Open DeFi Protocol Powering the Future of Decentralized Crypto Trading
Blockchain technology has definitely come a long way, from the days of relative obscurity (think “Bitcoin pizza”) to the present. Throughout its decade-long history, it’s been a rollercoaster ride characterized by historic bull runs, ICOs, exit scams and the rapid development of the blockchain industry, particularly the cryptocurrency space.
The year is now 2020, and blockchain has evolved into a well-rounded technology. Decentralization is now a key part of the blockchain landscape, in the form of decentralized finance, or DeFi. But in the context of blockchain, decentralization exists in two forms: network control and asset control.
Governance tokens give users a degree of control over decisions regarding the protocol, while decentralized exchanges put users in control of their crypto assets. In addition, DEXes help to maintain price points through liquidity pools and automated market makers (AMMs).
Over the last few years, decentralized trading of crypto has risen in popularity, characterized by the rise of platforms like Bancor, DeversiFi, KyberSwap, Balancer and, most notably, Uniswap. At the time of writing this article, DEXes have a combined TVL of more than $4.2 billion, according to DeFi Pulse.
But there is a problem…
Uniswap was the first exchange protocol to implement AMMs, providing a better way to trade cryptocurrencies in a decentralized way through liquidity pools instead of order books. However, the protocol has some issues which other DEX protocols are trying to solve.
One of the major issues DEX protocols face is the liquidity rewards model: users contributing to liquidity pools only receive rewards if they keep their stake in the pool. Another issue is the lack of true decentralization. LP rewards could get diluted once the whales start contributing to liquidity pools, so early liquidity providers could be rendered insignificant.
TRAMS is a permissionless decentralized exchange protocol for swapping ERC-20 tokens on the Ethereum blockchain. The project is a fork of Uniswap V2 with major improvements to the rewards mechanism and governance model. TRAMS DEX is in private development, and will be officially launched on October 28, 2020.
The TRAMS DEX was created to improve the design of AMMs in terms of liquidity mining rewards and protocol governance. Using the platform, users can deposit their crypto assets and earn interest, swap tokens at minimal fees and receive LP rewards for providing liquidity.
To help you understand TRAMS better, let’s take a brief look at the TRAMS token. As the native token, TRAMS serves two main features: on-chain governance and distribution of liquidity rewards.
On the TRAMS DEX, all trades attract a 0.3% transaction fee, which will be distributed among liquidity providers. By holding TRAMS tokens, LPs will qualify for a share of the fees paid by traders. Even after they withdraw their stake from the liquidity pool, they’ll keep earning liquidity rewards by holding TRAMS tokens. This way, the early liquidity providers will form an important part of the protocol.
Apart from rewards distribution, TRAMS token holders will also have the power to vote on suggested proposals and critical decisions regarding the protocol.
Traders will stake their tokens and then receive corresponding TRAMS tokens at a 1:1 ratio as a reward for contributing to the liquidity pool. The TRAMS token will be calculated as the equivalent returns in proportion to the amount of LP tokens you have staked compared to the total staked tokens in the liquidity pool. Your earnings won’t get diluted if you stop providing liquidity, since you’ll still receive loyalty governance rewards for holding TRAMS tokens.
Ultimately, TRAMS will evolve into a hybrid digital banking platform; essentially, a DeFi ecosystem consisting of a lending and staking dApp, TRAMS DEX, and a marketplace for non-fungible tokens (NFTs).