In 2020, we saw the beginning of the rapid growth of decentralised finance (DeFi). DeFi is an umbrella term for a range of cryptocurrency or blockchain-based financial apps. Its primary aim is to undercut the middlemen. It takes inspiration from blockchain technology. The blockchain allows several entities to keep a copy of the transaction history. It saves it from the hands of a single, centralised source. This is significant because centralised systems can slow down and complicate transactions. Meanwhile, it only gives consumers barely enough direct control over their funds.
Consequently, one of the key benefits of DeFi is that it eliminates intermediaries from all types of transactions. Decentralized finance was previously known as “open finance.” One of the major components of DeFi is DEXs, or decentralised exchanges.
A DEX is a type of marketplace for crypto traders. Traders can conduct transactions without entrusting their funds to a middleman. These transactions take place via smart contracts. Smart contracts are self-executing agreements written in code. There are three main types of decentralised exchanges:
- AMM (automated market makers)
- Order books DEXs
- DEX aggregators
All of them use smart contracts to allow users to trade directly with one another.
Danaswap is a ground-breaking DEX solution. It works on top of the Ardana platform. Additionally, providing a smooth and effective trading process for Ardana users. Let’s first see what Ardana is, and then we will try to understand Danaswap.
What is Ardana?
Ardana is a Cardano-based all-in-one DeFi station. Cardano is a third-generation blockchain platform. It features a multi-asset ledger and verifiable smart contracts. Cardano intends to be a decentralised application (DApp) development platform. Cardano works on the proof-of-stake algorithm. Cardano’s principal coin is “ADA.” A fun fact: Ada Lovelace, a 19th-century English mathematician regarded as the first computer programmer, inspired the moniker ADA.
The DEX enables very efficient trading between stablecoins and identical assets. Meanwhile, it provides liquidity suppliers with low-risk income through fees. The Ardana Dollar (dUSD) is a decentralised, on-chain, asset-backed stablecoin. It allows users to manufacture, spend, send, and receive dUSD over the Cardano network. Aside from that, Ardana will act as a hub for other projects as well. Developers can build on top of Ardana and receive access to reliable liquidity on the Cardano blockchain. As a result, creating a sustainable ecosystem built on a solid foundation of decentralised liquidity will be easier. The Ardana token (DANA) will power and administer the network. It will allow holders to earn from participation in Ardana’s many yield-generating activities. Activities like giving ideas on the project direction and voting to set factors regulating the system.
Ardana’s protocol also provides for Cardano native asset stablecoin loans. When a smart contract issues a loan, the user can generate the stablecoin, dUSD. To be eligible for a dUSD loan, the user must offer collateral in the form of an authorised Cardano native asset, such as ADA. The Ardana vault will safely store the collateral. The collateral must be more than the loan amount by a factor determined by governance. Holders can have trust in the value of dUSD amid market swings since it is over-collateralized. When the stablecoin loan is repaid, the user can get the collateral back.
Danaswap is an AMM that facilitates trade and token exchanges inside the Ardana ecosystem. It is made up of stable, multi-asset pools where users may swap different stablecoins for other wrapped assets. Danaswap works on the Cardano blockchain. It delivers high throughput, cheap trading costs, and great scalability. As a result, it gives a superior user experience to competing DEXs. Additionally, it has some of the best features of all DEXs:
- It enables the minting of many stablecoins as well as their smooth switching.
- Users can earn a share of the platform’s market-making fees by placing assets into pools.
- It gives you access to a digital forex market in the palm of your hand. Users can exchange popular fiat-pegged Ardana stablecoins like dUSD, dEUR, and dGBP.
- By depositing stablecoins, users may earn high-interest rates by yield farming and lending.
- Its invariant curve formula increases efficiency and cost savings by a factor of 50–100.
Danaswap is critical for propelling Ardana and Cardano to the forefront of blockchain technology. It will showcase the full potential of ultra-high speeds and efficiency for decentralised trade.
Can Danaswap revolutionise the DEX space?
The answer to that question is a big “YES.” It brings something new or something better to the table. It is going to make its competitors very nervous. Consequently, competition is the main force required to push the boundaries and attain new heights. Danaswap comes with several advantages, namely-
- It has far quicker throughput and transaction speeds. It means you can facilitate transactions much more effectively.
- The variety of stablecoin alternatives it provides also reduces price swings. Thus, maintaining the value of your assets.
- Through its pools and staking system, Danaswap maintains the promise of earning passive income. It allows users to create large yields with certainty.
- Because of the eco-friendly nature of the Cardano blockchain, users can be certain that they are decreasing their carbon impact. Meanwhile, they can experience some of the quickest trading speeds at almost no cost.
Danaswap stands out as the flagship solution. It is the only DEX among the big and established players that can deliver unprecedented scalability and efficiency. Furthermore, it allows for the exchange of trustworthy and asset-backed stablecoins. Hence, this provides greater confidence in the trading experience.
Danaswap is a DEX unlike any other. It elevates the landscape of trading platforms and interfaces with its features and capabilities. It is at the vanguard of innovation, staying ahead of the competition while contributing to the Ardana ecosystem.
Also read: Cosmos and ATOM for The Uninitiated