Swap
The swap function is one of the most important features of Vordex since it allows users to exchange assets directly on the blockchain in a manner that is fast, secure, and completely decentralized. Vordex employs liquidity pools in the swap process and automated routing to ensure that the user is getting the best possible rate with minimum slippage.
How does a swap work on Vordex?
For initiation of a swap on Vordex, the parameters considered are: 1️⃣ Input Token: The asset being swapped. 2️⃣ Expected Output: The expected incoming quantity of that asset. 3️⃣ Slippage Tolerance: The maximum price movement allowed between the estimated and executed price. 4️⃣ Order Duration: How long the swap should be held for execution (e.g., one hour, four hours, one day). This allows for the gradual execution of a swap over a time frame to reduce price impact and mitigate the risk of front-running. The protocol takes care of the optimal execution route by considering the available stable or volatile pools concerning the most optimal liquidity and execution.
TWAMM (Time-Weighted Automated Market Maker)
The feature of Vordex brings in TWAMM, which stands for Time-Weighted Automated Market Maker; designed to draw out large swaps over a fixed time period. Instead of executing a single trade outright, TWAMM breaks the trade order into smaller executions spread out over time for the sake of better execution and less disruption in the market.
TWAMM key benefits offered at Vordex ✔️Reduce price impact: To lessen the price distortion from large trades in the market price. ✔️Prevention against front-running : This makes it more inconspicuous for bots to sniff out and take advantage of large orders. ✔️Smoother execution : Orders will be executed gradually, not causing too much volatility. ✔️TWAMM Settings: Order Duration: Traders can determine the length of time over which the order should be executed (for instance, one hour, four hours, one day, three days, and beyond), allowing them to personalize trade pacing and time-based parameters for execution behavior.
📌 Example of TWAMM in action
The trader is trying to exchange 10,000 ALPH for USDT while worried about slippage and price manipulation. They have chosen to place their order through TWAMM over the period of 6 hours. Vordex will automatically split the orders into smaller trades, executing them at different intervals throughout the 6-hour timeline. 🔹This reduces the market volatility. 🔹This gives a better average price. 🔹This is also protection against front-running of the trade.
Swap Fee Structure on Vordex
Regardless of how much liquidity pools fluctuate or if they remain stable, Vordex enforces a flat fee structure on every single liquidity pool: ✔️ For every pair, a 0.3% swap fee is charged (eg. USDT/USDC, ALPH/USDT, or ALPH/VEX). Such fees will be redistributable among the liquidity providers and veVEX holders after the end of every epoch.
Slippage protection and swap security
Slippage is the deviation of the displayed price from the final execution price. Vordex allows users to set a slippage tolerance to avoid extreme price changes. ✔️ Low Slippage Tolerance → Ensures that the swap is executed at the expected price, but may fail when volatility is high. ✔️ High Slippage Tolerance → Allows the execution even in times of price fluctuation, although the user may end up with a worse exchange rate. ⚠️ If the final price goes beyond the slippage tolerance preferred by the user, the swap gets canceled automatically ensuring that users are not subjected to any surprise losses.
Swap fee distribution
Vordex takes a 0.3% swap fee on trades. This fee is shared equally (50-50) between: ✔️ Liquidity Providers (LPs) → They make money in proportion to their share of the liquidity pool. ✔️ veVEX Holders → They are rewarded according to their governance influence and voting power over the pools. This allows for an equitable and balanced reward distribution that incentivizes active liquidity provision while simultaneously validating the importance of veVEX governance participation. With the LPs and veVEX holders sharing incentives, Vordex nurtures sustainable and decentralized liquidity management, a factor imperative for the long-term growth of the ecosystem. 🚀
Why use swaps on Vordex?
✅ Decentralized → No intermediaries, full control over your assets. ✅ Optimized → Automated routing for the best available liquidity. ✅ Secure → Smart contract verification and slippage protection. ✅ TWAMM Execution → Reduce price impact and protect against front-running. ✅ Fair Fee Distribution → Transparent 0.3% swap fee, rewarding LPs and veVEX holders.
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