What competition does ArithFi face?
Currently, the leaders in decentralized derivatives trading by market capitalization are dYdX and GMX, with dYdX employing an order book model and GMX utilizing an LP pool model. ArithFi introduces a novel approach with its SCP model.
Here's a comparative analysis of the three trading paradigms:
| Order Book (dYdX) | LP Pool (GMX) | SCP Model (ArithFi) | |
|---|---|---|---|
| Trading Fee Rate | Similar to centralized exchanges, typically Maker: 0.02%, Taker: 0.05%. | 0.1% | 0% |
| Price Slippage | Varies based on the liquidity of different trading assets. | 0% | 0% |
| Funding Fees | Similar to centralized exchanges | 0.24%/Day | Dynamic funding fee rate typically 0.05%/Day |
| Trading Basis | USD-based | USD-based | ATF-based |
| Liquidity | dYdX utilizes market makers to provide liquidity, aiming for efficient matching, but cannot avoid slippage, leading to unstable prices, especially during large trades. | GMX uses a zero-slippage mechanism, allowing traders to buy and sell at stable prices even during large trades | ArithFi employs a zero-slippage mechanism, allowing for swift transactions with the system as the counterparty. |
| Value Capture Ability | The platform token DYDX captures minimal value from the platform's development. | The platform token GMX captures 30% of platform fees as a source of value. | The platform token ATF captures 100% of the platform's value, including fees and profits from acting as the counterparty. |
| Token Current Market Cap | $889M | $492M | $1.1M |
Overall Evaluation
dYdX has years of experience in decentralized derivatives exchanges, a solid technical foundation, and high liquidity, providing derivative trading value without the need for KYC. Its issue, however, is the lack of a strong value connection between the platform token and the platform itself; the absence of DYDX tokens has no substantial impact on the project's development.
GMX, as a representative of the LP pool model, attracts LP funds with high annual returns. However, its high transaction costs do not appeal to the broader retail trading market and are only suitable for a minority of large capital traders sensitive to slippage.
ArithFi, as a representative of the SCP model, stands out with its core advantage of extremely low trading costs. The benefits of zero slippage and zero trading fees are evident, and the platform token ATF captures 100% of the platform's value, aligning the interests of token holders completely with the project. Its disadvantage is that transactions are not based on a stablecoin, and achieving widespread user acceptance still requires competitive education costs.
In conclusion, as the pioneer of the Smart-contract Counterparty (SCP) model, ArithFi exhibits innovation and unique competitive advantages.