launch an rDEX is a smart one. Well, it depends on how this move is viewed. From the vantage point of value, an rDEX brings a lot of value to both rTokens and the StaFi chain in general.
The rDEX will allow rToken holders to trade the staking derivatives in one place, reducing the cost and inconvenience of cross-chain transactions.
From the trading perspective, the rDEX is certainly a masterstroke. It aims to solve the liquidity issues that have plagued rToken pools. Also, price impact and the need to increase slippage to outrageous levels are eliminated.
Another reason why the rDEX launch is such a gamechanger is its solution to the impermanent loss. Everyone adding liquidity to a regular DEX has to be wary of impermanent loss, which has a likelihood of becoming permanent. However, providing liquidity on rDEX comes with protection from the risk of impermanent loss as FIS tokens are given to liquidity providers to cushion the effect.
StaFi hopes the rDEX will be more than just a decentralized exchange. The DeFi protocol believes the DEX can put these staking derivatives on the map and it should. Being the one exchange where all rTokens can be traded for FIS is certainly a big deal.
In StaFi’s rDEX, there will no be need to balance assets in a 50–50 ratio to provide liquidity. An interested liquidity provider just has to add liquidity for single or several assets without any reference to a balance in the pool.
Can rDEX Launch Be Considered A Wrong Move?
There are people in certain quarters that believe the rDEX is a wrong move by StaFi. And they have their reasons.
Recall that Staking Finance has gotten rTokens listed on several decentralized exchanges, so many consider the launch of an rDEX as complicating an already solved problem. However, they forget that these exchanges weren’t built with rTokens in the picture. The result is the low liquidity challenges plaguing those DEXs. Launching the rDEX resolves the poor liquidity through techniques that aren’t feasible in other AMM decentralized exchanges.
The ‘wrong move’ perception of rDEX is also down to the timing of the launch. Many feel there are far too many DEXs already, with the rTokens currently trading on different decentralized exchanges, their viewpoint might appear to hold water. Yet, the fact remains that the rDEX has a lot of features you won’t see on a regular DEX. From the impermanent loss protection to the liquidity provision that’s lacking elsewhere, the rDEX is a welcome innovation.
What Is Next for rDEX?
There’s a lot to expect from the rDEX in the future. For one, the DEX will support the IDO of new rTokens. Once that’s a reality, rToken holders can take partnership in bringing new staking derivatives into existence — a situation that creates a massive use case for the rToken.
The rDEX will support the cross-chain transfer of rTokens between the StaFi chain and others. Users will gain from this move as rToken for rToken trading will come into effect.
StaFi launching rDEX is certainly a great move. Whether it’s a masterstroke is up for debate. The DEX brings a new lease of life to these synthetic staking derivatives with significant benefits to both holders and traders. We can only hope the decentralized exchange gains the attention it deserves in a crypto space that’s constantly evolving.