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Today, we've heard a lot about groundbreaking technology, which is integral to our industry. However, we often face challenges in translating these technological advancements into effective products. Here are some key insights from our experience:
Cosmos has rightfully earned recognition as a pioneer in blockchain innovation, particularly in fundamental infrastructure development. However, there's been a noticeable gap between their technological achievements and their ability to translate these innovations into widely-adopted user products and experiences.
Consider two notable examples:
This pattern highlights an important distinction between pioneering technology and achieving market dominance. Despite being first to market with several groundbreaking innovations, Cosmos has often seen others successfully commercialize and scale these concepts on different platforms.
The key takeaway? While the best technology doesn't always succeed in the market, the best products usually do. As builders, it's our responsibility to not only consider technological improvements but also to package these advancements into better products and experiences. This approach ensures users can fully benefit from these innovations.
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While decentralization, trustlessness, and self-custody are crucial in blockchain technology, they often relate more to system design than user experience. From a user's perspective, especially in DeFi, three key factors drive product value:
Throughout the industry, we've observed significant fragmentation and challenges across all three of these areas. While maintaining core blockchain principles is crucial, focusing on these user-centric metrics is essential for creating products that genuinely serve user needs and drive adoption.
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How do we take all these amazing technologies package them into nice product that we can then distribute to the industry?
Here are three stories we want to share with you.
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Trading has been a fundamental part of human civilization, enabling specialization and driving societal growth. Over time, the quest for efficiency in trading has led to significant innovations:
The history of trading is deeply intertwined with the history of civilization. Trade enables specialization—where one person might produce food, another might create art, and they exchange these goods. This exchange fuels societal growth. Over time, the quest for efficiency in trading has led to significant innovations:
| Era | Innovation | Impact |
|---|---|---|
| Early Civilization | Physical exchanges | Enabled specialization and goods exchange |
| Medieval Times | Town markets | Centralized exchanges, reduced travel for necessities |
| Industrial Era | Trading floors | Streamlined financial asset exchanges |
| Modern Era | Electronic order books | Aggregated preferences from thousands of participants |
As trading moved on-chain, the initial application of traditional order book models faced challenges due to technological limitations. This led to the development of Automated Market Makers (AMMs).
AMMs introduced a simple yet powerful innovation: a single liquidity pool as a counterparty for all trades. This dramatically improved computational efficiency and democratized market making. However, AMMs also have limitations:
To address these challenges, we propose integrated infrastructure using app chains. This combines several technologies to create more efficient markets:
These components enable the creation of "supervaults" - sophisticated market-making tools that offer numerous benefits:
| Benefit | Description |
|---|---|
| Minimized adverse selection | Reduces unfair advantages for sophisticated traders |
| Best execution for traders | Ensures optimal pricing and trade execution |
| Enhanced LP protection | Safeguards liquidity providers' interests |
| Reduced impermanent loss | Minimizes or eliminates a common risk for LPs |
| Consistent earnings | Generates steady income from facilitated trades |
This integrated approach significantly reduces trading spreads while maintaining profitability for liquidity providers, representing a major advancement in decentralized market making.
Our system operates within a narrow ±2% band around the market price, dramatically improving capital efficiency across the ecosystem. Here's how the process works:
This cyclical process achieves two critical objectives:
Financial markets are driven by the pursuit of efficiency and profitability. For decentralized products to succeed, they must outperform existing solutions in these aspects. This requires:
This approach represents a significant leap in decentralized finance, moving beyond simple automated systems to sophisticated, efficient market mechanisms that can truly compete with traditional financial infrastructure.