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Flash Trade is an innovative model of the Kinetex dApp. Let's take this opportunity to further discuss the advantages of this model and the technologies adopted by the Kinetex team to achieve these benefits.
With Flash Trade, users can directly exchange cryptographic assets with professional parsers (market makers), greatly simplifying the exchange process. Users only need to select the tokens they want to exchange and enter the desired amount, and the parser can manage the transaction from there. When users agree to the exchange rate, they sign the order, allowing the parser to access their assets. Before executing the order, the parser must provide collateral exceeding the order amount to ensure the safety of the user's assets if the order fails to execute on time.
Flash Trade was created by the Kinetex team after careful consideration of the key challenges facing the blockchain industry today. While liquidity aggregation models are useful for transferring assets across chains conveniently, they do not allow for instant transactions. By leveraging native liquidity, Flash Trade ensures fast execution times, fixed rates, and enhanced security.
Let's take a closer look at the most significant advantages of Flash Trade.
1. **Speed:**
Speed is one of the most prominent advantages of Flash Trade. The model works by setting a time limit for the parser to execute its selected orders, usually not exceeding two minutes. During this time, the parser should complete the order; otherwise, the order will be liquidated. During liquidation, the order can be filled by the parser's collateral or by a liquidator who will receive the parser's collateral as a reward (more on the liquidation system below). As a result, users receive their orders quickly every time. Additionally, competition among parsers significantly speeds up the process. When they compete with each other, they are incentivized to work faster, reducing the time needed to complete orders.
2. **Security:**
The next advantage under MEV protection consists of several elements: protection against MEV attacks, no need for bridges and third-party validators, and the liquidation system. MEV, or Miner Extractable Value, is a well-known phenomenon increasingly discussed in the cryptocurrency industry. It represents the maximum value that validators can extract by manipulating the transactions they validate and strategically executing their own transactions. Although it helps attract more validators by providing them with more profit opportunities to help maintain blockchain operations, it can also lead to a decline in user experience as they may be heavily exploited each time. To protect users from MEV attacks, the Kinetex team decided to cease using validators and mempools and instead adopt a direct peer-to-peer model. This became possible by using zero-knowledge technology, specifically Zk proofs. Furthermore, third-party validators are often subject to hacks or compromise, posing serious security risks even without MEV. Therefore, running the system without them is a significant benefit.
3. **No New Wrapped Tokens:**
Kinetex allows the decision-making for P2P orders to have a significant advantage: it eliminates the need for Kinetex to create new Wrapped Tokens. This is important because new Wrapped Tokens could lead to problems such as hack attacks and liquidity freezing and fragmentation. Unfortunately, the crypto community still occasionally experiences bridge hack attacks, highlighting major security issues that the industry has yet to resolve. Additionally, creating new tokens and locking assets in smart contracts while generating assets on different networks can exacerbate liquidity issues, especially for lesser-known crypto assets. Therefore, by choosing not to create new Wrapped Tokens, Flash Trade prevents security risks associated with bridged cross-chain transfers and helps improve liquidity between different chains.
4. **Liquidation System:**
The fully decentralized, Zk-based liquidation system is the last crucial component of Flash Trade that enhances its security. The Kinetex development team designed this system to be open and public, meaning anyone can be part of it and support the integrity of the Kinetex system. Liquidators check orders and find those that have expired because the parser, for some reason, could not fill these orders on time. Once such orders are found, liquidators can fill the order, generate a completion proof, and claim the collateral allocated by the parser for that order. With the drive of liquidator collateral, there is intense competition among liquidators to act quickly. Thus, Kinetex ensures all users execute transactions quickly and securely.
5. **Competitive Rates and No Slippage:**
Another undeniable advantage of Flash Trade is the fees. To successfully compete with others, parsers need to analyze user requests and provide competitive rates for users interested in them. Users can then view different proposals and choose their preferred one. As a result, all parsers actively offer the most favorable rates possible to maintain demand. Furthermore, since users exchange directly with parsers after choosing the best conditions, there is no price slippage. Users accurately receive what they want without being deprived.
6. **Gas Optimization:**
The final substantive advantage of the Flash Trade model is gas optimization and a gas-free process. Thanks to the innovative zero-knowledge technology used by Kinetex, transactions can be batch processed together. Therefore, the Flash Trade model reduces the number of individual transactions that need to be processed, reducing the overall cost of executing each transaction, eliminating unnecessary |
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Post time 8-12-2023 13:11:09