At Sigmadex, we realize the problems that currently face the exchange landscape are shared by tens of thousands of people. In order to address these issues and optimize the current landscape it's not enough to simply complain about these problems, but instead, come up with solutions that solve them.
One of the most troublesome issues that plagues the current exchange landscape is "Rug-pulling". Just as the term implies, it describes a scenario where the rug is pulled out from underneath token holders, leaving them holding tokens with no value and a massive loss of liquidity.
How Sigmadex Combats the Rug Pull
Without significant change to how capital is handled on these exchanges a solution cannot emerge that effectively counterbalances this issue. Through the Sigmadex protocol we hope to not only address this issue but offer a solution through time-locked liquidity and penalties, all of which spawned for our use of game theory.
Time-locked liquidity and penalties work in tandem to help protect token holders from being victimized by rug-pulling. A potential rug-puller is heavily penalized the earlier they withdraw their time-locked liquidity. If they withdraw their liquidity in an attempt at a rug pull; the penalty taken from their initial stake goes back to the people who follow the protocol's rules, allowing their time-locked liquidity to reach maturity without interference. Those who look to hurt the system and others by attempting a rug-pull have to answer to the penalties they would incur in the process, which end up actually benefiting their would-be victims and the Sigmadex ecosystem as a whole.
Game Theory Components
When considering an individual's self-interest, and possible outcomes that coincide with that self interest, we can determine through the use of game theory which decisions that individual is likely to make within a set of established constraints. Through this approach we were able to determine that if we implement time-locked liquidity with heavy penalties for those who act against the protocol we could create a system that turns malicious behavior into actions that actually benefit the overall ecosystem. This system could be seen as a self-healing; when individuals disobey the protocol, they only hurt themselves and benefit everyone else.
The Sigmadex protocol can provide a critical shift in how the market operates while benefiting those who use it. There can be a market created that allows for individuals to enter without fear of abruptly losing their money to individuals or organizations that consciously work to manipulate the market, and its communities, out of their money. Time-locked liquidity is a powerful and beneficial feature of the Sigmadex protocol that has the highest good in mind with maximum benefit for the market.
The cryptocurrency space has always been heavily laden with projects and whales who can operate covertly and without penalty. They wait for the perfect moment to strike by making a ton of money by pulling liquidity discreetly, passing the losses onto the retail communities who are supporters of the projects future. This is morally and ethically wrong. The Sigmadex game theory components within its protocol provide the confidence for traders to ensure liquidity remains locked for the future.
Fair play is part of our philosophy and a driving principle behind making the Sigmadex protocol as powerful and robust as possible. We want to give individuals around the world an advantage over being victimized in the fragmented cryptocurrency landscape that we currently find ourselves in.