Please describe your proposed solution
We are building Rapid DEX, a decentralized exchange designed to simplify liquidity management, improve efficiency, and maximize decentralization for the Cardano ecosystem. Unlike existing AMM DEXes that rely on batchers and factories, Rapid DEX removes these intermediaries to allow for direct interaction with liquidity pools, lowering fees, reducing delays, and providing greater control for users. This approach aims to create a more competitive and open trading environment while addressing key issues like batching costs and complexity. By using direct interactions and treating each pool as an individual entity without requiring factories, Rapid DEX significantly reduces the infrastructure setup and associated costs. By empowering users to directly engage with the system, Rapid DEX ensures that liquidity provision and trading are both streamlined and user-centric.
Rapid DEX is ideal for a variety of use cases where efficiency, flexibility, and cost reduction are critical. One key use case is frequent traders who seek to minimize transaction fees and avoid delays inherent in the traditional batching model. By enabling direct pool interactions, Rapid DEX reduces swap times and costs, making it particularly useful for high-frequency trading strategies.
Rapid DEX will benefit ADA holders and investors by improving trading efficiency and reducing fees, making Cardano more attractive. DeFi traders and liquidity providers gain from instant execution, lower fees, and reduced slippage. Emerging projects can create liquidity pools easily and affordably, fostering early adoption. Established projects benefit from competitive liquidity and collaboration. DEX aggregators see improved value through competitive fees, while stake pool operators (SPOs) gain from increased transaction volumes. Finally, DAOs and DeFi enthusiasts get easy access to pool creation, boosting DeFi participation and decentralization.
Pool creation
Existing AMM DEXes use sophisticated smart contracts called Factories, which prevent multiple pools for the same token pairs. Interaction with these Factories adds complexity, running costs, and transaction fees. To simplify usage, foster competition and reduce running costs and fees, Rapid DEX allows direct pool creation without Factories.
When creating a pool, users can set the swap fee in the pool UTxO datum. Higher fees can attract liquidity providers seeking better returns but may result in fewer swaps, while lower fees can boost swap volume, potentially giving the pool a competitive edge on DEX aggregators.
Swapping and liquidity management
Provided tooling will prepare the transaction, which directly interacts with the pool UTxO, allowing users to simply execute the interaction without needing to perform calculations themselves. Existing DEXes rely on batchers, which require users to create a request that is then batched together with others and applied to the pool UTxO directly. In contrast, Rapid DEX allows users to interact with the pool directly, reducing delays and eliminating the need for centralized batching, thus making the process more efficient, decentralized, and reducing transaction costs, as transactions are smaller and only one needs to be performed.
If multiple users attempt to modify the same pool within the same block, transaction chaining ensures that these transactions can still be processed. Transaction chaining is a mechanism that allows multiple transactions, which depend on each other, to be included within the same block. This ensures a smooth, sequential execution of trades even when multiple users interact with the same pool simultaneously.
Unlike the batching model, where users often receive different swap outcomes due to batch execution delays (effectively turning the transaction into a limit order), Rapid DEX ensures that users always execute their trades based on the known pool state at the time of submission. This prevents undesired outcomes and eliminates the need for users to reclaim transactions, which would otherwise incur additional costs.
If a transaction fails, the user will receive a simple notification that the pool has been updated, and the UI will reflect the new pool state without any disruptive errors.
ADA Staking
ADA staking is the process of delegating ADA tokens to a stake pool to help secure the Cardano blockchain and earn rewards in return. In the context of a liquidity pool, ADA held in the pool can also be staked, allowing the liquidity providers to earn staking rewards. This means that the liquidity in the pool not only provides trading functionality but also generates additional returns through staking.
In Rapid DEX, the stake key is embedded in the address of each pool UTxO. This configurable setup ensures efficient management of staking rewards from the liquidity pool, while maintaining core functionality and providing liquidity to traders.
Farming
Anyone can add tokens from a token pair to the pool, making these contributions public. This incentivizes token issuers to contribute directly, as it provides immediate rewards to liquidity providers rather than relying on promises. These contributions are visible in the APR (Annual Percentage Rate) calculations, which will reflect real, past donations, adding transparency and trust.
Token issuers can still signal future rewards by including metadata when creating the pool, but the instant nature of these rewards—untied to epochs—immediately increases the value of LP tokens. Furthermore, liquidity providers are not required to lock their LP tokens in a farming contract, giving them more flexibility and control over their assets while still benefiting from rewards.
Upgradeability
Migration to newer contracts can be done without a migration-agent. Just create a Tx withdrawing liquidity from this version of pools and adding to the next version of the contracts, with a change back to the user wallet.