The New DeFi Ecosystem Promises To Be “More Efficient” Than Established Competitors
The new Decentralized Financial (DeFi) ecosystem is aiming to create sustainability in the industry by leveraging the power of innovative protocols and maximizing profits from leading platforms.
Lux Market says its ecosystem leverages the power of an unlimited number of protocols and Compound being two of the most prominent ones they’re working on. Sushi and Pickle are among others that they plan to start making soon. The project describes itself as a hub for a variety of different protocols and strategies, with no limits on what it can build.
At the heart of this ecosystem is LuxToken, a cryptocurrency with an interest rate backed by an underlying asset designed to be held for long periods of time. As well as having a reserve of the underlying assets, they benefit from deposit and withdrawal fees.
A spokesperson for Lux Market explained: “LuxToken is the heart and soul of the development; they optimize and enhance the strategies used by the underlying protocols. LuxToken has been developed from scratch by the Lux Market and is designed to be used by long term-oriented investors. “
The value proposition of this asset comes from how it combines the potential return of an underlying protocol with a price difference return from mining and burning fees, as well as interest sharing ownership across pools liquidity is locked.
With LuxToken or LXT there are no management or performance fees, just minting and redemption fees. Every time LXT is acquired or minted, a fee is paid. On the other hand, half of the supply is meant to be burned to create scarcity. The remainder is committed to locked liquidity groups combined with LXT tokens, creating new arbitrage opportunities.
The LXT cryptocurrency acts as a deflation utility token allowing owners to participate in the governance of Lux Market — contribute to the development of the ecosystem and make decisions about future milestones.
Create sustainability
Over time, it is expected that LXT will eliminate much reliance on tokens that are profitable through the use of locked liquidity groups. The fact that these LPs are permanent eliminates the risk of impermanent loss, which illustrates the difference between holding tokens in the automated market maker and in the wallet.
A variety of LXT Ecosystems have been created — including Casinos, Games, E-Commerce, and Lending Platform- helping to provide ecosystem liquidity from a multitude of blockchains.
The folks behind Lux Market say this is an open source, testable chain project that anyone can check out. The ecosystem has also completed a full audit by ConsenSys Diligence.
The importance of lending
A crypto version of the LXT was also created to encourage people to hold onto their cryptocurrency for the long term.
Unlike other protocols, the LXT isn’t locked for a specific amount of time, meaning owners can continue to benefit from liquidity if they really need to. Instead, LXT is burned at ICO stage if not sold out; and during Lending. Investor who wants to lend based on LuxTech’s platform, must acquire LXT through public exchanges, the entire LXT of those processes above will be burned. Similar to other services within Lux’s ecosystems, that using LXT to pay, those LXT is also meant to be burned. The total amount of burned LXT is programed at 40 million LXT (an equivalent of 50% of the total supply).
This also plays an important role from a governance perspective, as only people with LXT can participate in the decision-making process, even for holders with as low as ten buck can participate in. In a recent blog post on Medium, Lux Market explained that this is designed to filter out who may have participated in voting with short-term thinking.
While liquidations are saved for last because of the limited opportunity, it’s important to recognize liquidations are a key part of the crypto-lending ecosystem and critical to the system’s efficiency. Crypto functions as a fantastic collateral because of its ease of sale and liquidity. In comparison to a mortgage, in which a foreclosure and liquidation is an extremely lengthy process, crypto liquidations take mere seconds. As the crypto industry continues to grow, the lending ecosystem is going to remain an absolutely pivotal piece in its success story.
In the immediate term, however, this ecosystem offers a number of unique opportunities for LXT holders to earn yield, gain liquidity and increase the productivity of their assets. Lux Market hopes to achieve sustainability in the industry after a blockbuster year in decentralized finance — and remove some uncertainty from the market.
For more detail information about LXT Token and Lux Market, please visit:
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