Thoughts on the Ronin DEX

CRYPTODAY 053

  1. In SkyMavis’ recent October update, they teased that the long-awaited Ronin DEX finally had an internal target launch date. They didn’t say specifically when that was, but in crypto terms, that usually means it’s getting quite close. A lot of people are looking forward to the Ronin DEX as a trigger for the SLP price to come back up, and in today’s newsletter, I wanted to talk about exactly what impact it may have on the market and the community.

  2. But first, what is it? SkyMavis is building its own special decentralized exchange within the Ronin network. This will allow players to convert their SLP into AXS, WETH, or possibly other cryptos, without having to leave the Ronin sidechain. Because it’s a DEX, it will need liquidity providers, and those LPs will earn from trading fees by lending their tokens to the exchange. Although the trades you execute on the Ronin DEX will likely have zero (or extremely low) network fees, there will still be a spread or exchange loss, because that’s just how markets work. (Generally, this is less than 1% though.)

  3. Why does the community need this? Well, that’s an interesting question, because a lot of things have changed in the months since SkyMavis first announced that they were aiming to launch their own DEX. For the average Axie Infinity player, I don’t think there will be a massive impact, because the DEX cannot magically convert your SLP into pesos in your GCash account. That kind of conversion is still purely the domain of centralized, fiat-based exchanges ... for now, at least. These days, the most common path for the average Filipino Axie player is to withdraw their SLP and then transfer it into their Binance wallet, which started accepting Ronin-based deposits back in September. Once their funds are in the Binance platform, the players proceed to the Binance P2P marketplace, sell their SLP to a local vendor, and then receive pesos in their bank account or mobile wallet. There’s no part of that path that is improved by the DEX.

  4. The DEX is possibly more useful for the various guild investors or managers, who also earn SLP but don’t necessarily need to turn their earnings into pesos immediately. With the Cryptopop Art Guild, I’m looking forward to being able to use the DEX to convert all our investor earnings from SLP into AXS, and then immediately staking that AXS to earn over 100% APR. Since we only pay investors once per quarter, that’s a lot of time to accrue staking rewards. Without the DEX, I have to move the SLP to Binance, exchange the SLP to USDT (0.1% trading fee), exchange the USDT to AXS (another 0.1% trading fee), transfer the AXS back into Ronin … and only then can I stake it. It’s a five-step process reduced to two, and without any losses from trading fees.

  5. Are there other uses for the DEX? Yes, for sure. But those other uses will depend greatly on what other cryptos it will initially support. It would be pretty amazing, for instance, to go from SLP directly to a stablecoin like DAI, or a wrapped YGG, or even the greater ecosystem of DeFi tokens like COMP or AAVE. Giving players more direct access to other tokens will be the winning strategy here, and for every new crypto that the DEX will offer, there will also be new earning opportunities for the Liquidity Providers who want to support those trading activities. Most of my ETH and YGG right now are in the SushiSwap liquidity pool, for example, which has a relatively stable 50% APR. It’d be a no-brainer to support an SLP/YGG trading pair on Ronin.

  6. The major cryptos are looking really healthy this week, with Bitcoin battling its way back to $60K and Ethereum attempting a return to $4k. The thing I’m most interested in monitoring closely right now is $BNB, not because I have a big position, but because their quest to go public (and thus, further into the regulated space) was not a strategy I was really a fan of. About two weeks ago I actually sold all of my $BNB when it was at $430, and now it appears to be rising at $468. I guess the markets disagree with me. (Was it a bad call on my part? Maybe, but I used the money to buy $AXS at $75, and that’s nearly doubled its value in that same period.)

  7. Today’s featured CPAG artist is Tricia Ann Dela Pena. Her digital watercolor illustration was wonderfully minimalist, and just what I needed to see on a busy Friday morning. On Monday evening, the Cryptopop Art Guild will be hosting its very first Guild Call, and we’ll be livestreaming it at 8pm at https://fb.com/cryptopop. I’ll be hosting and talking about the CPAG journey so far, as well as our future plans. I’ll be joined by my good friend and CPAG investor Caroline Dy, who will be spending the second half of the call doing our first ever mentoring session!

See you all next week, cryptofam!