DeGate - Trade easy, Sleep easy
Hey, friends!
Larry Fink is bullish on $ETH, EIP-4844 was launched this week, and the halving is only 1 months away.
This looks like the perfect layup for a bullish 2024.
With that said, today’s newsletter is a sponsored deep dive into DeGate which is a decentralized trading exchange.
DeGate - Trade easy, Sleep easy
Introduction
DeGate is a Decentralized Exchange (DEX) protocol built on Zero Knowledge (ZK) technology. By enabling spot order book trading and grid trading within the Ethereum ecosystem, DeGate, a ZK Rollup, closes a significant market gap and provides a centralized exchange (CEX)-like experience.
DeGate is one of the only DEX with the Stage2 label on L2Beat - one of the most mature and trustless Layer2 projects.
Spot trading, DCA trading and grid trading are just three of the tasks made possible by the protocol; further capabilities will be introduced soon to provide a cohesive trading experience.
Spot Trading
One of the key concerns on the Ethereum mainnet is gas expenses. Traditional AMM DEXes only offer market orders, requiring traders to accept the going rate for a trading pair, and they have hefty gas fees on Ethereum.
DeGate is a new kind of protocol that works similarly to a centralized exchange by enabling spot trading using limit orders. A "match node" that matches trade orders between traders is powered by ZK technology, which also records transactions on Ethereum mainnet on a regular basis. This guarantees an Ethereum-secured trading experience that is quicker and less expensive. Most importantly, the protocol is set up so that maker orders are free and taker orders have minimal expenses.
The protocol has introduced innovative gas-saving technologies to further save gas fees for consumers, such as:
Gas Saving Deposit: Enrolling in a DEX regimen frequently entails a hefty upfront cost. DeGate has developed a deposit option that saves gas. This alternative does not rely on a "contract call," but rather on a "simple transfer." By using this technique, you can save up to 75% on the initial gas deposit fee.
A technology known as Ultra-Efficient Gas Savings (UEGS): This invention, which was created especially for the DeGate protocol, guarantees considerable gas savings without sacrificing the decentralized nature of the protocol. The BatchSpotTrade which is a part of the UEGS technology basically help bundle up to 9X more transactions onto L1, saving gas fees.
You can read more about the batch spot trade here: https://docs.degate.com/advanced/batch-spot-trade
DeGate is a permissionless and trustless platform that offers functionality akin to centralized exchanges but without the inherent security issues of those platforms. Its security is derived from Ethereum.
Grid Trading
One other innovation of the DeGate protocol is the grid trading capability. This is an exact duplicate of grid trading on a CEX, where users can use the fluctuations in a trading pair to improve their trading strategy.
This functionality, when coupled with the benefits of DeGate's free maker orders, can assist users in safely generating long-term and predictable returns in the extremely volatile cryptocurrency market without having their money held in escrow by a centralized entity.
Design Principles
The design of DeGate protocol is based on three principles:
Fully decentralized
The DeGate protocol's long-term objective is to provide an independent, open-source client feature. This indicates that the system is unstoppable and that no one is managing the service in a centralized manner. Anyone can use the protocol by downloading the open-source code from GitHub. The protocol is intended to be built on an open network with thousands of nodes at long-term equilibrium.
Trustless
DeGate was created so that no hostile or centralized authority may access the user's assets and that the user always has the ultimate authority. Malicious actors "can't do evil" in this sense because DeGate is non-custodial. Furthermore, smart contracts can only be updated following a significant 45-day timelock. Details are available here: https://github.com/degatedev/degate_docs/blob/main/broken-reference/README.md
Permissionless
The whole system is an open protocol. Anyone can list any token on DeGate. Additionally, anyone with a blockchain wallet can utilize DeGate directly.
Roadmap
DeGate is developing a DAO-centric technology for completely decentralized limit order trading. Every revenue stream belongs to the DAO, and all liquidity originates from the community. Although it is a large-scale and difficult project with several implementation milestones, the protocol nonetheless ensures a trustless system with user ownership of all assets even in its initial iteration.
Permissionless Listing
DeGate is a unique open protocol that supports anyone listing any assets. The industry will gain greatly from the construction of a limit order decentralized exchange with fully open trading pairings.
As a forerunner of the DEX concept, Uniswap has demonstrated the value of a completely permissionless listing approach in fostering ecological prosperity and asset diversification on the AMM track. This idea is expanded upon by DeGate, which allows any pair to be traded using limit orders rather than market order swaps.
DeGate employs a comprehensive gas fee computation system for economic security. Gas-related fees will have to be collected in order to guarantee data availability and carry out on-chain transactions on a mainnet, in order to maintain the protocol's sustainability.
Multiple currencies are supported to pay for gas expenses and can be combined to complete actual orders placed, making for an improved customer experience. Even as an open system, a strict method of economic security will be put in place to guarantee that the protocol won't be exploited.
A closer look into the protocol
DeGate has been live on mainnet since last year, but in 2024 it has had a great TVL growth.
With 79 trading pairs and over 6k users, it has definitely been getting some traction.
Below you can see a screenshot of how the UI looks like for DeGate. It’s easy to navigate on the site and you choose trading pairs easily. If you want to do grid trading you should see the video they’ve made (I have highlighted it at the end of this article.
If you’re more of a DCA (dollar-cost-average)-person, you can simply use DCA-mode and choose the intervals you want to buy your favorite coins at. This is a great function for diamond hand HODL’ers.
Lastly here is a screenshot from DeFiLlama, impressive TVL growth with a growth from $5m before Christmas to $65m today. Expecting the volume to pick up rapidly also as we move more into alt season and a clean ATH break for Bitcoin.
DeGate DAO
DeGate functions as a DAO (DeGate Home DAO), with total authority over the Treasury. The DAO's members are holders of DG tokens who take part in governance and assign decision-making authority. DeGate Home DAO operates and controls DeGate protocol, and is thereby entitled to the revenue generated.
Amongst other key decisions, Home DAO can decide through the governance process what to do with the revenue generated. To illustrate, Home DAO might decide to convert a portion of the revenue generated into DG and custody it within a Home DAO account/treasury or burn it.
You can check out the DG token here: https://www.coingecko.com/en/coins/degate
Tokenomics
DeGate is a fair launch project with DG as its native token, with a total supply of 1 Billion, 100% owned by Home DAO.
19.8% Founder Financing: the founding team would acquire the stake for 990,000 USD, whereby the tokens will vest linearly over 4 years.
44.0% Incentives: most of these tokens will be allocated towards liquidity mining. 4% of the total will be allocated for token-swap offering to KEY holders. Additionally, any operational expenses related to community-building and marketing would be paid from the 44% incentive pool.
20% Financing: this 20% allocation can either be offered publicly or privately to strategic parties to raise capital for continuous growth.
9% Business Development: this 9% allocation would be used to compensate strategic partners in exchange for any services, support, and other forms of collaboration.
5.2% Reserve: reserved for Home DAO on any unforeseen or immediate needs.
2% Liquidity Pool: Half of the 2% allocation (1% of total) will be allocated to an AMM pool at the Founder Financing round valuation of ~5 million USD to bootstrap day 1 token liquidity. The remaining half of the 2% (1% of total) will be deployed into the same pool for further liquidity.
Can we have a figure here?
Protocol Fees
When using the DeGate protocol, users may need to pay different fees based on different scenarios.
Trading fees: The taker of the order pays the trading fees, which differ depending on the trading pair, when a limit order or market order is filled. The tokens that a user receives after trading are reduced by the trading costs. Example with DG/USDC: Assuming a 0.1% trading fee rate, if a user purchases 1,000 DG at market pricing, the Taker will pay 1,000 * 0.1% = 1 DG in trading costs, which will be subtracted from the 1,000 DG the user should receive. In the end, the user is given 999 DGs. The DeGate HomeDAO vault will receive all trading fees.
Gas Fees: When an operation is submitted to the Ethereum mainnet using zero-knowledge proofs, it is subject to gas fees. The DeGate protocol has specified how much gas each operation uses based on our testing results. Additionally, it determines the gas fees that a user must pay in order for an operation to begin depending on the price of ETH and the network's real-time gas pricing. Gas fees can now be paid with USDC, USDT, or ETH.
Are the assets stored in DeGate safe?
All operations concerning funds require authorizations from a user’s account and no one else can embezzle their assets.
Additionally, DeGate's system includes the Exodus Mode, empowering users to initiate a forced withdrawal of their assets into their L1 wallet if they ever feel their funds are under threat.
As DeGate is a decentralized exchange that uses ZK-Rollup technology. Performing a fund addition and send is equivalent to utilizing an L2 bridge.
What types of costs there are when trading on DeGate?
First, users need to pay gas costs from a L1 wallet when adding funds into DeGate.
Users are also required to pre-authorize gas fees when placing an order. However, they only need to pay the gas fees and transactions handling fees as the Taker of a filled order. Also, remember that MAKERS pay zero fees!
Gas fees are also required for operations such as assets withdrawals and transfers, resetting Asset Private Key, permissionless token listing, and adding trading pairs.
Purpose
DeGate stands out as the premier destination for crypto spot trading in the post-FTX era in 2024. They want to ensure the users understand that DeGate is a place where they can come and do their spot trades for ERC-20 pairs and feel safe trading.
DeGate is one of the only DEX with the Stage2 label on L2Beat - one of the most mature and trustless Layer2 projects. DeGate places an important emphasis on protocol security and operates under the principles of trustlessness.
The DeGate team aimed to create a product of lasting value for the community, rooted in the Ethereum ethos. DeGate is built upon these core Ethereum values, thus the guiding principles of “Trustless, permissionless, and decentralized” are evident throughout the product.
The DeGate target audience
DeFi users who are familiar with order books
Medium and big whale users that trade ETH (at least have $5k in their portfolio)
Grid traders
LP providers on Uniswap
(Grid trading is a better way to provide LP and earn yields)Developers that have income in ETH/USDC and want to trade at a favorable price
CEX users that want to get out to DEXs
Additionally, there is also Exodus Mode built into DeGate - whereby users can perform a forced withdrawal of assets back into their Ethereum L1 wallet if any malicious actions are suspected, which underscores DeGate’s dedication to user authority and trustlessness.
You can read more about Exodus mode here: https://docs.degate.com/v/product_en/concepts/exodus-mode
Highlights aka. why you should use DeGate
1. Limit Orders
-> Makers trade FREE.
-> Free to place orders. Free to cancel.
-> Low taker fees (0.01%-0.05%).Decentralized Grid Strategy feature
2. Grid Strategy feature
-> First DEX with grid strategy feature
-> First orderbook DEX with an innovative yield-bearing stablecoin pair (ETH/USDM). This means you are getting paid yield in USD while you wait for your trades to hit.
-> Grid trades charges zero gas fee & zero trading fee
3. DCA feature
-> Able to Buy/Sell. Able to customize to days, hours, and minutes too.
4. On-chain cancellation feature
-> Users can also pay a small gas fees to submit their order cancellation on-chain, further underpinning DeGate’s dedication to user authority and trustlessness. (This feature safeguards against order manipulation by DeGate DEX, a capability absent in centralized exchanges (CEXs).)
The time has come for the new era of DEXs, to trade in a decentralized way and in self-custody of own funds.
Below you can see how grid trading works:
Okay, that’s it for today friends.
Hope you liked this article and that you try out DeGate.
Stay bullish! Up only season next.
Want To Sponsor This Newsletter? 🕴️
Send me a DM on Twitter: https://twitter.com/Route2FI or reply to this email. I have a sponsorship deck I can send you.
Join My Free Telegram Channel 🐸
I’ve launched a free Telegram channel where I share tweets, threads, articles, trades, blog posts, etc. that I find interesting within crypto.
Join it for free here: https://t.me/cryptogoodreads