Detailed analysis — guide for DEX on Enosys platform. How to remove errors arising when making LPs, Farms pools or using crosschain bridges.
Greetings everyone!
In the previous review, which is divided into two parts-articles, we broke down the tokenomics of the Ēnosys platform with you. Part 1. Part 2. I recommend you to read it so that you have consistency in studying DEFI products presented on Ēnosys platform.
Today we are going to look at a tool like the Ēnosys DEX.
You can find this DEX at the following address (always check the address you enter, as there are fake addresses to steal your funds)
DEX address: https://dex.enosys.global/
✅ Addresses of all existing token contracts on the Songbird Network. https://songbird-explorer.flare.network/tokens
✅ Addresses of all existing token contracts on the Flare Network. https://flare-explorer.flare.network/tokens
Let’s understand the Ēnosys DEX interface in detail.
1️⃣ To log in to DEX click on tab number 1, select DEX;
2️⃣ Click on tab number 2 to select a network, in this case we will consider Flare Network;
3️⃣ Click on tab number 3 to connect your wallet from the presented list, after that you will have to select the desired network once again in the appeared window;
4️⃣ To start exchanging tokens, click on tab number 4.
The rest of the interface is very easy to understand. We will return to tab number 5 a little later.
The Ēnosys DEX protocol works and is implemented on Songbird and Flare Network. The examples in the article will be on the Flare Network. The functionality is exactly the same on the Songbird network.
Now let’s explore the theory of Ēnosys DEX.
This Ēnosys DEX protocol works and is implemented on Songbird and Flare Network. The examples in the article will be on the Flare Network. The exact same functionality is also available on the Songbird network.
Ēnosys DEX — is an ecosystem swap protocol that uses smart contracts to provide liquidity to automated market makers (AMMs).
Participants in the ecosystem can become decentralized on-demand liquidity providers (DODLPs) and receive a commission for doing so, while maintaining L1 rewards. For each token pair listed on DEX, there is a corresponding liquidity pool, a smart contract that holds assets provided by other users. Traders then trade using the liquidity stored in this contract.
The decision to introduce new trading pairs on DEX is made through a management proposal, ensuring the interests of the community and reducing the likelihood of spam or questionable listings on the trading platform.
🟩Swap tab. Swap Trading.
Exchange allows users to trade without having to go through a centralized exchange. This means that swaps are routed directly through your own wallet, and your tokens will never be owned by anyone else.
Swapping one token for another utilizes liquidity pools, where tokens are supplied by other users who are liquidity providers. There is no central authority that guarantees or controls transactions, so if users don’t provide enough liquidity, transactions of significant volume can significantly affect the price.
Traders can choose which tokens they would like to trade, view charts detailing price history, volume, available liquidity and how much their trade will affect the market they are trading in. In addition, traders can see the commissions charged on their trades, if any. .
Commission for each trade is charged in the form of the currency traded. At launch, the commission is set at 0.30% of each trade executed. Certain attributes of the system, such as commission percentage or supported tokens, can be changed by management token holders using management offerings.
Commissions are distributed back to the Liquidity Providers, the team and the APY cloud as follows:
- 90% goes back to the Liquidity Providers;
- 8% goes to the team/investors;
- 2% goes to the APY Cloud.
Order Book vs. Automated Market Making
Most centralized trading platforms use the Central Limit Order Book (CLOB) model, which matches orders from buyers and sellers. This allows participants to bid (buy) and ask (sell) for an asset at a specified price.
This is not ideal for markets with low liquidity as it may not be possible to match buy and sell orders. The use of order books also allows for various types of market manipulation, especially on the DEX.
Instead, Ēnosys Dex uses an automatic market making (AMM) model. For each specified token pair, there is a corresponding liquidity pool, a smart contract that captures assets provided by other users. Traders then trade against the liquidity captured in this contract.
Unlike the order book model, which determines the prices at which buyers and sellers wish to trade, the AMM model determines a single market price according to a deterministic algorithm (see “Prices and price impact” below). This means that a buyer does not have to wait until there is a seller willing to sell at the desired purchase price, but can always make a transaction instantly.
Slippage.
Since every transaction on a decentralized exchange adjusts the price of an asset, it is possible that other users’ transactions affect the price between the time a user approves a transaction and the time it is executed. This is called slippage.
The platform protects users from the negative impact of real-time price changes by automatically canceling transactions that result in the user receiving less than 95% of the original token amount. If a transaction is canceled, the user loses nothing except for a small gas fee required to get their funds back.
Platform Architecture
There is no backend, all functions are performed by smart contracts that are designed to be persistent and updatable. This makes the platform resistant to censorship, provides complete self-control and eliminates the need for a trusted authority (intermediary).
The interface (user interface) is provided as an additional level of user experience, simplifying interaction with smart contracts.
Incorporating L1 incentives, Enosys Dex LPs offer a multi-faceted revenue stream in the form of:
- Liquidity Fees;
- L1 Delegation Rewards;
- L1 S/F share awards;
- Enosys Farms launch panel rewards (optional);
- All accrued rewards are collected when users burn their LP tokens, +/- non-permanent loss.
L1 Rewards
Tier 1 rewards, such as rewards for delegation or subsequent distributions, are supported where possible. SGB or FLR provided as liquidity to the pool will be automatically packaged and delegated to the two FTSO providers. L1 awards can be requested through the liquidity pool interface or from the farm if your LP tokens are hosted there.
Ēnosys on the Songbird network uses FTSO: Defi Oracles.
Impermanent Loss (IL)
🔴 A very important aspect! Before creating LP tokens for liquidity pools, you should learn IL. 🔴
A non-permanent loss is a temporary loss of value when providing liquidity to a liquidity pool. It’s comparative in nature, but doesn’t mean you have taken a $ loss, only that you would have had more if you had not opened the position and decided to sell at that point. is called a non-permanent loss because the loss of value is not realized until you withdraw from the liquidity pool.
A nonpermanent loss occurs when the price of the deposited assets deviates from when you contributed them to the liquidity pool. Exposure to non-permanent loss increases as the deviation increases. In this case, the loss means a lower dollar value at the time of withdrawal than at the time of deposit.
- A price change of 1.25 times = 0.6% loss.
- A price change of 1.50 times = a loss of 2.0%.
- 1.75x price change = 3.8% loss.
- 2x price change = loss of 5.7%
- 3x price change = loss of 13.4%.
- 4x price change = loss of 20.0%
- 5x price change = loss of 25.5%.
Tokens with low liquidity are prone to volatility. Opening an initial pool of liquidity is also subject to volatility/slippage.
Commissions earned from swaps as well as rewards from placing LP tokens in farm pools can offset any potential volatile losses.
🟩 The “Liquidity” tab.
Anyone can become a liquidity provider, provided they own both tokens of the quoted trading pair. By blocking their tokens (equal value of both) in the liquidity pool, they receive a proportional share of the exchange fees.
There is a liquidity pool for each supported token pair. Users wishing to exchange their tokens on the exchange actually trade against these pools.
Liquidity on Enosys Dex is provided by individual users. They are rewarded with a pro-rata share of swap fees and LP tokens that can be farmed for additional rewards.
The liquidity pool is a smart contract that locks tokens to make liquidity available on the decentralized exchange. Ēnosys Dex allows participants to provide decentralized liquidity on demand (DODL) to traders and earn passive income in the form of trading commissions just like on centralized exchanges like Binance. Ēnosys Dex liquidity pools require a 50/50 token split, which means that the user must provide equal amounts of both tokens. Once liquidity is provided, the system issues LP tokens to the user, which act as keys to unlock the provided liquidity. Commissions are accrued in real time relative to the user’s pool share as trades are executed. Participants can retrieve accumulated trading commissions and return the provided liquidity at any time. When a user exits the liquidity pools, they burn their LP tokens. The system then returns the original tokens provided as liquidity, plus the accrued commissions of the liquidity provider or minus non-permanent losses.
Liquidity providers are key to the success of any AMM and therefore must be adequately motivated.
Fees
The swap fee is 0.3% of each transaction. The fee is distributed as follows:
- 90% of this fee is returned to the liquidity providers as remuneration;
- 8% of this fee is distributed to the team and investor pool;
- 2% of this fee is distributed to the APY cloud for management staking fees.
Now let’s move on to the practice of creating an LP.
5️⃣ Click on tab number 5 to enter the menu for creating liquidity token LP(Liquidity Pools).(pic 2):
There are two ways to create an LP in the Ēnosys DEX interface:
1. Click on any pair of LP tokens (indicated by the number 6) to enter the liquidity creation menu;
2. Simple Staking, i.e. simplified LP token creation;
Many DEX platforms have the same algorithm of LP creation, so I recommend to understand this functionality to the end in order to maximize its use for profit.
Let’s look at method number 1
(It is the most complicated)
Click on any token pair you want to create. A new menu will appear (pic 3):
As you have noticed in the window that appears, there is also a “Simple Staking” button — this is done for your comfort.
For the first time, before you start creating any action on DEFI platforms, in particular DEX, you must perform the so-called “Approve” (pic 3). After that you do not need to do this action.
Click on buttons 8 and 9. Then enter the number of tokens in one of the lines 10 or 11 and the tool will automatically select the required number of tokens of the second asset for you. If you have a sufficient balance of these tokens, the “Provide Liquidity” button will become active. Click on it and sign the transaction. Ēnosys DEX liquidity pools require a 50/50 token split, which means that the user must provide equal amounts of both tokens.
A new LP token will now appear on your wallet. To display it you need to add it like any other tokens depending on your wallet. This action is not necessary (it is done for your convenience), as Ēnosys sees them automatically after creating them in the interface, which you can use to provide liquidity in Ēnosys Farms (how to use LP token in Ēnosys Farms will be discussed in another article).
LP tokens can be sent just like any other token, effectively transferring the user’s share of the liquidity pool to the receiving account.
This is what an LP token looks like in your wallet after successful creation.
🔴 Under number 12 on (pic3) you will find the necessary statistics about LP. Always study it before taking any action. 🔴
All original LP tokens from Ēnosys can be found at this address in the block browser:
2. Simple Staking
The Simple Staking tool was designed to simplify and streamline the process of placing individual tokens and LP tokens into Ēnosys Farms pools.
It allows the user to take any supported token and place it in the desired farm pool. The Simple Staking tool will automatically perform the necessary swaps, provide liquidity, and force LP tokens, compressing them into a single transaction. The reverse process can also be accomplished with the Simple Staking tool, which allows the user to switch from the farm pool to any supported asset of their choice.
Simple Staking for farm pools with a single token:
Staking — the selected token will be changed to the desired token and placed in the single token farm pool of your choice.
Unstaking — your bid from the Single Token Farm pool will be destaking, converted to the token of your choice and credited to your account.
Accrued APS(or SFIN) rewards are automatically collected.
Simple Staking for farm pools with two tokens:
Staking — the selected token will be split equally into the two assets that make up the selected pair. Both assets are then provided as liquidity and the LP tokens are placed in the appropriate farm pool.
Unstaking — your bid in the farm pool with the two tokens will be destaking, the liquidity will be removed, and both assets will be converted to your chosen token and credited to your account. Accrued APS(or SFIN) rewards are automatically collected.
Fees
The Simple Stakes tool charges a fee of 0.5%. This fee is distributed as follows:
- 50% of the fee is distributed to the Team.
- 50% of the fee is distributed to APYCloud.
To access Simple Staking, on the slide (pic 2), click on button number 7 “Simple Staking” or click the exact same button in the Liquidity window.
In the window that appears (pic 4), perform the following actions:
In the line “Farming pool” under number 13 select the necessary pair of tokens to create LP.
Then in the line number 14 “Token to stake” select the token that will be used to create the LP pair (you can choose any token from the list, the main thing is to have this asset on your balance). The Ēnosys platform protocols will convert your token into the required token pair.
Now button number 15 “Approve token spending” is active. Click on it for the “Approve” function
After successful completion of token conversion, the button numbered 16 “Stake” will become active. Click on it to complete the creation of LP token. Be careful, you will be charged 0.5% fee of your token amount.
🔴 How to remove errors that occur when making LPs, Farms pools or using crosschain bridges 🔴
Whenever you use crosschain bridges (bridges to transfer tokens from one blockchain to another) or participate in liquidity pools (LPs) on DEX or stack tokens on farms to earn interest, you sign two transactions:
the first transaction of type “Approval” is the one that provides spending limits for the Dapp contract we use, effectively a third-party smart contract;
the second is the transaction that transfers our tokens to the address specified in the approved smart contract to start the decentralized funding operation.
A list of utilities to deal with the above problems:
- Revoke (Ethereum mainnet);
- EvmAllowance (multiple networks) (pic 5);
- Unrekt (multiple networks);
- zones (Ethereum mainnet);
- Cointool (multiple networks);
- EverRevoke (multiple networks).
The author of the article uses https://evmallowance.com. So I recommend it.
🔴 Beware of fake addresses for these utilities. 🔴
To use https://evmallowance.com you need to enter this address into your WEB 3 interface of your wallet and press “Сonnect”. Then the following window will appear (pic 5):
Now you can click “REVOKE” to correct your error. I recommend that you log in to this utility periodically to prevent errors from accumulating, and also for the safety of your funds.
Thank you for your attention️ ❤️
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In this article, the author expresses his opinion and does not endorse anything.
This article is not financial advice and does not encourage you to take any action.
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