Discussion on Gravity DeX Model

This forum post is to extend the discussion around the characteristics of Gravity DeX Model. Lite paper : liquidity/LiquidityModuleLightPaper_EN.pdf at develop · tendermint/liquidity · GitHub In short, it has three main unique characteristics compared to other existing DeXs. • it combines AMM(liquidity pool model) with orderbook system • it does not use CPMM(Constant Product Market Maker), but ESPM(Equivalent Swap Price Model) • it does not handle orders in serial manner, but in batched auction manner We hope to continue the discussion about the consequences of these unique characteristics, and explore possible improvement of the model. Argument : ESPM with Batched Execution significantly increase profitability of pool investors by reducing value extraction by arbitrageurs and dishonest validators • Reasoning • Batch execution results in swap price competition among arbitrageurs because it does not prioritize orders by transaction sorting in a block (every order in a batch treated equally) • Arbitrage orders with more competitive order price will have better chance to be executed • This order price competition among arbitrageurs will result in swap price…

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So this is maybe not about the gravity dex model but it’s going to affect the gravity dex a great deal, specifically, these AMMs are going to interact.

Also, it is likely that cosmwasm contracts will be written that span the whole network, and that is without getting into the kinds of automated systems that I figure will crop up for trading that live external to any one chain and interact with many chains.

Then, we have the question of onramps and offramps.

I think it’s likely that blockchains will choose to issue assets and then offer them on the hub and other dexes.

Next phase of gravityDeX is to link liquidities from different networks. Just like orderbook sharing among CeXs, but more elegant and decentralized way, by utilizing ibc infrastructure. This is our roadmap in 2022. Cosmos Hub should lead this expansion of liquidity connectivity, to become the center of interchain liquidity environment.

It will differ ibc with other pegging technologies. IBC allows us to build connection of blockchains with multiple dimension, not bounded by one dimensional token transfer

Strongly agree that liquidity can be shared over IBC. Worked on this last year. github.com cosmos/ics/blob/699422bb21726f9cf985235791dab736c8564020/ideation/ics-027-direct-interchain-exchange/ReadMe.md ``` # Cosmos Direct Interchain Exchange Protocol (DIEP) #### Core Idea: Asynchronous liquidity available with IBC that is resistant to theft by misbehaving validators. This eliminates the need to concentrate liquidity (limit orders) in a third party blockchain/venue. Price discovery and execution becomes native between Cosmos zones (e.g. N^2 IBC connections for N zones). There is a cost in terms of higher latency from this architecture. Exchange consists of three core components. 1. Commitment of Funds for an order 2. Order matching 3. Execution and delivery A DEX chain like Binance combines these 3 functions into a single synchronous environment. This comes with risks including asset peg risks, and trusting the validator set of faithfully executing your order. We propose an alternative model. In this model, each of the 3 phases is asynchronously executed on independent blockchains. #### Cast of Characters Alice has Foo tokens on FooChain. ``` This file…

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it provides some problem definition, but practically this approach is not very useful.
limit order should not be directed to particular chain or liquidity pool.
the module should search best available pool to be executed and deliver it to the user.
like a search engine for liquidity.
i think the service should be provided from the Cosmos Hub.
the liquidity search service can find liquidity from interchain liquidities for the user and bring the execution.

this definition of IBC-Liquidity brings a lot of obstacles, but very exciting challenge.