DEXTF Liquidity Mining Incentive

After going live about 10 days ago, we’ve received a fair amount of feedback from investors on how the crazy gas fees were preventing people from both creating funds and in general to interact with smart contracts on any platform in DeFi. However, the interest to capitalize on short term opportunities hasn’t stopped DeFiers in spending precious ETH in trading multiple tokens in a discrete amount of time.

DEXTF enables investors to capitalize on their existing assets in order to create indices, funds or any kind of strategy wrapped inside an XTF fund token. By providing the underlying assets on the DEXTF Dapp, you can mint the XTF fund token.

In other words, those with the required assets are now able to provide them in kind to a platform which would mint a fund token (XTF); in order to make it interesting to smaller investors for which gas costs are too high, we listed the fund on Uniswap. This way investors can simply buy it with a Uniswap transaction that is usually pretty affordable even with very high gas prices.

Large players can monetize their holdings and create a market, selling them at a slight discount and earn the Uniswap transaction fees. Smaller players are “outsourcing” the transactions to a large player and benefit from the economies of scale.

In order to further incentivize the creation of large quantities of funds in bulk and the subsequent distribution through Uniswap, we are excited to introduce the $DEXTF liquidity mining incentive starting from tomorrow 21st September 2020, to reward those who are actively using the platform.

Daily rewards will be distributed to investors providing liquidity to the pair XTF/ETH or XTF/stablecoins on Uniswap. Pools that will be eligible for the incentive will be whitelisted. Please get in touch with us if you created one and think that the market will love it!

Of course, these daily rewards are on top of the incentives which we’ve wrote about here.

We are also considering if we should and in case how we can incentivize the arbitrageurs.

Why are XTFs necessary and how is this different from existing solutions?

XTF fund tokens are the first permissionless non-custodian oracle-less ETFs: they combine a basket of assets that can be traded as a single token and a marketplace to exchange the basket against ETH/stablecoins. Because the basket has an intrinsic value, while the underlying assets move, this creates a discrepancy that arbitrageurs can exploit.

As an example today an index has been created: it’s a basket of exchange tokens under the ticker XTF.000EXC (Contract: 0xDC…e493) which contains: BAL, BNT, KNC, LRC, SNX, UNI and ZRX.

To the best of our knowledge, XTF.000EXC, is the first (and only) index that tracks decentralized exchange tokens, including the recently introduced $UNI.

Listing the XTF on Uniswap by creating a liquidity pool, allows investors to make the assets (which they would be holding anyways) work for them, by earning exchange fees and $DEXTF. Effectively, LPs are long on the underlying and at the same time also have the possibility of making arbitrage profit if the price of the XTF token differs from the fair value of the underlying (net of gas fees).

Exactly like for Traditional ETFs, the price of the token fund will reflect the underlying assets’ price through the action of arbitrageurs who play a fundamental role in balancing any price inefficiencies. They also indirectly provide price information to the protocol without the need of oracles.

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