Decentralized Exchanges — The Prevailing DeFi Narrative

Since their initial popularity surge in the Summer of 2020, decentralized exchanges, or “DEXes” have largely been heralded as the first major spark of the Decentralized Finance (DeFi) movement. From pushing hundreds of millions to up to tens of billions in volume per day, DEXes have continued to be a focal point of the crypto movement, and have rightfully earned themselves the status of being a “necessary staple” in crypto no matter the market conditions.

Why DEXes Are Here to Stay

The introduction of DEXes have completely transformed how we think about old Web2, finance, decentralization, and the self-custody of assets. For the first time ever, users could trade assets in a permissionless manner without forced KYC and the constraints of a centralized third party. This innovative system composed of smart contracts allowed anyone from all over the world to swap and trade cryptocurrencies freely regardless of their region. Adding to this, DEXes with secure codebases have highlighted issues surrounding the centralized structure of traditional exchanges and financial brokers. With countless high-profile exchange hacks, corruption, risks of asset seizure, and potential account freezes, the DEX model has proven to be a revolutionary alternative to centralized exchanges and TradFi as a whole.

Another groundbreaking feature stemming from DEXes was the unique yield-bearing opportunities offered to users in return for their idle assets. Through a mechanism called liquidity mining, users could lend their assets to protocols as market liquidity in return for passive income. With the benefits of a decentralized marketplace coupled with yield-bearing opportunities, decentralized exchanges remain one of the most prevalent Web3 narratives regardless of the market climate.

Hercules DEX — The Next Generation of DEX Technology

With decentralized exchange technology now around four years old, many crypto veterans have seen the rise and fall of countless exchanges. What may have caused many of these to fall out of favor despite being at the center of the DeFi narrative? One key factor is the lack of innovation.

Innovating upon the classic DEX model is key to keeping relevant and has been the focal point of the Hercules DEX. In fact, since its full launch back in April Hercules has quickly risen to the number one spot as Metis’ most popular DEX in both trade volume, TVL, and revenue from fees!

So, what innovative aspects make Hercules the champion DEX of Metis?

Firstly, while most DEXes aim to produce deep, on-chain liquidity, most fail to actually maintain it. That’s where Hercules comes in.

To produce long-term deep liquidity, Hercules implements a wide range of advanced tools and features that can customized to meet the unique needs of Metis protocols, offer multi-layer real yield opportunities for users, and mechanics to keep liquidity flow consistent.

Some of these key features include:

• Unique AMM and concentrated liquidity implementation to support volatile & stable assets with fully customizable dynamic fees and maximizes efficient use of liquidity.
• Nitro Pools allow projects to incentivize additional liquidity for pairs in a completely permissionless and customizable way. Each Nitro pool can be custom-tailored towards a project’s needs, as they can set their own LP /reward parameters and even target specific users/LPs they want to reward to further boost liquidity and user participation.
• spNFTs allow LP rewards to be reused for additional user/liquidity participation for increased yields.
• Dual Token Design for a sustainable protocol that enables real yield and incentivizes liquidity for users over the long term.
• xTORCH plugins are contracts that enable access to Dividend payouts, launchpad presales, and APR boosts for supercharged LP benefits.
• Multi-layer Reward Structures are baked into the protocol to keep LP engaged, multiplied, and locked in over the long term.

With this innovative liquidity structure, protocols across Metis will reap the benefits of long-term deep liquidity that’s consistent and customizable to provide better trades, attractive yields, and stability.

Conclusion

As innovations behind the decentralized exchange model have largely slowed, the Hercules protocol has taken a different approach. The philosophy of Hercules is that DEXes shouldn’t be constrained to purely facilitating its marketplace, they should serve as liquidity layers boosting the DeFi ecosystem of its chain and individual protocols listed there.

As we continue rolling out new features and upgrades, you can always rest assured that Hercules’ will continue to be the beacon for the best yields on Metis regardless of market conditions and its quest for constant innovation is unwavering!