How DeGate Achieves: Almost Zero 'Bid-Ask Spread',
And Trading Activity Close to 'Binance OKX'
In the article from the day before yesterday, DeGate was introduced as a DEX, which mentioned the bid-ask spread. Some friends privately asked Brother Bee why DeGate, as an order book DEX, can achieve such a small bid-ask spread?
➤ Starting from Order Book DEX
DeGate's mainstream cryptocurrency trading adopts an order book model, rather than an AMM model like Uniswap. Its advantages are obvious, as traders trade at the posted order or market price without trading slippage.
For example, if a sell order is posted at 0.5, it will not be executed at a price lower than 0.5. If a buy order is posted at 0.6, it will not be executed at a price higher than 0.6.
However, the premise for transactions to occur in an order book DEX is that there are trading counterparts. If there are no trading counterparts after an order is posted, then the order is difficult to execute.
It is important to know that order book DEXs differ from CEXs. In CEXs, there are market makers who fill the bid-ask spread and trading depth. However, there are no market makers in order book DEXs, so the bid-ask spread and trading depth become pain points.
➤ Comparison of Bid-Ask Spread: DeGate vs dYdX
Comparing DeGate and dYdX, taking JASMY as an example, the bid-ask spread for JASMY on dYdX is 0.00028, while on DeGate, it is only 0.00001.
Friends can check on DeGate; as long as a token is listed and there are users trading it, the bid-ask spread is almost this small.
You might not know how magical this bid-ask spread on DeGate is. DeGate has less than half the number of users compared to dYdX and a TVL of about one-sixth that of dYdX. Under such circumstances, DeGate's order book DEX can achieve an extremely small bid-ask spread.
➤ Comparison of Trading Activity: DeGate vs CEX
Brother Bee proposed a simple metric to assess trading activity.
24-hour Trading Activity = (24-hour Spot Trading Volume + 24-hour Futures Trading Volume / 10) / Capital Stock Data
Where the capital stock data for DEXs is calculated based on TVL, and for CEXs, it is based on publicly available capital reserve data.
The 24-hour futures trading volume / 10 assumes that futures trading uses an average of 10x leverage to roughly estimate the scale of futures trading.
DeGate's 24-hour trading activity = 0.155
Binance's 24-hour trading activity = 0.138
OKX's 24-hour trading activity = 0.222
The trading volume here for DeGate only includes the order book trading data for mainstream coins, excluding Swap trading volume. Comparisons show that DeGate's trading activity is comparable to that of large CEXs.
➤ How DeGate Achieves: Low 'Bid-Ask Spread' and High 'Trading Activity'
❚ Zero Fee for Posting Orders
Since there are no fees for posting orders, traders who wish to buy or sell tend to place orders within the price range of the bid-ask spread so that any slight price fluctuation can lead to a transaction, while also avoiding trading fees.
❚ Grid Traders Acting as Market Makers
Grid trading implements market-making functions, allowing grid traders to act as market makers, which is a clever design by DeGate. This design was proposed back in 2021, before DeGate was launched, and it was strategically planned and implemented to become an extremely unique and attractive trading product.
The grid strategy essentially divides assets into several parts to place orders, acting as a counterparty in spot trading, thus achieving market-making functionality.
Based on DeGate's zero-fee posting mechanism, grid traders can save a significant amount on fees. Due to the high frequency of grid trading, they are more sensitive to fees.
According to DeGate's statistical data, grid players can earn 55% more on DeGate compared to CEXs. Because of this, many grid players prefer DeGate.
The total grid assets of DeGate's top grid players are nearly $500,000, with the highest annualized return on grid strategies reaching 300%.
It is for this reason that DeGate's order book trading can achieve almost zero 'Bid-Ask Spread' and trading activity close to Binance OKX.
❚ Dollar-Cost Averaging
DeGate has also launched a dollar-cost averaging model, which also supports zero fees. The principle is similar to grid trading, where users place dollar-cost averaging orders in the form of Maker orders to enjoy zero fees.
➤ Security
Finally, since it’s a DEX, security must be addressed. Firstly, DeGate's code is open-sourced on Github. Secondly, DeGate has operated securely for 20 months,
Thirdly, it has undergone five code audits by three institutions.
Fourthly, it has launched a bug bounty program worth $1.1 million on a Web3 bug bounty platform, paying $408,000 to a white-hat hacker for a bug found and fixing it within two days.
➤ In Conclusion
With 'zero fee for posting orders', grid trading achieving market-making functionality, and the dollar-cost averaging model also offering zero fees, DeGate has achieved an almost zero 'Bid-Ask Spread' and trading activity close to Binance OKX. This is DeGate's innovation and is very friendly for traders.
On this basis, DeGate has also combined chain abstraction technology to launch seamless cross-chain trading. Using USDC, users can purchase assets on Solana, BSC, or Base chains with one click.
Support for ETH, USDC, or USDT to pay for GAS. When selling tokens, GAS can be directly deducted, making GAS also seamless on DeGate.
This means that on DeGate, when there are no meme coin trends, you can trade mainstream coins, dollar-cost average, and engage in mainstream coin grid trading. When meme coin trends are discovered, you can switch to them with one click.
No need for cross-chain, no need to prepare GAS, providing a CEX-like experience, available on both PC web and mobile app:
