The Next Generation of Market Making With Dexalot Price Discovery￼
Market makers have been a silent but critical component within the trading and exchange ecosystem. The concept of market makers is simple – they help provide a counterprice so that traders can get a price of exchange as close as possible to the value they wish to exchange a coin for. This was mainly with centralized exchanges but with the birth of decentralized ones like Uniswap, the idea of Automated Market Makers (AMMs) became the new norm. The downside was this came with new problems.
The use of AMMs with DEXs have been beneficial overall with its concept but not so much with its function. DEXs tend to be slow and overpriced on fees while AMMs can be clunky and don’t need to satisfy traditional trading needs like limit orders. This has created unsung barriers to using DEXs to their true potential. But there is a solution.
Dexalot with their Price Discovery tool helps solve the issues revolving around DEXs and AMMs.
The Dexalot Price Discovery Feature
With the combination of benefits between DEX and AMM, the Dexalot Price Discovery tool is a perfect solution to obtain a true price and value of exchange on the Avalanche network. The concept of the Price Discovery tool is to create a fair and distributed way to manage market making during a DEX exchange, whether this is during a normal token swap or from an IDO listing. Projects that integrate with Dexalot Price Discovery can list their token on the exchange before an event and users can activate its Central Limit Order Book to prioritize trades in a way so users get the closest traders possibly according to the value they decide. Users of the platform can make limit orders as well as market orders at a safe price target, minimizing slippage and preventing bots from front running their trades.
With Dexalot Price Discovery, users can have a fair chance at participating in things like IDOs, events that require the need for a DEX, or for users that wish to have a true value of exchange that are on the Avalanche network. The tool helps deter bots from using the platform, making a higher percentage of real users and real trades. This creates a safer exchange for AMMs and DEX listings.
How Does Dexalot Price Discovery Work
The Price Discovery tool is a good way to retain a fair value for coins on IDOs, but how does it work? In order to get a fair market value for users while also making it effective for IDOs and DEXs, there needs to be some stability on Dexalot to make this happen. Fortunately, they are able to manage this in two different ways: The Central Limit Order Book and through a coordinated process with projects.
- Central Limit Order Book: with Dexalot, the order book is prioritized within a price-time strategy so that trades get executed as fast as possible while still maintaining as close to the correct price that was asked. The highest priority will be given to those that have the highest price at the time it was initiated.
- Project Integration: a project can work directly with Dexalot to maintain fair value on their tokes. The project will have to deposit their tokens that will be available within a fixed time before the launch on the IDO begins. Avalaunch will then coordinate with Dexalot to integrate this on their platform. When trades begin, there will be a clean order book and then the fair value can begin.
Benefits of Dexalot Price Discovery VS AMMs
Dexalot Price Discovery has great benefits that make it a better choice than AMMs on a DEX platform. One of the biggest benefits of the Price Discovery tool over an AMM tool is the fact that it has limit order functionality, which is one of the most advantageous ways that traders like to exchange their value of a coin. If a user wants to trade AVAX at the value of $100 per coin, typically they want to get it to as close to the value of $100 as possible. AMMs in response to the lack of limit orders try to prevent this by prioritizing market orders, but this typically results in some sort of reasonable slippage or temporary price guarantee where slippage has already been accounted for. In both cases, this gives a price that not is not welcome to what a trader is looking for.
Other benefits include the ability to prevent bots from using the platform, giving users ample time to get the price they want versus trying to rush them into a launchpad at the exact moment they need to be connected, and prioritizing the price people want which helps cultivate real activity.
The Dexalot Price Discovery tool is an innovative and next-generation tool that allows projects to connect directly to the Avalanche network and get true market making performance for their IDO project or coin. The Central Limit Order Books helps prioritize both limit and market orders to help get the best price possible without the issue of slippage. Users no longer need to be online, connected, and willing to fight off bots at the last second because Dexalot will prioritize real humans that have real trading commitments for the event.
The Price Discovery tool is a great example of the true potential of market marking on a DEX platform.
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