DEX exchanges are undergoing dramatic transformations.
As we said before, when liquidity is no longer limited within certain boundaries, the wax and wane of DEX will accelerate.
Traditionally, Uniswap and Sushiswap possessed the dominant positions in DEX. But the rise of DEX in the BSC and Heco ecosystems is challenging their DEX leadership.
On February 19, according to Coingecko, the 24-hour trading volume of PancakeSwap, a decentralized exchange on Binance smart chain, exceeded US$1.3 billion, surpassing Uniswap.
During the same period, according to Defibox, the 24-hour trading volume of MDEX, a decentralized exchange on the Huobi eco-chain, exceeded US$2.3 billion, which also surpassed the performance of the established leader Uniswap.
If we compare the DeFi world to a highway, then CEX+DeFi is a railway track, on which PancakeSwap and MDEX are moving forward at an extremely fast speed.
MDEX is an example. Within one month after its launch, it has become a DeFi dark horse.
TVL: over US$1.9 billion
Record daily transaction volume: over US$5.05 billion
Cumulative total transaction volume: over US$40.5 billion
Fees for transaction mining subsidy: over US$100 million
The market value of mining output: over $732 million
Daily transaction fee: over US$8 million
Why DEX such as MDEX can surpass Uniswap and rise rapidly? Crypto analyst Mark believes that first of all the product itself is very valuable, and secondly, the timing provides a good opportunity.
“The Ethereum network is in an awkward situation. The higher the price of Ethereum, the more congested its network, and consequently the higher the GAS fee, the fewer transactions and various on-chain activities. The effect is negative”, said Mark. He believes that the stagnation of the expansion of the Ethereum network has become the best opportunity to develop the Binance smart chain and the Huobi ecological chain. Because of the low fees and high performance, the network effects of Heco and BSC are positive.
“The more popular the projects on the Huobi Ecological Chain, the higher the price of HT, but this will not affect the trading experience on HECO. The increase in HT prices will stimulate everyone to participate in the HECO ecological chain, thus forming a positive cycle. The same goes for BSC”.
MDEX’s way to success
The founder of Yuchi, Shenyu, commented on MDEX: “The mechanism is awesome, and there is currently no viable competitor on Heco.”
The mechanism here mainly consists of several parts: the issue mechanism of dual mining (liquidity and transaction mining); repurchase & destroy MDX, and the financial value realized in rewarding liquidity providers; community governance, that is, the governance value in making decisions on major community events.
MDEX.COM CTO Sky once stated that“MDEX.COM integrates the excellent governance of DEX and at the same time, manages to implement repurchase & destroy and transaction mining via smart contracts so to ensure transparency and automation. Neither practice is ingenious but for the governance token MDX, the combination of them contributes to the equilibrium of its production and deflation.”
Simply speaking, MDEX cleverly integrates the governance of DEX tokens and the financial value capture of CEX tokens. Everything can be shown through data. So far, MDEX has repurchased more than 15 million USDT and distributed over 9.95 million USDT through airdropping. The real-time deflation rate reached 7.35%.
In addition, the potential for ecological construction other than DEX also evokes a wilder imagination of MDEX.
On the homepage of MDEX.COM writes, “to build the largest platform that integrates DEX, IMO, and DAO in the DeFi ecosystem”. From this, we can see that MDEX’s ambition is not to be limited to DEX, but a DeFi platform that uses transactions as its entry point.
For example, MDX still relies on the standard fundraising tokens used by the decentralized fundraising pool HT-IMO. It is similar to ETH in 2017. In the future, the demand will expand with the prosperity of the IMO ecosystem.
Investors care nothing but transaction experience and wealth effects.
Any DeFi player who has suffered from bad experiences on Ethereum is very happy after performing MDEX transactions on Heco chain.
“I can’t go back. Since I conducted on-chain transactions on MDEX and CAKE, I have had headaches every time when I see Uniswap,” said investor Lin. Ethereum is very unfriendly to new and small investors like him. One on-chain transaction consumes dozens of dollars. It is truly unaffordable.
Take one transaction as an example. When UniSwap trades 1000 USDT, you need to pay a 0.3% transaction fee of 3 USDT, and a gas fee of 30-50 USDT. At the time of congestion, the fee is higher, and you need to wait at least tens of seconds, or even a few minutes if nothing else goes wrong.
In MDEX, the same transaction also costs 3 USDT transaction fee but it can be reimbursed later on by transaction mining. More importantly, the gas fee for a single token transfer is negligible, only $0.01.
If Uniswap is now a high-end club for the rich, MDEX is a playground for ordinary people.
“Before the mature application of Layer2, I prefer to participate in transactions in MDEX or CAKE”, said Lin.
In addition to the smooth transaction experience, MDEX’s wealth effect is also surprising.
The temporary wealth effect is not unexpected, but the continuity is impressive. When opening the official website of MDEX.COM, we can see there are three mining pools with APY over 400%, and the MDX price is still soaring. This is great for miners who are used to mining, selling and withdrawing.
Why can MDEX continue the wealth effect for a long time?
Analyst Mark believes that most of the “DeFi mining” will eventually collapse because most of them are pseudo-demands, but DEX has always had real demand. It is the real demand that supports MDEX’s high APY and token prices. Secondly, MDEX also benefits from the advantages of the Heco ecological chain. MDEX has become the representative of Heco, and the token MDX has become Heco’s golden shovel.
MDEX’s investment value
“After CAKE, it is MDEX’s turn,” community leader Li Guang said in the community groups.
In his opinion, CAKE’s success could be attributed to the fact that everyone expects a new Uniswap to appear on Binance BSC. Uniswap has been successful, and Huobi Heco also needs a benchmark project like Uniswap. And it can only be MDEX.
We have introduced the time machine theory of DeFi investment before.
Basically, Masayoshi Son believes that countries such as the United States, Japan, China, and India are in different stages of IT development. It is better to start business in developed countries. With the experiences accumulated, investors then should go to Japan and then to China, India, etc. It is like sitting on a “time machine” traveling back to the past of developed countries.
This investment approach can also be applied in DeFi field.
In the DeFi field, there is no doubt that Ethereum is the forerunner. DeFi projects on Ethereum enjoy the most rapid growth rate, the most innovations, and the largest amount of funds deposited. Star projects such as AAVE\Uniswap\Synthetix have emerged on Ethereum. Their success has verified the investment logic in DeFi.
Thus, investors can use this set of investment logic to find the same project on the new public chain, such as looking for new AAVE\Uniswap\Synthetix in BSC and Heco, then assessing and lastly investing. This is still the time machine theory.
For PancakeSwap and MDEX, their aim is unanimously to gradually move closer to and eventually surpass Uniswap.
Currently, the two have outperformed Uniswap in terms of transaction volume. The next focus is to approach Uniswap in TVL, asset volume, market value… It is both a challenge and an opportunity.
We can make a simple comparison. The stacking in MDEX.COM is about 1/4 of that on UniSwap and 1/3 of that on Sushiswap, while the circulating market value of MDX is only 1/15 of that on UNI and 1/5 of that on SUSHI. If we follow the same value evaluation method, then MDEX is still in the stage of value discovery.