Decentralised finance must be matched by a Decentralised distribution approach, redefining decentralised financial intelligent contracts. If the blockchain’s immutable properties guard the truth of the world, then smart contracts redefine fairness. Order is an important symbol of social progress. When the order is built on the social structure of people, the balance of the order is out of compensation under the endless greed of people. At the same time, the newly defined decentralised intelligent contract guards fairness with code, and everyone is equal before the code.
Currently, most decentralised exchanges (DEX) use capital pools, which differs from the traditional centralised exchange matching trading model. DEX does not use counterparty trading. The user’s counterparty is a contract capital pool. The intelligent contract queries the capital pool, selects the optimal price to complete the transaction, and calculates the transaction price by the contract algorithm, and all trading is with the decentralised currency of the smart contract as a counterparty is really to achieve decentralised trading; the current mainstream to the centre of the exchange ” PancakeSwap”, “Uniswap” using the AMM automatic market-making mechanism.
The AMM automatic market-making mechanism uses a constant model of the product of two asset reserves to price one of the assets, e.g., X * Y = K. It uses the addition of liquidity provider (LP) to increase the corresponding reserve of the asset, which in combination drives the price to rise steadily. The AMM mechanism has the potential risks of “free loss” and “multi-token exposure”. At the same time, it also has the disadvantages of being “unable to price independently”, “insufficient transaction depth and large slippage”, and “low capital efficiency”. The AMM mechanism can only generate transaction prices but not find market prices. In this case, electronic dog arbitrage must be introduced to bring the prices back on the right track, which means that the AMM mechanism without centralised exchange cannot reflect fair, accurate asset prices; the AMM mechanism is barely competent for mainstream Tokens that are currently on centralised exchanges without considering free losses, such as Bitcoin (BTC), Ether (ETH), etc. For the issuance of new currencies, especially for transactions with small asset reserves (I .e. capital pools), the k value is small and cannot support large transactions. If the slippage is too significant, otherwise higher prices will be paid. Such new currencies without centralised online exchanges are entirely controlled by the issuer and thus make huge profits. This differs from the centralised exchange’s random pumping and dumping to make profits. Although the Uniswap(V3) is updated and iterated based on the AMM mechanism, which significantly improves the efficiency of capital through centralised liquidity, there is still centralised manipulation for centrally issued tokens, for example:
Method 1. the issuer to centralise the issuance of tokens XXX. In the early stage, private placement, airdrop, issuer reservation, technology holding, community reward, ecological construction and other tickets account for about 30%. In the early stage, decentralised DEX adds transactions with small reserves to allow assets to be freely traded in the market. The stability coefficient K value is small. A small amount of funds forces the currency price to rise too fast and is not conducive to market development. Tokens reserved in various forms in the early stage will flow into the fund pool and take profits simultaneously to make the currency price down, once again prompting the intervention of the secondary market. In this situation, there is a risk of a large number of holders of tokens to pump and dump, and it is difficult to reach a consensus; the pool of funds to pay the proportion is too low, and investors can not make 100% rigid payment. Eventually, all tokens return to the collection and fall below the issue price.
Method 2. that the issuer centrally issues tokens XXX. In the early stage, it did not reserve all of them to enter the trading pair fund pool. Due to the shortage of other stable currency assets, the price of tokens is low. In the early stage, a few funds purchase many tokens without participating in the addition of liquidity (LP). In the later stage, there are still all possibilities of method 1, and it isn’t easy to reach a consensus.
Since the birth of intelligent contracts, the exploration of innovative contract applications has never ended. The new DEX exchange DAOF has redefined decentralised finance by proposing a new way to serve the entire cycle of the past economy. There are three major segments in DAOF’s decentralised finance: decentralised issuance, decentralised trading, and decentralised value feedback mechanisms. These three sections build a complete decentralised financial cycle based on blockchain smart contracts, with all trading rules deployed on top of smart contracts and no room for human operation. The code of an intelligent agreement acts like a firewall to isolate all human factors from the decentralised world. DAOF’s new market-making mechanism determines prices based on the quantity in circulation, accurately reflecting market price volatility and flexible price adjustment capabilities to achieve investment objectives better.
Token UNHT is the ecological mother currency of DAOF’s decentralised exchange. All tokens UNTH enter into trading contracts with no airdrop, no private placement and no reservation. It is issued in a decentralised way, with 100% rigid payment and never falling below the issue price. All eco-rewards of the DAOF exchange and TNFT constructed by its POS consensus mechanism are settled in token UNHT. Diversified application scenarios determine that tokens UNTH will be widely circulated in the future, circulation will generate consensus, consensus determines value, and jointly create thousands of times the currency. This accurate blockchain financial transaction model does not rely on a specific website. Digital assets and transaction information are all on the public chain and can be accessed and operated through WEB3.0 on the network. The website serves as a display and operation platform for investors and cannot control the issuance and rise and fall of currency prices.
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