Decentralized derivatives have two main solutions in terms of protocol types:
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The Vault mode represented by GMX, where LP serves as the counterparty for traders, and the trading price is determined by Oracle's price feed.
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The Order Book mode represented by dYdX, which involves off-chain matching and on-chain settlement.
Although these two solutions are widely adopted in the market, they have some potential risks. The Vault mode is susceptible to Oracle price manipulation, resulting in losses. On the other hand, the Order Book mode lacks transparency in off-chain matching and on-chain settlement.
Among the numerous decentralized derivatives protocols, the influence of individual protocols is limited. The entire on-chain derivatives trading market is still in its early stages, and the market landscape is yet to be determined. Winning in this competition is a significant challenge for every existing protocol, as it will determine their future.
Based on the Starknet ecosystem, the derivative protocol ZKX adopts the Order Book mode. However, through differentiated deployment, it provides users with an on-chain trading experience and security comparable to or even surpassing that of centralized exchanges (CEX). OG Trade and Pro Trade offer various trading options for different types of users. ZKX AppChain records all transaction processes on-chain, ensuring transparency and security. ZKX Accounts and Starkway provide seamless onboarding and simplified procedures for new users.
ZKX Background Information
ZKX was founded in 2021 by Eduard and Naman, who previously held leadership positions at SOSV, one of the world's top venture capital firms with over $1.2 billion in managed assets. The main team members have extensive experience from companies such as PayTM, Flipkart, and Byju's, spanning 8 countries.
In April 2022, ZKX received funding from StarkWare (the parent company of Starknet). In July 2022, ZKX raised $4.5 million in seed funding, with investors including StarkWare, HashKey Amber Group, Crypto.com, DragonFly Capital, and Ashwin Ramachandran, a general partner at DragonFly Capital.
ZKX provides users with a more engaging trading experience through gamified trading options, making trading more social. By utilizing ZKX AppChain, ZKX combines the efficiency of CEX with the self-custody and trustless nature of DeFi, offering broader scalability and high-speed APIs. ZKX is currently deployed on Ethereum and Starknet. According to official data released on June 5th, ZKX had a trading volume of $2.3 billion in the past 30 days, with over 24.6K+ account creations and over 2 million transactions. The trading volume of STRK alone exceeded $300 million.
The ZKX protocol token $ZKX TGE will take place on June 19th and will be listed on Kucoin and Gate.
OG Trade & Pro Trade
Traditional on-chain derivatives platforms usually have static trading interfaces, where traders of different levels are forced to use the same interface without any choice. ZKX innovatively divides trading into OG Trade and Pro Trade for different levels of users.
OG Trade provides a simpler and more enjoyable trading experience for short-term and swing traders by introducing gamified elements. It offers 30-minute trading competitions and provides visual real-time trading data on the interface to help novice users gain trading profits in a short period.
Unique gold, silver, and bronze badges can be obtained for profit, loss, and trading volume. These badges represent the value of users as traders in the OG trading competition.
Pro Trade is designed for more experienced intermediate and advanced traders, offering various types of orders, complex trading features, public APIs, advanced tools, etc. Professional traders, large capital players, and proprietary trading firms can easily trade on Pro Trade.
OG Trade and Pro Trade meet the needs of different types of traders in different ways. However, users don't have to worry about liquidity and depth issues because both trading modes share the same on-chain order book in ZKX.
ZKX AppChain Bridging Performance and Security Gap
Some on-chain derivative protocols use the order book model to improve performance, such as dYdX and Aevo, but they operate in an off-chain matching and on-chain settlement mode. The off-chain matching process lacks transparency and carries a certain risk of manipulation. ZKX perfectly bridges the performance and security gap through ZKX AppChain.
ZKX AppChain is a full-chain layer developed using the Substrate SDK, seamlessly connecting users to ZKX through multiple L1 and Rollup solutions. Its stack includes an intermediate layer responsible for synchronizing assets and state data between Starknet, parallel Rollup built using its SDK, and ZKX AppChain. Therefore, ZKX AppChain is essentially an L3 public chain based on the Starknet ecosystem.
The ZKX order book runs entirely on ZKX AppChain, ensuring that ZKX transactions are not limited by on-chain speed and gas costs. Even in the event of congestion on the chain, ZKX users can still enjoy smooth gasless transactions, continuous liquidity, and operability.
On the AppChain, the order book and Substrate manage transaction processing and verification, and any transaction records are traceable and queryable. This further enhances the decentralization and transparency of ZKX, providing a possibility for secure and trustworthy on-chain derivative trading.
ZKX has expanded to support 3 blocks per second and over 2000 API requests every 10 seconds. This gasless and efficient trading can provide users with a trading experience comparable to CEX while ensuring the security of their assets.
ZKX AA Accounts
Although most on-chain derivative protocols are adopting various strategies to attract new users, the high barrier to on-chain operations is the fundamental reason why new users cannot transfer their trading from CEX to the chain. Reducing the entry barrier for new users and allowing them to seamlessly experience the decentralized trading system is currently a focus.
Account abstraction is a necessary condition for blockchain mass adoption, as it provides a seamless experience similar to CEX while maintaining the security and privacy offered by DEX. ZKX is the first decentralized derivatives protocol to integrate account abstraction. By utilizing Starknet's native account abstraction and Starkway as an L1 to L2 bridge, ZKX AA accounts are currently deployed on the Starknet mainnet using Cairo 1.0. It will be expanded to other L1s and more Rollups in the future, providing users with a seamless full-chain trading experience.
Using ZKX AA accounts simplifies the process of recording private keys and fund entry for users. As a decentralized account on Ethereum L2, users can seamlessly bridge to Starknet, eliminating multiple complex steps and directly engaging in gasless transactions on ZKX AppChain. ZKX AA accounts will also serve as a one-stop DeFi application hub for users, offering features such as staking and other DeFi products in addition to perpetual trading, all within a user-centric DApp.
Starkway Native Cross-Chain Bridge
In the era of multiple chains, cross-chain bridges are essential infrastructure for connecting blockchains. Starkway consists of Solidity smart contracts on Ethereum and Cairo contracts on Starknet. Through the L1-L2 message passing mechanism provided by StarkWare, Starkway enables users to seamlessly transfer funds between L1 and Starknet through a trustless and transparent mechanism.
Currently, users can easily deposit funds from Ethereum L1 directly to ZKX AA accounts on Starknet using Starkway. They can also use Starkway in ZKX activities such as airdrops and clan NFTs. Starkway also has message passing capabilities, allowing ZKX to check the eligibility of L1 wallets and allocate rewards accordingly.
Through Starkway, ZKX bridges the channels for fund inflow and outflow, making different chains no longer barriers to funds. Users can seamlessly experience any services provided by ZKX.
Final Thoughts
The decentralized derivatives trading market is on the verge of explosive growth, with trillions of dollars in potential. Currently, the overall landscape of on-chain derivative protocols is yet to be determined, providing valuable opportunities for innovative projects and a critical moment to compete for market share.
ZKX's core advantage lies in its decentralized order book, which offers high performance and liquidity. Combined with ZKX AppChain and ZKX AA accounts, it enables users to securely and seamlessly use ZKX services through a simplified process. It provides users with a trading experience comparable to CEX, while also offering the security and decentralization of DEX.
Through unique differentiation strategies, ZKX aims to address the issues and risks in existing protocols and emerges as a strong competitor in the decentralized derivatives race.
The ZKX token will start trading on June 19th, with a total supply of 100 million tokens. With a reasonable IDO valuation of $50 million, it is worth paying attention to its price after listing.
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