A decentralized, peer-peer, order book based cryptocurrency exchange
Polkadex's Design focuses on reducing the complexity of the chain. Polkadex believe that only those things that need public verifiability need to be on-chain. In Polkadex, Orderbook, Trader Assets Management, Bridge mechanism to Polkadot and Ethereum, and On-chain market making bots are On-Chain. Trading features like market data aggregation, technical analysis indicators, storage and retrieval of trade history, and all the remaining exchange related features are made off-chain. It enabled to increase the throughput of trades and made it comparable to the efficiency of centralized exchanges.
Polkadex supports two types of trades, Limit and Market Orders. Market-taking orders have a trading fee of 0.2 percent, and market-making orders have zero trading fees. The market makers are incentivized by giving 50 percent of collected trading fees in their trades, and the remaining 50 percent is paid to Polkadex Team. Trading bots are economically impossible in smart contract-based DEXs due to high gas prices; we solve this by using zero network fees. In short, the market makers will get an extra 0.1 percent on their trades, and market takers pay 0.2 percent.
Polkadex does not collect network fees, a.k.a transaction fees. The Distributed Denial of Service (DDoS) problem associated with zero network fees can be solved if the blockchain can identify when getting attacked and charge network fees only for those attack transactions. Polkadex classifies each transaction as a good or potential DDoS attack, based on which network fees are levied from traders. Trades are classified as potential DDoS if the execution results in,
Invalid Price/Quantity Error
Invalid Trading Pair
Invalid Order type
Trading bots can use Market Data RPCs provided by the full nodes to retrieve market data for specific blocks. All technical analysis of market data can be done on the trader's side or the cloud. It also enables traders to use their custom trading algorithms and proprietary trading techniques.
The liquidity problem of order book based DEXs is solved by having On-Chain market making bots a.k.a AMMs inside the trading engine. Traders can provide liquidity for their favorite AMM curves like constant product AMMs. These AMMs acts like virtual market making bots hence called as On-Chain trading bots.