Introducing Demodyfi

A decentralized, cross-chain protocol powering the future of crypto finance asset exchange, powered by Polkadot.

7 min readOct 30, 2020

The year 2020 has come to an end and a number of events happened that were not included nor expected in 2021 blockchain trends. Especially the COVID-19 pandemic that not only intensified trends that were already underway but also generated new trends in blockchain and defi.

DEFI illustrates successful process of smart contracts for financial services. This alternative form of financing perfectly fits into the fintechisation of the economy. This year we already have seen a firm rose of DEFI services. The total value of fulltime decentralised financial services (based on cryptocurrencies) witnessed impressive growth and even surpassed USD 30 billion. It is seen to be further speeding up in 2021 and beyond.

The current orientation focuses mainly on Ethereum and still leads the ecosystem with a market cap of 203 billion. But we have seen a reorientation of the various blockchain defi projects built mostly on the Polkadot ecosystem with a current market cap of 32 billion with far more room to grow from just a financial perspective. Polkadot is in our opinion the leading blockchain when it comes to innovation and problem-solving, while not imitating the forks of other Ethereum projects.

Problem context

The Ethereum network fees are skyrocketing and slow performances are often seen, which leaves end-users frustrated as witnessed during the Defi hype. Ethereum is still congested and cost efficiency & scalability challenges are driving projects to build on other chains. However, strong and purpose-built blockchains outside of Ethereum remain heavily underutilized and are dominated by the size of the overall cryptocurrency market space. Cross-chain communication with ecosystems like Polkadot has emerged as a major challenge and an opportunity to unleash massive liquidity and asset variety into the decentralized finance space.

While the whole community of Polkadot is keenly looking forward to the next phase of the Polkadot ecosystem, the Demodyfi’s team wants to share some knowledge about the platform and what is coming!

The Demodyfi protocol supports the value interoperability between different parachains, allowing the tokens on the Polkadot chain to be quickly traded and circulated. The protocol is integrating and combining communication between different blockchains:‌

Ethereum Compatibility = “blockchains on parachains Architecture.”

Framework & Architecture

The Demodyfi protocol utilizes Moonbeam’s parachain smart contract interoperability while the Substrate framework serves as a fundamental layer. Combining this makes it potential to build on Polkadot, furthermore make it compatible with the EVM, and to deploy EVM-based bytecode compiled from Solidity using tools available from the Ethereum stack.

Moonbeam is a smart contracts blockchain platform built in the Rust programming language using the Substrate framework which uses the Cumulus library to provide integration to the Polkadot relay chain. In addition to these Substrate Frame Pallets, website Moonbeam.

Solution

Build a UI that is accessible for the beginner as well as for advanced users.
Using Polkadot’s advanced substrate technology to create its own blockchain.
Focused on market segmentation with all DeFi needs in one place.
Collaborated decentralized liquidity pools, enabling cross-chain lending for ERC 20 and ERC 721!
Advanced price discovery by implementing price oracles.
By utilizing parachain interoperability from Moonbeam, Demodyfi is able to bring in liquidity cross-chain.

As a result,‌ we are able to build a next-gen DEX that extends its DeFi product line to a one-stop cross-chain asset market. Also, the possibility of making both pools and cross-chain swaps, powered by the Polkadot ecosystem, can provide higher throughput for faster and cheaper transactions while staying connected to the Ethereum Network and other blockchains for liquidity. Users will be able to trade multiple crypto assets from Demodyfi’s native DEX and use its convenient interface to manage their assets across multiple chains, non-custodial, using the Metamask and Polkadot.js extension wallets.

KEY-BENEFITS

Non-custodial: Demodyfi allows users complete control over their funds. Thus, the risk associated with centralized exchanges, where one can lose his funds if the exchange gets hacked or goes bankrupt, is completely absent.

No KYC procedure: Since users have full control over their funds, there is no need to go through the KYC procedure and disclose personal information. In this way, it is much faster to start using the exchange.

Low fees: Demodyfi charges a flat fee of 0.3%* per trade like Uniswap. This is significantly cheaper than most decentralized exchanges.

Access to new coins and NFT: Typically, in the case of centralized exchanges, different cryptocurrencies or DeFi projects must go through an exchange verification process before their coin or token is available to traders. However, since Demodyfi is decentralized and growing in popularity among the community, many companies choose to launch their projects directly on Demodyfi. This way, Demodyfi users can access new tokens before others.

Unified account experience: Demodyfi is making this possible for the end-user by implementing efficient cross-chain swapping between wallets like Metamask and Polkadot.js

$DMOD TOKEN Utility

The mechanism is predicated upon a digital token called $DMOD, designed to provide traditional financial products and services without the centralized authority of banks and financial institutions. The token is distributed as a reward for contributions made to the platform and provides access to a variety of economic incentives. The token allows its holders to participate in decisions affecting the parameters of the system.

Our tokenomics is designed to incentivize the token $DMOD holders and the users of Demodyfi Protocol. Here’s how $DMOD tokens will power the Demodyfi protocol:

Fee discounts — Nobody enjoys paying exorbitant fees to trade on Uniswap. In addition to the existing fee, savings will be available to Demodyfi users, DMOD token holders will get additional fees discount of up to 5% to use Demodyfi.
Staking — A part of the fees collected from the Demodyfi protocol will be used to buy DMOD tokens from the market. These tokens will be distributed to the DMOD token staking holders.
Trading fees — We all know Uniswap liquidity providers earn 0.3% of the trading fees. Demodyfi protocol implements off-chain data with mid-market price, the staleness of that price, and the historical volatility which will reduce slippage and save trading fees.
Token burn — DMOD is a deflationary token, 10% of the fees collected will be used to buy DEMO tokens from the market and burned.
Liquidity mining — Liquidity mining of DMOD tokens when you trade on Demodyfi. Hold the tokens to get discounts, stake them to earn reward from the protocol.
Governance — Its mechanism for swap and governance is predicated upon a digital token called DMOD that allows its holder to stake/participate in decisions affecting the parameters of the system. DMOD token is distributed as a reward for contributions made to the platform and provides access to a variety of economic incentives.

Roadmap

Simplicity is key (MVP Perspective)

The Demodyfi system is designed to on-ramp both entry-level and advanced users. Throughout this context, we are able to respond to the actual preferences of the target audience by providing the same ease of use as centralized platforms. Connecting DeFi and our use case is the mission. Creating transparency between our use case and blockchain simplicity is our goal by making the platform accessible for all user-segments with no super-advanced user interface, but with something which feels familiar to its user and space.‌

Create incentives by rewarding users for providing liquidity and creating circulation under the Demodyfi protocol.
Lower the threshold and make the network accessible to everyone, from basic to advanced.
Scalable — Next-gen DeFi platform by the Multitude of assets existing on numerous chains.
Cost reduction — By building on top of the Polkadot architecture we are creating virtually limitless composability between blockchains. The real benefit of this is that we are able to scale economically in volume for transactions which leads to lower costs.
Permissionless — Any new token can directly access liquidity through adding their token for an exchange to the router contract
Circulation — Liquidity providers can benefit from contributing liquidity to liquidity pools.
On-time transactions — With the Polkadot ecosystem, we are able to accelerate the speed process for transaction validation.

A Final Word

Demodyfi stands for “thinking differently and diverging from the way we currently think and act throughout traditional finance.

Our mission is to accelerate the mass adoption of digital assets by bridging traditional and decentralized finance. Our project is a next-generation Blockchain DEX called Demodyfi. The solution is to build an infrastructure that enables you to take control of your assets combining with easy use of access in UI/UX.‌

Although inspired by current Dex’s in the market, Demodyfi is a decentralized finance platform with a vision to bring financial stability, liquidity, and accessibility to the mainstream. It is the go-to open platform for finance-oriented dApps to deploy upon using smart contracts or built-in protocols with out-of-box cross-chain capabilities, security, and financial optimizations.

‌We want to share our passion and build value by enhancing and innovating monetary products in a decentralized way using blockchain. We also conclude that economies should be decentralized, yet rational and that doing so would create a social impact. Furthermore, we share Polkadot’s values of technological agnosticism, interoperability, and cross-chain collaboration. “Demodyfi aims to become a key building block supporting the new, user-centric, crisis-resilient financial ecosystem.”

Sincerely,

The Demodyfi Team