DeGate aims to be an Ethereum layer-2 (L2) native decentralized exchange (DEX) protocol that is formed, governed, and owned by the community as a Decentralized Autonomous Organization (DAO), whereby the token will be distributed to the community via a fair-launch process.
We expect the protocol to encompass a full-set of exchange-related modules including but not limited to autonomous-market-making (AMM) functionalities, orderbooks, leverage-capabilities, L1-L2 bridge, fiat on/off-ramps, and initial-offering capabilities.
The governance of the protocol will be conducted via Home DAO and Council DAO:
Home DAO owns and controls the DeGate protocol, and is thereby entitled to the revenue generated.
Council DAO is entrusted by the Home DAO to manage the day-to-day decision-making.
The technical constraint of Ethereum layer-1(L1) brought forth an interesting challenge: due to high cost and uncertain process timing, the common orderbook + market-depth exchange model practiced in traditional finance does not really work. Thankfully, the ingenuity behind the Uniswap team brought forth a new, cheap way of trading ERC-20 tokens effectively – the mathematical-formula-driven, “vending-machine-like” model which we call Autonomous Market-Maker (AMM). The elegance of this solution plays well into the confines of Ethereum L1 today and achieved strong product-market-fit, evident by the ~1 - 1.2 Bn USD of transactional volume per day by Uniswap alone (No. 4 in the world if we compare across all crypto exchanges). It appears self-evident to us that AMM DEX model is not only the mainstream, but also the optimal way of exchanging tokens on Ethereum today.
As layer-2 technology on Ethereum matures, however, we believe that the transactional throughput within the Ethereum ecosystem is about to explode by at least 1-2 orders of magnitude in the coming years, if not months. The significant reduction in cost per tx on L2 thanks to rollups (See “An Incomplete Guide to Rollups”) will make cost-prohibitive / uneconomic design-choices on L1 possible, or even optimal. We strongly believe that this sea-change will empower new design primitives and leads to significant market share shifts – It is with this belief that we are throwing our hats in the ring with DeGate.
DeGate will be deployed across to Ethereum’s largest L2-networks and aim to become a L2-liquidity hub across on the L2-networks. We are currently studying Optimism, Arbitrum, and zkSync acutely and are open to other alternatives.
For more details, see whitepaper.