Frequently Asked Questions

A DEX is an exchange that operates on the blockchain, which means it's trustless and not property of any corporation. Anyone can interact with it’s smart contracts, it never stops, and is fully automated.

(thanks to @mikewday)

We believe that a sound financial system needs to be built on a sound blockchain. Cardano addresses many shortcomings of the so-called gen 2 blockchains (such as Ethereum and Binance Smart Chain) from fees, through network scalability (via Hydra) and governance (Voltaire and the Catalyst project), and having one of the most sound communities (critical, no or very little FUD and FOMO), to having the power of Haskell, Plutus, and formal verification behind it.

Moreover, over 70% of the ADA in supply is staked, which is optimal for developing in an ecosystem with relative price stability and conveys a long-term commitment to the project from the majority of its holders.

We believe that all other DEX offerings are inherently inefficient. That is that they consume far more resources than is necessary and are costing users. We believe we have the experience in quantitative mathematics and financial haskell development to deliver a highly efficient DEX. A more efficient use of capital will result in better returns, better user experience, and will better reflect the actual state of the market. The DEX of tomorrow.

(thanks to @NikodemZegzd)
The protocol that we are building is of paramount complexity; at the same time we are pioneering a series of innovations in DeFi. Once the protocol is developed, it must undergo a thorough auditing and verification process. Typically an audit takes 1-2 months, but due to the high complexity of our project, it may take longer. The goal is to release a revolutionary and sound product, so while we expect to launch early in 2022, we cannot commit to any specific dates.
Mal is a Daemon, and daemon is a program which runs in the background performing tasks automatically for the user. He is the perfect representation of how our programmable swaps work. As programmable swaps are fundamental building blocks of the Maladex protocol, daemons underpin the architecture of more advanced (and higher level) DeFi features - passive investing (Cardano indexes), active investing (strategy vaults trading complex algos like in hedge fund), synthetics, derivatives, option strategies, and much more. This means that Mal is our best friend and the core of our DEX, hence our mascot.

Neo... we live in an NFT collection.

... you take the blue pill...the story ends, you wake up in your bed and believe whatever you want to believe.

You take the red stay in Wonderland, and I show you how deep Cardano NFTs go.

For Tech Heads

  1. Eliminate all impermanent loss and increase capital efficiency way beyond the current benchmark.
  2. Create a living proof of how superior EUTxO is compared to the account-based model.
  3. Use our quantitative knowledge to build the first mathematically sound DEX which can scale well beyond the current applications in DeFi.
  4. Implement a novel approach to on-chain trading — programmable swaps allowing us to implement strategies such as DCA from USD to ADA over 30 days, trigger trade of X when the price movements by Y in Z hours, etc.
  5. Provide comprehensive education and introduction to DeFi for Cardano users, which when combined with our DEX will help them make as sound investment decisions as possible.
  6. Build a great community around the project that supports each other with idea sharing, observations, and analysis.
  7. Be the place where the smart money knows their money is being put to work.

Maladex protocol is going to both consume and produce oracles..

Mathematically sound and timely oracle data is necessary to implement collateralized synthetics, indexes rebalancing, trading strategies, and more.

Maladex, as a high capital efficiency protocol, will provide timely and accurate Cardano-native asset prices, and we will make this information available to other projects via oracles in the future.

Additionally, Maladex is going to provide a series of trading indicators from the classical weighted moving price averages, divergence indicators, etc. to advanced quantitative data streams, similar to those used by the most sophisticated hedge funds in the world, advanced momentum based indicators (distribution moments up to 6th order), Greeks, etc.

Impermanent loss (IL) is the loss due to change in token ratio. In Uniswap v1 / v2 (basically every other Cardano DEX white paper ATM) liquidity is allocated inefficiently.

x * y = const means that the user provides liquidity at extremely unlikely scenarios, e.g., assuming that we take the market of pizzas to USD, in x * y = const the same amount of liquidity to buying and selling pizzas is provided at the price of $1B per pizza as for the $20 per pie scenario.

As you can imagine, we probably aren't going to end up buying pizzas for $1B, but x * y = const treats this as just as likely as buying pizza for $20 today. That liquidity allocation comes from the liquidity curve.

This problem can be solved almost completely by concentrating liquidity where the market is, e.g., in the above scenario providing 67% of liquidity $19-21, 28% in $15-25, 5% in $5-35 ranges. Such allocation is called geometrical and describes the natural price dynamics.

Maladex protocol provides a series of innovations that minimize or in some cases completely remove impermanent loss. But, that's not the only thing that Maladex protocol will have built in for good and profit. Another thing is when minting liquidity pool a user will be provided with a ton of telemetry and information to be able to make better decision as to how to construct the liquidity pool.

An audit is a comprehensive analysis of source code to discover any bugs, security breaches, and violations of good design standards. For DEX (and any DApp) it's an audit of smart contracts code with a focus on vulnerabilities known to specific programming language and financial operations.

Any complex software often can end up in billions of different states, hence a comprehensive audit will involve automated code scanning for known vulnerability patterns,state exploration for invalid states, and more. In the case of Plutus formal proofs might be written as well.

Proofs guarantee that certain properties hold absolutely, but proofs are much more time-consuming to write (and more expensive). The audit should end with an audit certificate, giving a rating of each vulnerability found on the severity scale, and recommendations to the project.

Usually, after the first round, the project will work to resolve major vulnerabilities and be audited again. Any change in (smart contract) code can result in new vulnerabilities being introduced to the whole system; therefore, it's essential to structure code well.

For critical parts (e.g., dealing with movement of money) as in contrast to routing transactions to not change after an audit.
Many projects offer multi - asset pools and use basically the same inefficient x * y = const formula, but in N - dimensions, i.e.x * y * z * w * ... = const. Where each variable on the left-hand side is an asset. In this form it's the well-known capital inefficient pool, but now it's even more inefficient due to poor price discovery in such high - dimensions(see curse of dimensionality). On the other hand, grouping similarly behaving assets (e.g., all USD stablecoins) into one actor and connecting it's liquidity to any other side of the pair that needs it is increasing efficiency. This is a feature which is planned for far into the future.