Introducing PEX: The Fairest Decentralized Spot & Perpetual Exchange on zkSync

The decentralized finance (DeFi) landscape continues to rapidly evolve as new protocols aim to push the boundaries of innovation and efficiency. This is where PEX comes in — a brand new decentralized exchange built from the ground up to become the fairest spot and perpetual trading platform.

At PEX, our overarching goal is to support and enrich the wider DeFi ecosystem by building a flexible, sustainable liquidity infrastructure. This includes effective features to aid new protocols wanting to leverage our platform, giving them the tools to effortlessly launch, bootstrap initial liquidity, and sustain long-term growth.

After analyzing existing Perpetual DEX (PerpDEX) models, we identified a fundamental problem — high rewards provided to governance token holders leads to misaligned incentives between liquidity providers and traders. This zero-sum game dynamic causes relationships between stakeholders to become competitive rather than cooperative, often leading platforms into a death spiral after initial success.

To fundamentally shift these incentives towards collective interest rather than individual gain, PEX introduces the revolutionary Auto-Equilibrium Engine (AEE). The AEE contains a set of decentralized, mathematic-supported auto-balancing mechanisms to make the trading game provably fair for all participants.

Aligning the Interests of Traders, Liquidity Providers, and Token Holders

The core innovation that powers PEX’s fair and sustainable ecosystem is the AEE — designed to optimize efficiency, ensure fair practices, and boost engagement. The AEE achieves this through four key components:

Trading Contribution Calculator

The Trading Contribution Calculator proportionally rewards active traders with fee distributions based on their volume and PnL. This compensates traders for their contributions in growing protocol activity and income. By giving back to traders, the calculator provides incentives to keep using the platform.

LP Target APR Archiver

The LP Target APR Archiver guarantees predictable returns for liquidity providers (LPs) via two sub-systems — the Earn as Expected Engine and PnL Compensator. This provides certainty to LPs on their expected yields, encouraging more liquidity provision to the platform.

Long Short Imbalance Safeguard

The Long Short Imbalance Safeguard balances long/short positions using the Funding Rate mechanism. This prevents one-sided exposure risks from lopsided positions. Maintaining equilibrium between longs and shorts results in a robust and stable trading environment.

PnL Compensator

The PnL Compensator balances out the profit/loss between LPs and traders. It reduces losses on both sides and brings them into the $PEX ecosystem by awarding $PEX tokens as compensation. This boosts user retention, trading activity, and overall platform growth.

By aligning the incentives between all stakeholders, the AEE shifts dynamics to an ecosystem where all parties succeed together rather than at the expense of each other. This game changer is what makes PEX the fairest trading platform in DeFi.

Complementary Features for an Optimized Trading Experience

In addition to the fairness mechanisms provided by the AEE, PEX also offers other features to deliver the best overall trading experience:

Margin Trading

Margin trading allows traders to amplify their gains (and losses) by trading assets with leverage. This caters to more advanced trading strategies. A liquidation system protects against excessive risks.

Staking

Staking incentives encourage liquidity provision and governance participation. Unique staking mechanisms like minting difficulty and lock periods allow targeted reward distribution.

PLP

PLP is a unique stakable LP token with minting difficulty and asset rebalancing features. The difficulty mechanism controls PLP supply, while the rebalancer maintains equilibrium between assets. This ensures adequate incentives and returns for liquidity provision.

By aligning the incentives between traders, LPs, and token holders, the AEE shifts dynamics to an ecosystem where all parties succeed together rather than at the expense of each other. This game changer is what makes PEX the fairest trading platform in DeFi.

Real World Asset Tokenization

PEX plans to bridge traditional finance and crypto by enabling fractionalized trading of real world assets like stocks, commodities, real estate as tokenized representations on blockchain.

The AEE combined with margin trading, staking, and tokenization makes PEX the most well-rounded decentralized trading platform — where sustainability and fairness are integral parts of the ecosystem.

The Exciting Road Ahead

As we prepare for the full mainnet launch of PEX, the open beta is now live for the community to test and experience the platform’s capabilities first-hand. The beta includes all the features slated for the official launch.

The PEX team prides itself on delivering the highest quality products following industry best practices like rigorous internal testing and external audits. We are targeting the full production launch in early 2023 after concluding ongoing audits and final adjustments.

We warmly invite you to join us on the journey as we build the future of fair and sustainable decentralized trading. Be part of the innovation and experience DeFi 2.0 with the growing PEX community.

Let’s work together towards an ecosystem that incentivizes win-win relationships between stakeholders. A future that is open, accessible and fair to all.

Check out our Twitter, Website and Gitbook for more information!