Money on Chain (DeFi protocol), a lending platform and stablecoin issuer based on Bitcoin (BTC) sidechain RSK, has announced the launch of TEX, an automated token swap platform based on an order book, with a unique twist.
It has been reported that instead of being available instantaneously, orders are processed in batches according to a slightly variable interval of a few minutes. Each execution, called a tick, matches the orders submitted to the blockchain.
However, each trade occurring in a given tick is performed at the same average price between all orders submitted by traders. Limit orders submitted by users indicate the maximum or minimum acceptable price.
Max Carjuzaa, the CEO of Money on Chain, explained that the system also uses an oracle system for more fine-tuned control. With so-called market maker orders, traders express a price with a certain percentage offset from the reference rate obtained by the oracle.
This ensures that the orders will track the changes in price occurring between ticks. The design of the system was inspired by the London Spot Fix, a pricing mechanism for gold where a committee deliberates on the price of gold two times per day.
Likewise, automated market makers like Uniswap are often seen as a necessity in light of the slow performance of blockchain-based systems.
Front-running and price discovery are often considered major issues in AMM exchanges, but Carjuzaa believes that their system “needs much less liquidity to operate.”
For the same liquidity, he claims AMMs will have more slippage compared to TEX.
Thus, this benefit is “especially important in a new network, and enables organic liquidity growth.”