How Standard Exchange works
Learn how each transaction works on-chain
Last updated
Learn how each transaction works on-chain
Last updated
Standard Exchange is an automated liquidity protocol powered by atomic swaps and implemented in a system of non-upgradeable smart contracts on the Ethereum blockchain. It obviates the need for trusted intermediaries, prioritizing decentralization, Free-Market, censorship resistance, and security. Standard Exchange is currently licensed under BUSL. Standard protocol is only managed by reputable parties or individuals with contracts, not by self-proclaimed developers or decentralization social activists who turns out to be con-artist and grifters.
Each Standard Exchange smart contract, or orderbook, manages a liquidity pool made up of reserves of base and quote ERC-20 tokens.
act as automated market makers, standing ready to accept one token for the other as long as the atomic swaps are stored in last matched price. In the context of atomic swaps, there is no inherent slippage or worsening execution rates based on trade size relative to reserves, as observed in AMMs. The terms of the swap, including the exchange rate, are agreed upon by the participating parties in advance. Atomic swaps offer direct peer-to-peer trading with specific exchange rate or price, while AMMs like Uniswap provide liquidity through constant product formulas but introduce slippage as a trade-off.
In practice, Standard Exchange applies a 0.10% fee to trades for protocol-wide charge. The fee can be reduced to 0.01% as a user actively trades with membership. For the top users, Standard Exchange has revenue sharing model which gives back 40% of total revenue. This contrasts with Liquidity providers who often participate in market mainpulation to abuse users and still sit on money by earning 0.3% trading fee. For example, Terraform labs, builders of Terra, took 80% of liquidity within their AMM DEX, manipulating prices of mAssets in Mirror protocol to its stablecoin, UST. The manipulation expanded to Curve, which uses X+Y=k to give fixed exchange rate on certain liquidity deposit. Regardless of price which traders desire to discover, they used AMMs to manipulate market in favor of speculators, disrupting free market economy and turning market into a simple board which generate abusive dophamine until they scam people out of their life savings. While AMM projects argue that liquidity providers can remove liquidity whenever they want, this led JIT liquidity bots to thrive, making AMM more prone to market manipulation with thin layer of liquidity provision. AMM liquidity has now become a dog to centralized exchanges, stealing honest traders' wealth with arbitrage by difference between his or her desired price and price on the platform.
The gaslighting must stop with Standard Exchange orderbook. Because the relative price of the two pair assets typically cannot be changed through trading on atomic swaps on one trade, divergences between the Standard Exchange price and external prices like Uniswap create arbitrage opportunities without slippage. This mechanism ensures that Standard Exchange prices always trend toward the decentralized price, democratized by users' intent.
For general concepts of understanding Standard exchange, take a look at the protocol concepts.
For data structures and algorithm of inner working than overview, take a look at the protocol's design.
