Maiar DEX Transforms Into xExchange. Economics, Utility, and Mechanics of MEX 2.0
Going back about 1 year ago and more than 3.2M swaps, Maiar DEX, the economic engine of the Elrond Network (currently MultiversX), started to accrue its first inflows of liquidity, which later on powered the efficient and permissionless access to value exchange within our ecosystem.
Perhaps the most important aspect here is the fundamental underlying infrastructure, being deployed on a truly state sharded architecture and operating through the fastest Virtual Machine in the space.
Henceforth gaining all the defining properties of an internet economy - fast, secure, scalable, decentralized - and of utmost necessity for a core building block.
That alone was a significant milestone for the entire industry and a true fire of creation for other essential DeFi primitives layered on top of the newly created market opportunities. And ultimately setting the foundation for what’s to come.
Maiar DEX evolves into xExchange
An art and science at the same time, creating new DEX economic models around their respective native tokens presently opens a significant challenge.
There is a clear misalignment between the growth trajectory of all these decentralized exchanges and value capture mechanisms of their native tokens.
This may be the most significant open problem plaguing the entire DeFi ecosystem, and threatening its long term sustainability, and even survival.
With the introduction of xExchange, we present a new economic structure and foundation that intends to solve this ecosystem-wide problem in a compelling way.
An overview on how we plan to tackle this hard problem
xExchange (Maiar DEX 2.0) presents a set of significant improvements and benefits, while correcting the most important limitations residing in the previous economics model.
Here is a summary of the key insights xExchange brings:
- The total supply will be capped. The proposed emissions, amenable via governance in 5 years, will decrease year by year and will be zero in 8 years. This will immediately make MEX 3 times less inflationary than in Maiar DEX 1.0.
- LKMEX v2 introduces the powerful concept of energy, which builds on the v1 “time lock” concept to increment utility. In xExchange, users will enjoy many new benefits simultaneously: boosted APRs in Farms and Metastaking, 100% Metabonding rewards, staking rewards received automatically, direct access to preferential xLaunchpad tiers, Governance Power, 50% of energy removal fees and 0.10% from all swaps.
- LKMEX v2 will be a game changer by shifting from a paradigm prioritizing quantity to a paradigm prioritizing quality: 100 LKMEX with 0 energy has no utility and no power, while 1 LKMEX with 100 days of energy has more utility and more power.
- Users who convert all their LKMEX v1 to LKMEX v2 will earn between 2x and 10x more Metabonding rewards during the first 3 months and earn an NFT that can be exchanged with a guaranteed launchpad ticket.
- LKMEX v2 will bring a robust and reinforcing value accrual mechanism by which even exits from the energy paradigm benefit long-term contributors and holders: when users remove energy from their LKMEX, up to 80% of the whole amount is redistributed to long-term contributors and holders.
- LKMEX core principle will be protected by being non-transferable in general, except in trusted setups like xExchange services and protocols whitelisted by governance or between two wallets.
Complementary to LKMEX, the new MEX will be the key entry point for the entire exchange ecosystem, serving as both a payment token and access token, bringing recurring demand from projects and users who want to interact with and access the benefits brought by the exchange. Some of the specific benefits:
- Fully transferable on xExchange (and other exchanges as well)
- Buyable with on-ramp solutions (Moonpay, Transak, Ramp, etc)
- Usable for payments in xPortal SuperApp, xSpotlight NFT marketplaces, xMoney platform, and soon other places within the community
- Top-up cards, maximizing utility for the users
- Usable as liquidity in xExchange pools to earn trading fees and farm rewards
- Entry point to all xExchange energy based utilities/applications, through which it also brings a generous bonus-pack for those who convert MEX to LKMEX (more details prior launch), so first-time users and existing users bringing more new energy into the system are rewarded
Roadmap timeline & details:
Whitelisting process begins — 17 November
Before the xExchange launch, projects that serve as catalysts for user adoption and bring valuable use cases will have the opportunity of being whitelisted by submitting a GitHub request.
Use cases that go against the xExchange principles, such as enabling LKMEX selling or buying will not be eligible.
Important note: whitelisted Smart Contracts can be revisited at any time through a governance call.
Please review the full details on the whitelisting process by following this guide.
LKMEX v1 becomes non-transferable — 24 November
To conserve its energy and protect its benefits, LKMEX v1 will no longer be transferable, being henceforth bound to the account holding it (the same applies for LKMEX v2).
Some limited transfers for LKMEX will still continue to be allowed:
- between two wallets for exceptional yet important cases (wallet compromised, moving from a hot wallet to a cold wallet, etc.). Such transfers will come with constraints (more details in the full paper).
- inside xExchange, restricting them to specific operational transfers, for things like staking, adding liquidity, etc.
- inside other services and products beyond xExchange, as decided via governance by the community of LKMEX holders.
MEX, on the other hand, stays fully transferable and also tradeable on xExchange and other exchanges.
Governance vote for the transition to V2 — 28 November - 5 Dec
Decentralization is a process always in evolution and one that takes time, especially because it requires many pieces to be carefully put together.
Placed on a changeable spectrum that is highly influenced by design decisions, one of the crucial steps supporting this path has been taken before launch, 1 year ago, when we started the distribution of MEX as a 100% community-owned token.
As the MEX token reached a sufficient number of holders needed to provide a wide and diverse spectrum of feedback, ideas and directions, we are now opening the governance process with the first vote on the transition to V2 to happen on 28 November.
Note: The LKMEX accumulated by an account will translate into the governance power of that account. More details about the process and the voting portal will be revealed prior to the governance vote.
xExchange goes live w/ LKMEX v2 — 8 December
The official launch date of xExchange marks the first day when users can convert LKMEX v1 to v2 and when the new economics model will take effect if the governance vote is favorable.
Whitelisted SCs are enabled to support LKMEX v1 & v2 — 9 December
Whitelisted Smart Contracts that have previously applied and have been approved will be enabled to support both LKMEX v1 and v2.
New markets and avenues for MEX - Post launch
Following the December 8 launch, we plan on opening new avenues for MEX tokens in different markets.
Bootstrapping A Reinforced Growth Phase
In the 1 year since its go-live, Maiar Exchange managed to prove itself as a fundamental component, igniting a new phase of growth in the Elrond ecosystem.
Today, as we lay down the first building blocks and make our first steps in this new journey we call MultiversX, it's time for Maiar Exchange to also evolve into something more.
It’s time for Maiar Exchange to become xExchange.
A new journey, with new challenges and opportunities. A new design bound to complete an awe inspiring vision. A new commitment towards a forthcoming future.
This blogpost is a synthesis of the xExchange (Maiar DEX 2.0) paper.
The full version is available here: https://github.com/ElrondNetwork/elrond-specs/blob/main/xExchange 2.0.pdf