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DeFi Money on Chain Protocol, a stablecoin lending and issuing platform based on Bitcoin’s RSK (BTC) sidechain, announced Wednesday the launch of TEX, an automated token exchange platform based on an order book, with a unique twist .
Instead of being available instantly, orders are processed in batches at a slightly varying interval of a few minutes. Each execution, called tick, corresponds to the orders sent to the blockchain.
Every trade that occurs on a given tick is executed at the same average price across all orders sent by traders. Limit orders submitted by users indicate the maximum or minimum acceptable price. For example, a limit order to sell Bitcoin for $ 18,000 will not be triggered if the average price is $ 17,900.
Max Carjuzaa, CEO of Money on Chain, explained to Cointelegraph that the system also uses an Oracle system for more precise control. With so-called market maker orders, traders express a price with a certain percentage offset by the reference rate obtained from the oracle. This ensures that orders track price changes that occur between ticks.
The design of the system was inspired by the London Spot Fix, a gold pricing mechanism in which a committee deliberates on the price of gold twice a day.
Automated market makers like Uniswap are often seen as a necessity in light of the slow performance of blockchain-based systems. Asked whether these concerns drove TEX’s design, Carjuzaa replied:
“No, the main reason it was adopted is the determination of the fair price. The method used in TEX is a way to avoid front-running and ensure a fair price, even at low volume. “
Front-running and price discovery are often seen as major issues in AMM exchanges, but Carjuzaa also believes their system “needs far less liquidity to function.” For the same liquidity, he claims that AMMs will have more slippage than TEX. This advantage is “particularly important in a new network and allows for the growth of organic liquidity”.
