Throughout this article series, we have concentrated on how Sigmadex has the infrastructure necessary to become the #1 liquidity protocol in cryptocurrency, through its ability to negate common problems that currently affect all other exchanges in the space. We related our platform to how it would benefit the average investor by providing a safer atmosphere to trade, and for Liquidity Providers (LP) by ensuring amplified DeFi profit margins free of Impermanent Loss (learn exactly how Sigmadex negates Impermanent Loss in our 2nd article here).
Where do DApps Fit into the Sigmadex Ecosystem?
However, we did not delve into the multitude of benefits DApps will have by utilizing the Sigmadex platform. Particularly, how startup companies can improve their odds of a successful IDO launch and for bootstrapping liquidity. As there is a great deal of amenities DApps have at their disposal when utilizing our platform, let’s get right into it.
Time-locking Contracts Ensure Liquidity
The simplest mechanism that allows our DEX platform to provide enhanced security of liquidity for DApps is our incentivized time-locked liquidity. Basically, by disincentivizing LPs from withdrawing their liquidity upon short notice, projects can be more assured that their liquidity will be more stable. This is particularly important for startup projects, where their limiting factor in success is often their lack of sufficient liquidity for their community to regularly undergo liquid trading.
Promoting Enhanced Security
These time-locked liquidity pools have another benefit associated with them; Namely, the ability to significantly disincentive Rug Pulls. Since premature withdrawal from an LP results in them incurring penalty fees, it essentially makes liquidity Rug Pulls by any one party disadvantageous from a financial perspective. This is a critical feature as investors are particularly worried about Rug Pulls with startup projects, and by negating its potential to occur, investors are more likely to invest in the startup company based on lesser risk for the same proportional reward when providing their capital investment.
Sigmadex’s Frontrunning protection (see article #2 here for the underlying mechanics behind this protection) also ensures that no bot can pump and dump during an IDO launch. This is very important as a start-up’s launch success is often predicated on not being a victim to Frontrunning, as they can be left with no liquidity, which is essentially a death sentence for a starting project.
Due to Sigmadex hosting on a Polkadot parachain, DApps using Sigmadex as a DEX will also have the benefit of becoming interoperable with all other blockchains. This means that their users can trade their tokens amongst many different marketplaces on numerous types of blockchains in a seamless manner, thereby maximizing the communities’ exposure to the entire crypto-industry. To learn more about the multitude of benefits of hosting on Polkadot, see our article here.
Due to Sigmadex’s high interoperability, security, and ability to provide amplified profitability margins for LPs, Sigmadex ensures investors who seek passive earnings, but have a lower risk threshold, have a place in DeFi. More liquidity will be injected into DeFi as a result of Sigmadex, due to the lesser risk of being an LP within the ecosystem. This means that there will be more liquidity for any DeFi project within the marketplace utilizing Sigmadex’s liquidity protocol. This effect will bolster startup companies’ longevity, and overall success, potential whilst ensuring that early supporters of the project will not fall victim to common DeFi scams including the notorious Rug Pulls and Frontrunning.
Read our other articles to learn exactly how each of these mechanisms works to create the new-age DEX within the DeFi crypto-space. For the savvier mathematical and/or computer science readers, check out our Lightpaper for an in-depth explanation of each of our components; The validity of which is verified through auditable mathematical equations.