New version — Flash Trade on swaps.io (demo)
Flash Trade is a new innovative mode of the Kinetex dApp. The upcoming launch of Flash Trade provides a perfect opportunity to talk more about the advantages this mode has and the technologies the Kinetex team employed to achieve them.
With Flash Trade, users can swap crypto assets directly with professional resolvers (market makers), and such an approach dramatically simplifies the swap process. Users only need to select the tokens they want to swap and enter the desired amount, and resolvers manage transactions from there. When users agree to exchange rates, they sign orders, permitting resolvers to access their assets. Before resolvers can fill orders, they must provide collateral, which should exceed the orders' amount, to ensure the safety of the users' assets if they fail to execute orders on time.
Flash Trade has been created by the Kinetex team after thorough consideration of the critical challenges present in the blockchain industry today. While the Liquidity Aggregation mode is useful for transferring assets cross-chain in a convenient way, it does not, for example, allow for instant trades. By leveraging native liquidity, Flash Trade guarantees fast execution times, fixed rates, enhanced security, and more.
Let's look more closely at the most notable advantages of Flash Trade.
Speed is one of the most prominent advantages of Flash Trade. This mode works by setting a time limit for resolvers to fill their selected orders, usually no more than two minutes. Within this time, a resolver should complete an order, or otherwise, it gets liquidated. During liquidation, the order can be either filled from a resolver's collateral or by a liquidator, which will receive the resolver's collateral as a reward (more about the liquidation system below). As a result, users receive their orders every time and very quickly. Additionally, the competition among resolvers also significantly speeds up the process. As they compete with each other, they are motivated to work faster, thus reducing the time taken to fill the orders.
The next advantage consists of several ingredients: protection from MEV attacks, the absence of bridges and third-party validators, and a liquidation system. Firstly, MEV is a well-known phenomenon discussed more and more in the crypto industry. It stands for maximum extractable value and refers to the profit validators can gain while manipulating transactions they validate and strategically placing their own trades.
While it helps to attract more validators to help sustain blockchain operations by giving them more profit opportunities, it may also lead to a decline in the user experience as they may get severely exploited every time. To protect users from MEV attacks, the Kinetex team decided to stop using validators and mempools and turn to a direct peer-to-peer model instead. It became possible with the use of zero-knowledge technology, namely Zk proofs. Besides, third-party validators often get hacked or compromised otherwise, presenting serious security risks even without MEV. So, running the system without them is a great benefit.
Secondly, Kinetex's decision to allow P2P orders has a significant advantage: it enables Kinetex to avoid the need to create new wrapped tokens. It is important because new wrapped tokens can lead to several problems, such as hacker attacks and frozen and fragmented liquidity. Unfortunately, the crypto community still experiences bridge hacks from time to time, which highlights the major security issues that the industry has yet to resolve. Moreover, locking assets in smart contracts while creating new tokens and generating assets on different networks can worsen liquidity problems, especially for lesser-known crypto assets. Therefore, by opting not to create new wrapped tokens, Flash Trade prevents security risks associated with cross-chain transfers through bridges and helps to improve liquidity across different chains.
Thirdly, a fully decentralized and Zk-based liquidation system is the last vital part of Flash Trade that contributes to its enhanced security. The Kinetex development team designed this system to be open and public, which means anyone can become part of it and support the integrity of the Kinetex system. Liquidators look through orders and find expired ones, which resolvers could not fill on time for some reason. After such an order is found, a liquidator can fill it, generate a proof of completion, and claim collateral allocated for this order by a resolver.
Motivated by resolvers' collateral, liquidators have high competition with each other, trying to act as quickly as possible. Consequently, Kinetex is able to ensure a quick and guaranteed execution of trades for all users.
Another of Flash Trade's advantages is, undoubtedly, rates. To successfully compete with others, resolvers need to analyze user requests and provide competitive rates for those they are interested in filling. Users can then look at different proposals and choose those they like the best. Therefore, all resolvers are motivated to offer the most advantageous rates possible to remain in demand.
Additionally, since users swap with resolvers directly after choosing the optimal conditions, there is no price slippage. Users receive what they want precisely without any percentage taken from them.
The final substantial advantage of the Flash Trade mode is gas optimization and gasless flow. Thanks to the innovative zero-knowledge technology used by Kinetex, transactions can be batched together. Consequently, the Flash Trade mode reduces the number of individual transactions that need to be processed, thus reducing the overall cost of executing each transaction, eliminating unnecessary gas payments, and saving time.
Furthermore, users do not need to pay gas fees themselves when using Flash Trade since the resolvers handle all aspects of order completion, including gas payments. This approach creates a gasless flow, saving users from storing multiple native coins in their wallets.
Flash Trade is a new generation of the Kinetex dApp, which combines the best new technologies on the market, including cross-chain resolving, Zk technology, and liquidation system. With Flash Trade, users can trade their favorite cryptocurrencies seamlessly and securely without worrying about price slippages, long time periods, expired transactions, etc.
Stay tuned for further updates and keep swapping with Kinetex!
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