By
Temitope Olatunji
April 18th, 2024
The extremely low transaction fee and high scalability of the Polygon blockchain have encouraged IDEX to launch its hybrid liquidity DEX on the network.
On Wednesday, December 1, San Francisco-based decentralized crypto exchange (DEX) – IDEX – announced the launch of its v3 Hybrid Liquidity DEX on Polygon. The hybrid exchange will merge the functionalities of traditional order books with the automated market maker (AMM) liquidity pools.
Why IDEX Chooses Polygon
The goal here is to provide higher financial returns for services liquidity providers. Besides, it also aims to offer traditional investing tools like limit orders, stop losses, and real-time execution. IDEX also said that this development will also aim at overcoming the shortcomings of the DEX ecosystem. This includes slippage, front-running, and sandwich attacks.
The reason behind choosing Polygon is to avoid high-gas fees on transactions. Polygon, the Layer 2 scalability solution of Ethereum, has been much popular among DEXs and DeFi players. As per IDEX, Polygon has transaction costs that are “10,000–100,000 times cheaper” than the ones on Ethereum layer-one.
The recent decision from IDEX comes as the decentralized finance (DeFi) sector has witnessed exponential growth. Speaking on this matter, IDEX CEO Alex Wearn said:
“DeFi has been hamstrung by issues like gas prices, front-running and slippage since its inception, yet few solutions have truly offered answers to these problems. The novel Hybrid Liquidity design protects users from these pain points, while simultaneously generating higher returns for liquidity providers to boost the scalability of the wider decentralized economy.”
The Issue of High Fees among DeFi Liquidity Providers
DeFi protocols on Ethereum have been facing the burden of high fees faced by liquidity providers. Nearly, half of the liquidity providers on Uniswap v3 have been subject to impermanent loss. However, the Ethereum-based Uniswap DEX continues to rank first with its 24-hour trading volume standing at $2.8 billion.
Uniswap recently publicized a reduction in failed transactions from 11% to 6%. However, the users have still suffered more than 10,000 failed transactions.
As a result of these failures, many DeFi players feel encouraged to move to Ethereum Virtual Machine-compatible and other Layer-2 networks for cheaper alternatives. Thus, IDEX decided to launch its hybrid liquidity DEX on Polygon. Speaking of this development, Hamzah Khan, DeFi Lead at Polygon said:
“We are excited to assist IDEX launch its platform on Polygon, and believe it will serve as a catalyst for decentralized applications building on our network. IDEX takes an innovative approach to resolve issues such as front-running and failed trades, which helps drive significant value for traders.”
This is certainly a positive development for the Polygon ecosystem as a whole. In the last 24-hours, MATIC, the native cryptocurrency of Polygon has gained 15% with its price moving close to $2.20.