I personnaly strongly support this proposal as to me, swapping two assets is kind of a common good facility. But I don’t think either Uniswap v2 or any existing AMM based model (except aggregation) is the right way to do it.
I think this dex could bring more users to the eco as the dotsama’s store front, but it has to comply with some rules not to compete with existing dexes, such as not using KSM for incentivizing liquidity, acting as an aggregator, using fees to be redistributed via treasury, and focusing on best execution via order books instead of amms (acting as an aggregator for them).
I think the is a clear misunderstanding and fear of parachains/existing dexes potentially competing with this dex and creating a potential conflict of interest with DotSama’s governance and its own community. I think you guys are wrong.
There is a clear confusion by most of you guys about what brings liquidity into a market and what should and how it should be incentivized. As an ecosystem, we need to support each other and stateminE/T was exactly made for solving the free rider problem in any market, acting as a base model for parachains to develop themselves organically upon it.
I think there are few features that dotsama needs to implement in order to integrate with other ecosystems and eventually with regulated exchanges and institutions as well. Because in the end, only « users » will bring liquidity.
- EXECUTION
Any exchange needs to tackle execution as a fundamental feature of its architecture. It’s the primitive that brings liquidity to any market. Substrate’s current execution is not a priority as current dexes are too much focused on economic incentives. But someone as to tackle this. Like in a prisoners game, only a common good architecture can focus on this. That was common good parachains are all about imo: solving the free rider problem.
This dex would not compete AT ALL with any parachain if it could bring the best execution to the ecosystem. It could be done via l2s, TEEs, phat contracts or even « off-chain », and we could even build order books on top of these. On the contrary? It could bring more users to the eco, which we definitely lack of. Which leads me to 2)
- REGULATION
As an « official » product from dotsama, it will eventually have to be regulated as an exchange and thus look like an exchange: this statemint exchange could be the doorway to onboard new users to dotsama, as well as institutionals looking for a decentralized best executiton exchange (GSR, Jump, or even investment banks and asset managers).
- ANTI-TRUST RULES
There are clear rules that this dex should use not to compete with any parachain, such as never using KSM and an extra incentive for liquidity bootstrapping.
As a common good dex, it must serve parachains to bring liquidity to their ecosystem, not the opposite. But meanwhile, as an official product, it also has to remain independent from other dotsama dexes and not collude with any of them. This has to be taken very seriously by DotSama’s governance to protect the exchange and the well being of the ecosystem.
CONCLUSION
I think this common dex can only be the fuel to the DeFi ecosystem in DotSama. We already have so many pallets related to this to implement it and we could show the power of our DeFi eco via XCM by displaying them in an unified UI.
Last but not least, I’ll quote the GOAT who recently tweeted about polkadex:
« Finally, an exchange which looks, acts and feels like a CEX, coded on @substrate_io, hosted on @polkadot. @polkadex »
this is what imo is this proposal all about.