Written by:Paras Katoch

DeltaFi | Solana based AI-driven DEX

Decentralized exchanges (DEXes) come to mind whenever we talk about DeFi protocols. DEXes proved the strength of blockchain networks in managing complex transactions without the need for a centralized authority. Although the technology is in the growing stage, there’re some areas where DEXes needs to work on like price slippage & impermanent loss. To counter such issues and build sustainable liquidity we have DeltaFi, a DEX that applies machine learning to become the smartest DEX in the crypto universe. Let’s dive in and review what makes DeltaFi different from the established players –

Table of Contents

  1. What is DeltaFi?
  2. Important Terms to Remember
  3. How DeltaFi Works?
  4. DeltaFi Liquidity Risk Management
  5. What is DELFI Token?
  6. DeltaFi IDO
  7. DeltaFi Benefits
  8. DeltaFi Drawbacks
  9. DELFI Token Price
  10. Where to buy DeltaFi DELFI token?
  11. Is DeltaFi worth investing?
DeltaFi

What is DeltaFi?

DeltaFi is the first AI-driven automated market maker (AMM) that aims to become the leading & most efficient DEX in the crypto space. Built on the Solana blockchain, DeltaFi is focused on addressing the issues hindering the operational efficiency of the existing automated market makers.

DeltaFi swap & earn

The existing AMMs are largely the forks of Uniswap V2 which pioneered Constant Product Curve (CPC) and stableswap by Curve Finance. CPC brings its own set of challenges including impermanent loss, slippage & capital inefficiency while stableswap on the other hand only facilitates swaps between stablecoins.

If we take a look at the Order Book DEXes. For example, Serum DEX is efficient in providing a better user experience to traders & professional market markets. However, it fails to offer liquidity provision functionality to features like yield farming. To counter and resolve these issues we have DeltaFi.

DeltaFi features
DeltaFi Offerings

Important Terms to Remember:

Take a look at the following terms to understand the issues linked with existing DEXes –

Price Slippage:

Slippage refers to the difference between the expected price at which the trader places a trade and the actual price at which the trade order is executed. Suppose, a trader placed a trade to purchase 1 $COIN, the expected price shown was $10 but at the time of execution, the price of $COIN increased to $12. He has been charged $2 more than the usual price which accounts for the slippage cost. Though the value is small but imagine if it’s a high volume trade worth 10,000 $COIN in one order. The loss will be huge.

Impermanent Loss:

Impermanent loss is the loss of funds that can occur in DEXes when the ratio of tokens inside the liquidity pools becomes uneven. The loss is faced by the liquidity providers who deposit funds to the DEX liquidity pools. Though the occurrence of such events is low and is further reduced by pegging the crypto with stablecoins (for low volatility), the threat is always there.

How DeltaFi Works?

DeltaFi is building an intelligent AMM by working on three segments –

  • External Market
  • Internal Market
  • AMM Algorithm

The external market refers to the price and market situations in both centralized & decentralized exchanges while the internal market refers to every trade inside the DeltaFi exchange. AMM algorithm runs the DEX by governing prices in both markets.

DeltaFi leverages the power of oracle (Pyth network) to keep a check on the real-time price of digital assets in the external markets, minimizing impermanent loss. It also keeps a history of order information, tokens prices & trade information to figure out abrupt changes within the exchange.

The AMM Algorithm followed by DeltaFi –

p=o*m

p is the token price determined by the AMM, o is the oracle and m represents the multiplier learned by the machine learning system.

The oracle is built on an internal time-weighted average price and external Pyth Network price

Using time-weighted average price of historical price data within the AMM and the external oracle helps stabilize the price and reduce the chances of impermanent loss and arbitrage trading.

DeltaFi Liquidity Risk Management:

Liquidity risk is mitigated by categorising the asset under one of the 3 classes defined by DeltaFi Volatility Index

  • Low Risk
  • Medium Risk
  • High Risk

Low risk indicates an asset with low volatility and vice-versa. There are two sources of the Volatility Index. Number one is Pyth Network which determines the change in pricing of assets off-chain and second is on-chain DeltaFi internal exchange prices. Based on these two indicators, the risk per asset is categorized.

Liquidity Providers with high-risk tolerance are rewarded with high transaction fee rates during high volatility

What is DELFI Token?

DELFI is the native governance token of DeltaFi. DeltaFi created DAO contracts for community members to vote for proposals on liquidity mining rates, trade farming rates, developer funds and more. DELFI is used to reward the community i.e token holders and Liquidity providers. It will help build a community-driven decentralized AMM.

DELFI Tokenomics:

The total supply of DELFI tokens is capped at 1 billion and the token distribution is shared below –

DeltaFi tokenomics

DeltaFi IDO:

DeltaFi offered DELFI tokens to public in the IDO sale round on the Solanium launchpad on Jan 21, 2022, selling each token at a price of $0.50.

Deltafi IDO

DeltaFi Benefits:

Cross-Chain Platform:

Built on Solana, DeltaFi will soon spread its wings on other chains like Ethereum, Binance & Terra making it multi-chain protocol.

Better Risk Management:

Using Volatility Index, on-chain & off-chain oracles has helped DeltaFi manage liquidity risks by categorizing the asset class and helping liquidity providers with intelligent AMM which further reduces the risk of impermanent loss.

Team & Investors:

DeltaFi is backed by top investors and partners which include Jump capital, HASH KEY, making it financially stable.

Delta team investors

Audited Contracts:

All contracts on DeltaFi are audited and reviewed by CERTIK, adding an additional layer of trust and security among the traders & Liquidity Providers.

DeltaFi Certik audit
CERTIK Audit

DeltaFi Drawbacks:

Competition:

Although DeltaFi uses intelligent AMM to drive its operations, it may not be enough to attract Liquidity Providers & traders using the leading platforms like Curve Finance or Pancakeswap offering better rewards and multi-earning options like Lottery in Pancakeswap.

DEX Rankings by Defipulse
DEX Rankings by DefiPulse

Rewarding System:

There’s limited information available on DELFI, the native token of DeltaFi. Trading fee rewards, staking rewards and LP rewards aren’t discussed in its Whitepaper. It’s difficult to invest in the project without having proper knowledge about the rewarding system.

DELFI Token Price:

Check the latest price of DELFI token, shared below –

Where to buy DeltaFi DELFI token?

At the time of writing, DELFI can be purchased from Gate.io and Raydium DEX.

DeltaFi on Raydium
DeltaFi on Raydium

Is DeltaFi worth investing?

DeltaFi is the first AI-driven decentralized exchange that harnesses the power of intelligent AMM to bring operational efficiency in the system. It is also the only exchange that deploys two oracles (on-chain & off-chain) to bring stability in price, hence reducing the opportunity of arbitrage trading and impermanent loss.

Clearly, DeltaFi aims to take AMM to the next level and the model does look promising. The only problem is the existing players which are already adjusting & improving their operations to remain at the top spot. It will be difficult to bring down the market leaders like Curve Finance or Uniswap Exchange who are the trusted players in the segment.

Moreover, it will take some time for DeltaFi to establish a reputation in the DeFi space since the competition is more fierce than it was 5 years ago. Having said that, DELFI is the governance token and has the same utility as other DEXes tokens.

If you trust the project and its future potential, it’s better to invest early in the DeltaFi token, because more or less it will replicate the price action of the established tokens in the segment.

This completes my review of DeltaFi. In the next post, I will talk about Kaizen Finance & Project SEED. If you’re a blockchain technology fan, share this post on your social handles and educate everyone around you. Do remember to subscribe to my YouTube channel for more informative content, released every week.

DISCLAIMER:

Cryptocurrency is a highly volatile market. All the information shared in the post is for knowledge purpose only. By no means, it’s financial or investment advice. Readers are responsible for their own investment decisions and should only invest in cryptocurrency after proper research.

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