Getting more users to the DutchX

(copy of my telegram post)

I think there are 4 keys for a succesfull exchange:

  • Token availability: This should get solved with the forked frontend listing all tokens with a ERC20 badge is deployed (i.e. really soon once we’ve dealt with the domain name).

  • Fees: Even if the DutchX does not really charge a fee, it charges a liquidity contribution which acts as a defacto fee. The liquidity contribution currently rewards GNO token holders (by allowing people to spend OWL not to pay it) and market maker (by lowering it through locking MGN). It can provide a bit of liquidity through market maker incentive, but I think a 0.5% is way too much (even if a part come back in the next auction). For comparison, binance base fee is 0.1% (which can also be lowered with BNB and for large traders) and Uniswap does not have a fee (there is a 0.3% spread for liquidity providers, but they support token fluctuation so not all of it is rewarding liquidity providers). I would suggest to divide the liquidity contribution by 5 (0.1% base contribution).

  • Liquidity: MGN incentivizes liquidity providing a bit. However, I think the real key to liquidity is aggregation of other exchanges. I’d see the DutchX be a place where people go when they are not in hurry to get the best price such as in the worse case, they get their order executed via other DEX and in the best case get a price better than everywhere else (when someone bids). To get there I think this should be done throught automated arbitrage. This has already been started with the Uniswap Arbitrage (https://dutchx.readthedocs.io/en/latest/uniswap-arbitrage.html) but could be improved by linking to a no fee agregator. If we don’t have liquidity, we just need to connect to place where the liquidity is.

  • Communication: Being a DAO is cool, but there is not enough people involved and no communication budget. There could be a budget if the dxDAO token sale is succesful. But then for it to make sense to affect it to the DutchX, we may have to redirect part of the liquidity contribution to the dxDAO (it may be 0% for now, but at least have a plan to make one).

What do you think?

Hi
I really like you idea about aggregation with other exchanges, also I think dxDAO should think about auction time - change auction from 6 hours running to 2 hours create more opportunities for bots to provide liquidity from other places and be profitable.

On the time I would have the opposite take.
Six hours is slow anyways, so you won’t use DutchX when time is an issue. The longer an auction run, the more likely it is to have people bidding on it.
On those 6 hours, most of the time is spent at really high valuation where it’s unlikely for someone to bid.
I would not even mind doing 24h auctions (since most of the time, you either go to sleep late to have your auction finished or look at the result the next day).