A balance between short-term speculation & rational asset allocation, How does L7 DEX achieve

August 26 00:13 2023

The essence of finance is optimizing asset allocation and allocating capital to more efficient areas. This is the ultimate goal of finance. The emergence of DeFi has broken through the physical limitations of financial interactions. From a macro perspective, in ancient civilizations, barter trade was a fragmented asset exchange at the individual level. In the agricultural civilization era, the emergence of iron tools upgraded fragmented exchanges to asset allocation within a region. In the industrial era, the rapid rise of machinery brought capital from one region to another, achieving cross-regional finance. In the information era, capabilities of capital allocation on a global scale have emerged

Every advancement in productivity determines the efficiency of capital allocation during a certain period of time. As a cutting-edge productivity tool, blockchain naturally brings about another leap in financial efficiency. This article will take L7 DEX as an example to explore how decentralized finance (DeFi) breaks through physical limitations, achieves efficient capital allocation across time and space, and discusses how L7 DEX combines short-term speculation with rational asset allocation for retail investors.

Whale’s Speculative Game

Whales, the ocean’s largest mammals, are also known as capital giants in the blockchain world. In the ocean, whales feed on shrimp, and after they die, their bodies sink to the ocean floor and become a new ecosystem.In the blockchain world, whales hold capital, build tall buildings, create massive waves, bringing endless wealth, and taking away countless brokers.

Discussions on this topic are always contradictory but worth pondering. A former whale,a teenage with billions of dollars worth of on-chain assets, lent out a large amount of platform tokens through collateralized loan to manipulate Maker and Compound’s community proposals. Although both attempts ultimately failed, it undoubtedly made more blockchain practitioners realize the possibility of whales manipulating DeFi. Later on, we also witnessed the immense impact that Luna founder Do Kwon and SBF had on the industry.

Throughout DeFi’s history,whales have been a significant source of both capital influx and existing assets, but the entire DeFi space is almost like a game of battle between whales. So, for most retail investors, how can they achieve their own asset speculation and allocation in DeFi?

Different users have different considerations, and different projects have different answers. As a decentralized perpetual contract trading platform, L7 DEX will strive to achieve a balance between the entire community and participants regarding short-term speculation and asset allocation, through the following aspects.

Early Core – Global Community

Most retail investors have weak awareness and participation in DeFi projects on the market because they haven’t actively participated in the project’s development and profit sharing. To address this issue, L7 DEX focuses on establishing a global community and has built a community access and profit-sharing mechanism with NFTs and economic models at its core. This, along with an efficient viral mechanism, achieves synchronized growth in the user base and user participation.

For community users, owning NFTs is equivalent to directly participating in the project’s development. On one hand, users can earn stable and substantial long-term returns by staking NFTs. This will be the first asset allocation method provided by L7 DEX to users. At the same time, NFT holders will also be the first to receive L7 DEX’s platform token, LSD, indirectly becoming early-stage investors in the project and naturally enjoying tremendous benefits during the project’s various stages of development. Additionally, NFTs, as a core element, will play a significant role in product functionality. After the contract trading is launched, NFT holders will directly enjoy benefits such as reduced transaction fees. During the liquidity building phase, NFT holders will also receive liquidity rewards and bonuses based on the NFTs they hold.

In the current stage, L7 DEX has already established communities in 40+ countries and regions worldwide. A large distributed DAO community is being built, where the community members are not just numbers, but true project builders and profit sharers. Through the form of DAO, we aim to achieve shared construction and sharing by all, and also take the first step towards building a pool of assets that increases in value for all members.

In the Middle Stage – Product Launch

As a decentralized perpetual contract exchange, product development has always been of utmost importance. This stage is also a crucial link in L7 DEX for balancing asset speculation and investment, where speculation and investment are no longer zero-sum games.

With the innovative ‘PvP AMM’ mechanism combined with optimized smart contracts, users can enjoy a smooth contract interaction experience while avoiding malicious actions such as shutting down the website,wild swings in price, and market manipulation. This makes contract interaction more secure and stable, reducing the possibility of users suffering losses due to unexpected market factors. The introduction of the ‘PvP AMM’ mechanism transforms users’ adversaries from the project party or giants to other real users in a “peer-to-peer” manner, eliminating the possibility of unfair gaming and bringing trading and investment back to its pure essence.

Different users have different options. Users who are good at short-term speculation can enjoy more pure contract and spot trading through L7 DEX. Users who prefer stable investments can become nodes and enjoy substantial profits from transaction fees. At the same time, holding spot assets will also benefit from the silent development dividend as the platform continuously repurchases and destroys LSD.

Important Expansion – Liquidity + IEO

Asset management and allocation in the real world are usually complex, making it difficult for non-professionals to find truly valuable investment options among the highly developed and packaged financial products. After the emergence of blockchain, DeFi has provided investors with a way to go back to basics.

Liquidity + IEO is the third stage of the development plan for L7 DEX, and it is also a key milestone in achieving efficient asset circulation and allocation. Users of different sizes participate in the construction of the platform’s core through liquidity building, providing a continuous source of vitality for the platform. At the same time, the liquidity staked also brings more profits to users, becoming another important means of asset allocation for users.

After the IEO opens, L7 DEX is expected to invest and cooperate with 500-1000 quality Web3 projects. Through the connection and integration of the platform token LSD, users and these quality projects will eventually form an asset management and allocation system centered around LSD and other platform assets, completely breaking down the barriers for ordinary users to participate in the primary market. It also further breaks the opposition between speculation and investment. With the efficient integration and profit recovery of assets through LSD, DeFi greatly leverages the power of cross-temporal asset allocation, asset and mining power, giving Web3 more room for imagination and empowering Web3 to become a reality.

Interelocking & Unity in Opposite

Trying to achieve financial speculation and asset allocation through DeFi is not an overnight thing. Empowering the development of Web3 through DeFi’s asset management and allocation properties is not something that can be accomplished by just one or two projects. But this is always a hopeful and feasible path. L7 DEX, through its interconnected mechanism in three stages, breaks down the financial barriers that would otherwise make it difficult for ordinary people to participate in the real world. It also, to some extent, combines speculation and investment, allowing opposing positions to play to their strengths and ultimately achieve new growth.

In a new cycle of bull and bear markets, a more comprehensive platform and smoother participation opportunities will become the top choice for more users. L7 DEX is a valuable exploration that uses DeFi protocols to achieve efficient capital allocation and empower the development of Web3. For users, risks and opportunities still exist, but a crypto economy market with fundamental support and more high-quality projects as the infrastructure has arrived. The tide is rising, and we look forward to seeing more crypto heroes emerge.

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Company Name: L7 Labs
Contact Person: Lucas
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Country: United Arab Emirates
Website: www.l7dex.finance