The DEX Brief No. 6

Top of mind at Shipyard

This month Shipyard began its journey to decentralized governance with the formal incorporation of AdmiralDAO (Admiralty LLC)! The reasons we incorporated are likely to drive other DAOs, especially those governing DEXs, to incorporate, namely (1) corporate personhood and (2) limitation of liability.

The first allows DAOs to operate practically in the real economy, from signing contracts to hiring employees. The second shields members of the community and multisig holders from liability in the case of loss of funds or regulatory issues. For example, there could be severe consequences for DeFi projects in which funds are intermingling with Russian sanctioned addresses.

These are such glaring issues that it amazes us they aren’t more widely discussed. That’s probably because the class action lawyers haven’t realized the golden opportunity that awaits them. Expect protocols and DAOs to get wise over the coming months.

Shipyard Insights

As the first organization to legally incorporate a DAO in the Marshall islands, Shipyard has been making waves ever since Mark’s keynote presentation at DAODenver. AdmiralDAO will be the organizational entity governing Clipper and future DEXs on behalf of Shipyard’s community. Beyond Cointelegraph’s overview of this exciting development, here’s a full breakdown of why Shipyard chose to incorporate its DAO in the Marshall Islands.

This month’s Tech Talks piece featured a custom solution for batching gas reimbursements from Hrithik Datta. In case you missed it, the first installment featured a breakdown on how to calculate accurate DeFi yields from Shipyard CTO Abe Othman.

The debate over whether most DeFi tokens can be classified as securities under existing SEC regulation continues to churn. Mark recently sat down with Worth to share his take on how this regulatory dilemma is kneecapping US growth.

DEX headlines that caught our attention

• 0x is introducing multi-chain NFT swaps, marking the beginning of NFT interoperability.
• Balancer announced veBAL, using Curve’s vote-escrowed system to ensure that governance participants are locking into Balancer’s pools. 
• Starkswap came out of stealth, introducing a DEX built with zk-Rollup technology.
• Solidly Exchange launched on Fantom as the first protocol-to-protocol AMM with a very interesting token rewards model.
• CoWDAO and vCoW were born, creating community governance for the protocol formerly known as Gnosis Protocol.
• Curve Finance launched on Moonbeam, which brings a new level of interoperability with Polkadot. 
• Hashflow launched on Arbitrum and Avalanche in order to enable faster, lower priced trades. 
• Serum, a shared liquidity platform for Solana, launched its own accelerator.
  

What we're reading

The DEX landscape has grown increasingly fragmented with a wide array of chains, sidechains, rollups — each with their corresponding fee structures, liquidity and slippage. This deep dive into 1inch Network’s ecosystem unpacks everything the project is doing to streamline the DeFi experience, from one-click trades across multiple protocols to voting on new governance proposals.

This case study takes a closer look at ParaSwap’s November 2021 airdrop, which was designed to allocate tokens based on a user’s engagement with the protocol. The article dives into what happened once ParaSwap’s tokens were distributed and gives an overview of the considerations that went into ParaSwap's design and implementation processes. 

Clipper and Shipyard Updates

As a result of Clipper’s ongoing evolution, DEX’s Polygon deployment now operates using a Formula Market Maker (FMM). This new marketing-making mechanism combines the best qualities of an automated market maker (AMM) and a Proactive Market Maker (PMM) and we believe Clipper has been able to avoid significant losses other DEXs have experienced by transitioning to this model. 

Clipper recently launched on Optimism! Instead of recycling Clipper’s contracts from Polygon for Optimism, we wrote custom methods that used compressed calldata and reduced Clipper transaction costs by roughly 50%.