$MCB - MCDex



MCDex


MCDex provides leveraged trading but decentralized. In simplest form it is trying to succeed through being a Uniswap type of trading platform, that is completely decentralized. With the various regulations involving this type of risky trade for the general retail investor – like Uniswap – advanced traders may begin to trade through a decentralized exchange that offers more advanced derivative. I have followed and read about MCDex and as the price has appreciated and usage expanded, I believe this trend will continue.


Reading about the recent events in Turkey – where centralized exchanges collapsed, and various digital assets are lost. A decentralized exchange, providing a future perpetual contract, is very beneficial, as there is a lower chance of the exchange being hacked or corrupted by the centralized owners.


The first usage of the $MCB token is governance. With the token MCB users can vote on modifications of the contract parameters. This includes commission rate, initial / maintenance margin rate, liquidation penalty rate, + more.


$MCB holders will be able to act as liquidators and take all the liquidation risk - this is balanced against liquidation penalties which will be used by the protocol to repurchase MCB tokens, thereby allowing MCB to capture the value of liquidation. Notably, MCB will also be eventually used as collateral for the AMM, enabling MCB holders to provide liquidity.


MCDex


Market Cap

$56,023,493


24 Hour Trading Vol

$1,568,571


24h Low / 24h High

$25.35 / $26.02


Circulating Supply

2,153,901 / 2,153,901


Fully Diluted Valuation

$260,102,395


Max Supply

10,000,000


Total Value Locked (TVL)

$2,011,377


TVL

Capital deposited into the platform in the form of loan collateral or liquidity trading pool.


Market Cap / TVL Ratio

27.85


Market Cap / TVL Ratio


Ratio of market capitalization over total value locked of this asset. A ratio of more than 1.0 refers to its market cap being greater than its total value locked.


Fully Diluted Valuation / TVL Ratio

129.31


Fully Diluted Valuation / TVL Ratio

Ratio of fully diluted valuation (FDV) over total value locked (TVL) of this asset. A ratio of more than 1.0 means that the FDV is greater than its TVL.


Market Cap / TVL Ratio


Ratio of market capitalization over total value locked of this asset. A ratio of more than 1.0 refers to its market cap being greater than its total value locked.



Fully Diluted Valuation / TVL Ratio

Ratio of fully diluted valuation (FDV) over total value locked (TVL) of this asset. A ratio of more than 1.0 means that the FDV is greater than its TVL.


MCB Tokenomics

Upon Jan 12th, 2021, 2,016,096 MCB has been issued, among which:

  • 1 million MCB belongs to the team, advisors and investors:

  • Dev Team: 484K

  • Advisors: 75K

  • Angel investor: 109K

  • Private token sale: 332K, Price 2.5USD/MCB

  • 996,955 MCB belongs to Liquidity providers

  • 19,141 MCB belongs to community contributors

According to the approved Proposal 19, the new Tokenomics states:

  1. The total supply of MCB is 10,000,000;

  2. MCDEX DAO is responsible for the specific usage of the newly issued MCB;

  3. The speed of issuance will be under following restrictions:

  4. It is plausible to issue 1 MCB for 1 USD captured by the MCDEX DAO vault

  5. At least 0.2 MCB can be issued by one Ethereum block (approximately 1300MCB/day)

  6. For every new issuance, 75% is for community incentive, and 25% belongs to the developers.


MCDEX DAO

The MCDEX community has issued its governance token MCB and has done a series of governance work. While launching the Mai3 protocol, we will establish MCDEX DAO based on MCB. MCDEX DAO will be the core of the MCDEX community. The mission of MCDAO is to continuously develop the MCDEX ecosystem.


MCDEX DAO has vault. The asset in this vault comes from:

· Share from the fee captured by MCDEX ecosystem

· Newly issued MCB in the MCB tokenomics

· Other payments made to MCDEX DAO


The asset in the vault is used to assist the MCDEX DAO mission. Its specific usage includes but not limited to:

· Liquidity incentive: Incentives for LP of AMM

· Governance incentive: Incentives for MCB holders who participate in community governance

· Development incentive: Incentives for community starters and community managers

· Audit fee and other required fee

· Add liquidity to products in the MCDEX ecosystem

· Buyback MCB from the secondary market. The MCB will be part of the vault asset

· Provide liquidity for MCB (in the MCB liquidity pool on Uniswap)


MCB holders have the governance right of MCDEX DAO. MCDEX DAO applies the “Off-chain discussion, On-chain governance” method. Since the governance is on the chain, every proposal is essentially an executable smart contract. MCDEX DAO should provide a smart contract factory for the ease of initiating proposals.


The MCDEX DAO governance includes:

  • Managing the specific usage of the vault asset;

  • Running numerous perpetual swaps as operator;

  • Electing a multi-signature address when necessary. This multi-signature address will complete the routine work representing MCDEX DAO as an operator;

  • Upgrading MCDEX DAO smart contract

The MCDEX governance proposal needs to be initiated by MCB holders, and the initiator’s MCB voting power must be no less than 1% of the issued total. The voting quorum must be no less than 10% of the issued total. The proposal initiator is set to vote yes.


A MCB holder can delegate the voting power to another holder.


The voting period lasts 72 hours, and there is a time lock of 48 hours.


Stake MCB to get vMCB to participate in governance. As vMCB is a staking certificate, it is not transferrable. If the holder would like to unstake, there will be a 5% penalty of vMCB, which is distributed to other stakers.


vMCB holders get rewards from the Vault and newly issued MCB. The specific amount will be determined by MCDEX DAO.


Stated Value Proposition -


The goal of the protocol is to allow anyone to create and trade in the digital asset perpetual markets. To start with, anyone can create their own perpetual market with the price feed of underlying asset and choose any ERC20 as collateral. Secondly, they have designed an AMM for the perpetual market and this AMM also has better capital efficiency. Moreover, AMM solves the liquidity problem - anyone can provide liquidity to AMM by depositing assets in the pool and get reasonable market making profit. At last, anyone can trade perpetual swaps permissionless. Traders’ assets are in the smart contract in a noncustodial way and the process of trading are conducted on chain completely.


The smart contract of the protocol has been strictly audited by a third party, and there is no admin key of the protocol, maximizing the decentralization and security of this protocol.



1. Background


MCDEX is a decentralized derivatives exchange of perpetual swaps, whose price anchors the spot index. AMM is essential for the perpetual swaps.


What is AMM?


An automated market maker (AMM) is a type of decentralized exchange (DEX) protocol that relies on a mathematical formula to price assets. Instead of using an order book like a traditional exchange, assets are priced according to a pricing algorithm.


What is an LP in Defi?


An LP in Defi is a liquidity provider, not to be confused with Limited Partner, the traditional finance term for fund owners. In Defi, when you provide liquidity into a pool, you typically receive an LP token in exchange. This LP token represents your share in the liquidity pool. Every time when a trade is made on the liquidity pool, users must pay a fee.


Liquidity Providers Profit and Risk Exposure


LP profit mainly comes from spread, funding payment, and transaction fee.


Spread. There is a spread between the AMM’s best bid and best ask. When traders and arbitrageurs trade against AMM, this spread will cause AMM to profit. As 𝑁 increases, AMM’s risk increases. A higher risk is designed to result in a larger spread, which then lead to a higher profit for LP.


Funding payment. Funding payment is the interest that trader pays to LP when trader goes long or short. When the long side and the short side happen to be identical, it can be interpreted as the two sides lending money from each other, and the interests cancel out. When the amount of long side and short side are different, AMM is the only asset lender. Therefore, AMM deserves the interest from net position.


Trading fee. Most AMMs charge fee at a fixed ratio when trader trades with AMM. MCDEX AMM V3 is inclined towards decreasing the trading fee and arranging the distribution of profit through the methods discussed earlier.


Other income. Technically LP receives liquidation penalty as well. But since it is a function of the perpetual swap, we will not discussion it in this passage.


Simulation - Case Study


In this experiment, traders and arbitrageurs are both agents. Technically LP, who adds liquidity and withdraws liquidity, belongs to the agent category as well. For the sake of simplicity, we fix the behavior of LP to starting with adding liquidity and ending with withdrawing liquidity.


Trader: Trader will compare the AMM price with the market price 𝑃𝑚. Assume that in other markets, trades could be made at the market price, cost is 𝑐=0.075%, and an error 𝑒 of 3% is allowed. If the buying price of AMM is smaller than 𝑃𝑚(1+𝑐) (1+𝑒), or the selling price of AMM is bigger than 𝑃𝑚(1−𝑐) (1−𝑒), there is a possibility that the trader would trade against AMM, and the trading volume follows the chi-square distribution. In a bull market, the will to buy is stronger than the will to sell; in a bear market, the will to buy is weaker than the will to sell; and in a monkey market, the two wills balance.


Arbitrageurs: When there is space for arbitrage, risk-free arbitrage activities take place in multiple markets (Here we do not take funding rate into consideration), and arbitrageurs receive their profit after closing. Meanwhile, arbitrageurs take AMM’s risky position. Thus, arbitrageurs are inevitable in the system.


1.1 Structure



When a trader enters long or short position of Δ𝑁 contracts at a certain entry price 𝑃𝑒𝑛𝑡𝑟𝑦, Δ𝑁>0 indicates that the trader longs, Δ𝑁<0 indicates that the trader shorts. The PNL (Profit and Loss) is calculated as follows: (𝑃𝑚𝑎𝑟𝑘−𝑃𝑒𝑛𝑡𝑟𝑦)Δ𝑁

(1)


Exchanges

MCDEX combines an off-chain order book with an on-chain Uniswap-like Automated Market Maker (AMM). This hybrid allows MCDEX to offer traders functionality and feel that’s similar to centralized exchanges, while the AMM provides the ability to find on-chain liquidity.


Perpetual futures contracts are one of the most popular investment vehicles in crypto. BitMEX has several derivative products and consistently generates more than US$1B in daily volume, while the successful launch of Bitcoin (BTC) perpetual futures contracts on dYdX temporarily made the DEX’s trading volume the highest in Decentralized finance (DeFi).


Decentralized finance or DeFi is, in turn, one of the fastest-growing sectors in the crypto-asset ecosystem and refers to the interconnected web of financial service-oriented crypto assets, smart contracts, protocols, and decentralized applications built on the Ethereum platform blockchain.


While Bitcoin (BTC) enabled individuals to make financial transactions with other individuals without the need for a financial intermediary, the Ethereum blockchain added another layer of programmability through the use of smart contracts. It allows for permissionless borrowing and lending services and opens up funding opportunities to a more internet-based global audience.


“What differentiates MCDEX is that it is the first of its kind to introduce an Automated Market Maker to provide on-chain liquidity to its perpetual contracts,”


“Competitors such as dYdX still rely on off-chain funding rates, and therefore are less decentralized.”


Liu says the MCDEX on-chain Automated Market Maker (AMM) is fully decentralized. The AMM is used to derive the funding rates and this in-turn balances out long or short orders to ensure that perpetual futures contract prices stay close to the index price. The exchange uses Chainlink’s ETH/USD Price Reference Contract on the Ethereum mainnet as its index price feed. Brave New Coin is a Chainlink node operator.


However, the platform offers an off-chain orderbook for “liquidity sensitive” traders. “On-chain trading is not the best for many traders who are used to centralized trading software,” Liu said in an interview with Decrypt media. “Therefore we are adding off-chain order books, which naturally have lower slippage, better liquidity, and ultimately a better trading experience.”


The MCDEX Perpetual contract also offers margin trading, by using a funding mechanism that keeps prices anchored to the index. Leverage in a perpetual swap contract changes the amount of funding a trader gives or receives by adding a multiplier to it, in the case of MCDEX, up to 10 times.


Normally in margin trading, a third party, like an exchange or brokerage, lends assets to a trader so that they may be able to trade with borrowed funds. Perpetual swaps remove the third party. With these contracts, traders fund each other in a peer-to-peer system.


Short and long traders pay or receive a funding rate to each other. A price is set when a trader opens a position. If the trader is long and the price moves in their favor they receive funding from short traders. If the trader is short and the price moves against them then they must fund the other side of the market. Contracts close when either a trader exits their position or they can no longer afford to pay their funding rate requirements.


MCDEX issued a native token, called MCB, to allow users to participate in platform governance. The token will be available to key stakeholders on the platform including traders, liquidity providers, and DeFi developers. MCB will be issued as a way to capture “platform value” and will be offered as a reward to contributors willing to provide liquidity to the platform.


MCDEX is also planning to introduce structured funds, which any users will be able to deposit funds into. Funds can be automated or human-managed. These structured funds are also tied into the native token. MCB tokens will be distributed to the funds based on their net asset value at a fixed amount per day. Fund managers will even receive a cut of the MCB they earn for fundholders.


Beyond launching an ETH perpetual, MCDEX is one of few China-based DeFi projects. As DeFi is increasingly drawing the attention of DeFi users, it’s only a matter of time before they start building a regional ecosystem, MCDEX founder Liu Jie said.


AMM with Isolated Liquidity Pool Simulation

The tables below show the simulation results. The “Trading Income” refers to the profit obtained from spread and slippage. The “Fee Income” refers to the profit obtained from trading fee. The “Funding Income” refers to the profit obtained from funding payment. 11


When there is not arbitrageur, AMM takes all the risk. We call it the “high-risk state”. Table 2 and Table 4 show the PNL in this case. When there is arbitrageur, AMM takes a small part of the risk. We call it the “low-risk state”. Table 3 and Table 5 show the PNL in this case. However, the reality is somewhere in between.


AMM performed well in both real markets and simulated markets under the stated conditions, so we can see its robustness to an extent. The following conclusions can be drawn: 1) AMM cannot guarantee profit only by trading income, it will only be profitable after receiving other fees. 2) AMM needs to set up its parameters according to the specific coin type with its own volatility and trading volume. In MCDEX V3, a concept of “operator” is introduced, and operator is responsible for adjusting the AMM parameters to protect the profit of LP. In the experiment, the choice of the two sets of parameters has balanced the profits of all sides.


Recent Crypto Projects Q1- Q2 of 2021 that are gaining popularity. 1Inch air dropped 150 tokens to Uniswap holders as an incentive to use their platform.


Why use 1inch?

If you are a trader trading large amount of tokens, you may not be aware of all the availability liquidity across different DEXes in order to get the best price quote. Price quote offered by DEX fluctuates according to the liquidity pool at any given time. Also, when you are trading large size, every percentage of savings can be magnified with an optimal trading path. 1inch aims to solve all that in a single user-friendly interface.


What is Pathfinder?

Pathfinder is the discovery and routing algorithm developed by the 1inch team. It is the algorithm the powers the backend to finding the most efficient route to swap a token. For example, if a user wants to sell ETH for WBTC, Pathfinder will explore all DEXes such as Uniswap, Curve, Balancer, DODO, Sushiswap, and more. The result is a recommended route that optimizes fees and liquidity in order to give users the best rate. Users no longer need to check each individual services in order to find the best price.


Who are the creators of 1inch?

1inch was founded by Sergej Kunz (CEO) and Anton Bukov (CTO). The idea for 1inch was developed at a hackathon in just over 60 hours at New York City. Fast forward today, it is one of the fastest growing DeFi product.


Polygon (MATIC)


24h Low / 24h High

$0.803486 / $0.937034


Circulating Supply

6,009,074,997 / 10,000,000,000


Fully Diluted Valuation

$8,517,062,017


Max Supply

10,000,000,000


Total Value Locked (TVL)

$5,005,052,144


Market Cap / TVL Ratio

1.03


Fully Diluted Valuation / TVL Ratio

1.71


What Is Polygon (MATIC)?


Polygon (previously Matic Network) is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building multiple types of applications.

Using Polygon, one can create optimistic rollup chains, ZK rollup chains, stand alone chains or any other kind of infra required by the developer.


Polygon effectively transforms Ethereum into a full-fledged multi-chain system (aka Internet of Blockchains). This multi-chain system is akin to other ones such as Polkadot, Cosmos, Avalanche etc. with the advantages of Ethereum’s security, vibrant ecosystem and openness.

The $MATIC token will continue to exist and will play an increasingly important role, securing the system and enabling governance.


Polygon (formerly Matic Network) is a Layer 2 scaling solution backed by Binance and Coinbase. The project seeks to stimulate mass adoption of cryptocurrencies by resolving the problems of scalability on many blockchains.


Polygon combines the Plasma Framework and the proof-of-stake blockchain architecture. The Plasma framework used by Polygon as proposed by the co-founder of Ethereum, Vitalik Buterin, allows for the easy execution of scalable and autonomous smart contracts.

Nothing will change for the existing ecosystem built on the Plasma-POS chain. With Polygon, new features are being built around the existing proven technology to expand the ability to cater to diverse needs from the developer ecosystem. Polygon will continue to develop the core technology so that it can scale to a larger ecosystem.


Polygon boasts of up to 65,000 transactions per second on a single side chain, along with a respectable block confirmation time of less than two seconds. The framework also allows for the creation of globally available decentralized financial applications on a single foundational blockchain.


The Plasma framework gives Polygon the potential of housing an unlimited number of decentralized applications on their infrastructure without experiencing the normal drawbacks common on proof-of-work blockchains. So far, Polygon has attracted more than 50 DApps to its PoS-secured Ethereum sidechain.


MATIC, the native tokens of Polygon, is an ERC-20 token running on the Ethereum blockchain. The tokens are used for payment services on Polygon and as a settlement currency between users who operate within the Polygon ecosystem. The transaction fees on Polygon sidechains are also paid in MATIC tokens.


Who Are the Founders of Polygon?


Polygon (formerly Matic Network) was launched in October 2017. Polygon was co-founded by Jaynti Kanani, Sandeep Nailwal and Anurag Arjun, two experienced blockchain developers and a business consultant.


Before moving to its network in 2019, the Polygon team was a huge contributor in the Ethereum ecosystem. The team worked on implementing the Plasma MVP, the WalletConnect protocol and the widely-used Dagger event notification engine on Ethereum.

The team included co-founder of Polygon, Jaynti Kanani. Jaynti, a full-stack developer and blockchain engineer currently serves as the CEO of Polygon.


Jaynti played an integral role in implementing Web3, Plasma and the WalletConnect protocol on Ethereum. Prior to his blockchain involvement, Jaynti worked as a data scientist with Housing.com.


Co-founder and chief operations officer of Polygon, Sandeep Nailwal is a blockchain programmer and entrepreneur. Before jointly starting Polygon (formerly Matic), Sandeep had served as the CEO of Scopeweaver, and the chief technical officer of Welspun Group.

Anurag Arjun is the only non-programming co-founder of Polygon. As a product manager, he has had stints with IRIS Business, SNL Financial, Dexter Consultancy and Cognizant Technologies.


What Makes Polygon Unique?


Polygon is self-described as a Layer 2 scaling solution, which means that the project doesn’t seek to upgrade its current basic blockchain layer any time soon. The project focuses on reducing the complexity of scalability and instant blockchain transactions.


Polygon uses a customized version of the Plasma framework which is built on proof-of-stake checkpoints that run through the Ethereum main-chain. This unique technology allows each sidechain on Polygon to achieve up to 65,536 transactions per block.


Commercially, the sidechains of Polygon are structurally designed to support a variety of decentralized finance (DeFi) protocols available in the Ethereum ecosystem.


While Polygon currently supports only Ethereum basechain, the network intends to extend support for additional basechains, based on community suggestions and consensus. This would make Polygon an interoperable decentralized Layer 2 blockchain platform.


How Many Polygon (MATIC) Tokens Are There in Circulation?


MATIC tokens are released on a monthly basis. MATIC currently has a circulating supply of 4,877,830,774 MATIC tokens and a max supply of 10,000,000,000 MATIC tokens.

At its initial private sale in 2017, 3.8 percent of MATIC’s max supply was issued.


In the April 2019 launchpad sale, another 19 percent of the total supply was sold at $0.00263 per token to generate $5 million.


The remaining MATIC tokens are distributed as follows:


Team tokens: 16 percent of the total supply.

Advisors tokens: 4 percent of the total supply.

Network Operations tokens: 12 percent of the total supply.

Foundation tokens: 21.86 percent of the total supply.

Ecosystem tokens: 23.33 percent of the total supply.

According to the release schedule, all the tokens will be released by December 2022.


How Is the Polygon Secured?

As a Layer 2 solution utilizing a network of proof-of-stake validators for asset security, staking is an integral part of the Polygon ecosystem. Validators on the network will stake their MATIC tokens as collateral to become part of the network’s PoS consensus mechanism and will receive MATIC tokens in return.


Members of the network who do not wish to become validators can delegate their MATIC tokens to another validator, but will still take part in their staking process and earn staking rewards.


In addition to the proof-of-stake checkpointing, Polygon uses block producers at the block producer layer to achieve a higher degree of decentralization. These block producers give finality to the main chains using checkpoints and fraud-proof mechanisms.


Where Can You Buy Polygon (MATIC)?


Being one of the projects that contributed a lot to the development of the Ethereum ecosystem, MATIC is popular among online exchanges focused on DeFi. The top exchanges where you can buy, sell, and trade MATIC currently are:


Binance

BiONE

ZebPay

Coinbase Pro

Huobi Global

UniSwap

WhiteBIT, and

Hotbit


Sources -


https://bravenewcoin.com/insights/latest


Brave New Coin

Brave New Coin (https://bravenewcoin.com/) (BNC) is a data and research company focused on the blockchain and cryptographic assets industry. Founded in 2014, BNC provides data, analysis and research to a global network of market participants. Brave New Coin supplies spot-pricing, index solutions, research and news both aggregate and proprietary, via partners such as Amazon Alexa, Dow Jones Factiva, NASDAQ, Refinitv, RapidAPI and dozens more. The company’s experience and expertise make us the leading provider of standard and non-standard institutional grade, highly compliant, data solutions. BNC Pro leverages all our experience and data into a user-friendly dashboard solution


https://bravenewcoin.com/insights/latest


https://coinmarketcap.com/currencies/polygon/


https://www.globenewswire.com/news-release/2020/10/22/2112651/0/en/Decentralized-Exchange-LEVERJ-Launches-Perpetual-Swap-Futures-Powered-by-Brave-New-Coin.html


https://leverj.io/


https://coinmarketcap.com/rankings/exchanges/