Polkadex ($PDEX) Review: Decentralized Exchange Revolution
There is approximately $89 Billion in market cap among exchanges, both decentralized and centralized. Needless to say, there are huge winners within this market. There is also significant competition.
Polkadex aims to revolutionize decentralized exchanges. Here we review Polkadex, the platfrom, team, tokenomics, and market.
What is Polkadex?
Polkadex is a decentralized exchange built on a solo blockchain. The Polkadex solo blockchain was purposefully built to enhance the mechanics of an exchange.
On the platform users have access to orderbook, swap, custom bots, cross-chain trades, and more. Users also enjoy the benefits of both a centralized and decentralized exchanges, while avoiding most of the downsides.
Problems and Solutions
Customer Experience
The user enjoys the experience of many centralized exchanges that allow orderbook transactions. However, there are times when a swap would be a better alternative.
The team at Polkadex solves the user experience with Fluid Switch Protocol (FSP) that automatically chooses the best price when an order is placed from the orderbook.
Execution Speed of Trades
A trade on a decentralized exchange can often take a long time depending on the network congestion and gas fees.
The team chose a solo blockchain that acts as a trading engine to boost its performance to near the speed of a centralized exchange. It’s layer 2 solution is built on top of it’s fast blockchain giving the orderbook side even more speed.
Trade-off: Custody of Assets vs Fees
Many users prefer a decentralized exchange because they do not have to give up assets to a 3rd party. Unfortunately, decentralized exchanges such as Uniswap also include high gas fees. For this reason, many users prefer a centralized exchange.
Polkadex does not charge any gas fees while allowing the user to retain custody of their assets in their wallet.
Cross-Chain Trades
Users want decentralized access to cross-chain pairs on one user interface.
Polkadex is a cross-chain decentralized platform with connections to Ethereum and Polkadot networks.
Platform Overview
Polkadex Blockchain
Polkadex runs on its own blockchain similar to Ethereum’s blockchain. Built via the Substrate framework, the Polkadex blockchain is built specifically for an exchange. Substrate is a platform that gives its users the means to quickly deploy and maintain a custom blockchain.
A key premise to the Polkadex blockchain is it only stores what is required, all else is stored off-chain. For example, orderbook and bridge mechanisms are stored on-chain while technical analysis and trade history retrieval are stored off-chain.
Bridges: Trustless Ethereum Bridge & Polkadot Parachain
To bring in liquidity, Polkadex is building bridges to Ethereum and Polkadot. Snowfork is the framework used to implement the trustless Ethereum bridge. Polkadex is in development to be setup as a Polkadot Parachain.
The Ethereum & Polkadot bridges support Polkadex’s access to liquidity from the Polkadot and Ethereum network while allowing the user to retain its assets in their own wallet.
Chainsafe will provide a liquidity bridge to the Ethereum network as a stop-gap while the Snowfork solution is in development.
Fluid Switch Protocols (FSP) & On-chain Bots
Placing a trade order via the orderbook will get filled through AMM if a matching order is not available. The process is as follows:
- The user creates a buy or sell order through the orderbook.
- If a orderbook match is not made, the order will switch to the AMM pool without additional user action.
- The switch and order fulfillment is handled by on-chain AMM bots.
Trading Bots
With no gas fees, trading bots have the freedom to access Polkadex via their Layer 2 (L2) solution. This gives access to institutional traders and professionals to use their own custom algorithms and popular trading bots such as Hummingbot.
Polkadex
While still decentralized, the Polkadex orderbook portion will feel and act like a centralized exchange. There will be a KYC process, orderbook, and a fiat off/on ramp.
The platform is still connected with a wallet, thus decentralized.
KYC
Integrating a KYC process allows Polkadex to work with institutional investors and liquidity. KYC information will not be stored by Polkadex or on-chain. Instead, KYC will be handled by KILT blockchain’s technology.
It is not clear who will be allowed access based on KYC. Users who do not provide KYC, or meet KYC standards, will have access to Polkapool without KYC.
Fiat On/Off Ramp
A huge advantage of KYC is a fiat on/off ramp. Fiat on/off ramp is a feature offered by centralized exchanges.
Orderbook
The polkadex orderbook solution will be built on their own layer 2 allowing them to have trade settlements in 20 milliseconds. Institutional traders and liquidity will work similar to a centralized exchange.
Polkapool (AMM Pool)
Here the user can trade gasless and cross-chain without the worry of KYC.
Swap
The swap feature is typically seen in Decentralized Exchanges, such as Uniswap. Swaps require liquidity from Automatic Market Maker (AMM) Pools to fill orders. Opposed to an orderbook that matches the buyer and the seller.
No KYC
The is no KYC on this portion of the platform, a feature that has been critical to the success of Decentralized Exchanges.
Liquidity Mining
Perpetual Liquidity Mining will be available through Polkadex. Plus, traditional orderbook market makers will have access to bring liquidity into the DEX without incurring gas fees through Polkadex’s layer 2 solution.
Additional Features
- Futures
- Derivative markets such as NFTs
Polkadex UI Screenshot
Market Segment
As of March 14th, 2021, the market cap of all exchanges is $92,645,406,659. Decentralized exchanges account for $35,016,850,393. Here are a few of the top performing DEXs of the 63 listed on Coingecko.
Revenue
Much of the literature online says no fees, but as we all know this is not possible. Instead fees will be in the form of trading fees and paid in $PDEX.
Token ($PDEX)
Ticker: PDEX
Type: Polkadex Solo Blockchain (Will bridge to additional blockchains)
Utility
- Trading Fees
- Governance
- Staking
Tokenomics
Initial Total Circulating Supply: 1,963,860 PDEX
Maximum Supply: 20,000,000 PDEX
Seed/Private/Pre-Public Sale Fundraising: $3,938,600
Seed Sale: $0.5 TGE 20%, 20% Quarterly
Strategic Sale: $0.75 TGE 25%, 18.75% Quarterly
Private Sale: $1.00 TGE 30%, 17.5% Quarterly
Community Round: TBA. Estimate of $1.25 TGE 100% (2% of maximum supply)
Public Sale Price: TBA
Burn: Tokens are automatically burned if the supply reaches over 20 Million PDEX
Distribution Release Schedule
The release schedule assume TGE and mainnet launch happen around the same time. It is possible the mainnent launch happens 1–2 months later. This effects the Founders & Team and the Advisors unlock by their respective unlock schedule.
Distribution Graph
Based on the chart above.
Roadmap
Q1-Q2 2021
- Public Sale
- Launch Mainnet
- Security Audit
Q3-Q42021
- Parachain Development
- Polkadot Crowdfunding
- Parachain Auction
Q1-Q3 2022
- Margin/Lending
- Futures/Options
- Pebble Consensus Upgrade
Team
Gautham J. (CEO & Technical Lead)
- Software developer with specialty in machine learning, artificial intelligence, and blockchain technologies
Vivek Prasannan (Executive Director)
- Software Developer
- Active in crypto since 2013
Deepansh Singh (COO & Collaborations)
- Operational strategist
Advisors
Matthias Hafner (Cryptoeconomic Advisor)
- Experienced crypto advisor
- Holds a Masters in Economics
- Currently completing Ph.D. in Philosophy
Jasper Byun (Strategic Advisor)
- Advised and invested with a number of businesses including a crypto
- One of his portfolios includes SpaceX
Sonja Prstec (Legal Counsel)
- Experienced crypto attorney with previous experience at Web3 Foundation
- Help launch ICO for Bitnation
Team & Advisors Chart
Investors & Partners
Upcoming Catalyst Events
- Public Sale (TBA)
- Bridge & Parachain completion.
- Polkadex Mainnet launch expected May 2021
- Polkadex layer 2 launch August 2021
- Quarterly unlocks for seed and private investors for the following 4 quarters after TGE
Conclusion
The team at Polkadex understands the pain points in Decentralized and Centralized Exchanges. The team brought on seasoned advisors to complement their technical expertise.
Market Potential
At the time of this article, it is not known what the initial market cap will be for Polkadex. If I were to assume a price of $1.25 based on initial circulating supply, their starting market cap would be $2,454,825.
While Polkadex aims to compete against centralized exchanges, we will focus on the decentralized exchange market for analysis, as it is more conservative.
There are a total of 63 decentralized exchanges listed on Coingecko. Removing Uniswap from the equation as the outlier, the median market cap for decentralized exchanges is approximately $45-$55 Million.
If the team is able to execute their roadmap and build the product they describe there is potential for a 20x return (with the initial market cap assumption).
In the long term, mass adoption of the platform could lead to a much higher market cap.
*Keep in mind the estimate $1.25 sale price was used to estimate the initial market cap used in this section.
Risk & Concern
- The first year while building the product includes private sale unlocks every quarter.
- Mass adoption in the light of current dominant players and the number of competitors.
