OIP-2: Onomy Exchange (ONEX)

Abstract

The Onomy Exchange (ONEX) is a cross-chain and multi-chain hybrid decentralized exchange (DEX), with a technical architecture that converges Automated Market Maker (AMM) liquidity pools with an orderbook UI, thus creating a powerful, fair, and non-custodial approach to trading that supports stop losses, limit orders, conditional orders, and advanced charting. It provides the necessary tools to support on-chain Forex whilst upholding the benefits of an AMM.

Motivation

The new OIP structure for tracking significant developments that contributors are working on has prompted the submission of an OIP for the Onomy exchange (ONEX). It is a long-standing development in the Onomy community, and its back-end code was complete before the Mainnet launch. Competing interfaces and tools built upon the ONEX back-end code is encouraged.

Specification

ONEX features the following:

  • Permissionless, decentralized, and non-custodial
  • Solidity implementation for EVM chain deployment
  • Golang implementation for the Onomy chain (Cosmos SDK-based)
  • Orderbook + Automated Market Maker (AMM) hybrid
    • Orderbook enables a familiar approach to trading by enabling resting limit orders
    • AMM Maker is the counterparty to each trade
    • Limit orders in the orderbook are triggered upon the AMM price crossing the set limit order price
    • Market orders move AMM price
  • TradingView compatibility for charting
  • Market, limit, and stop loss orders
  • No static fees per trade

Rationale

A permissionless, decentralized, and non-custodial exchange supports the promise of crypto. Ownership of your funds, decisions, and actions. It removes the possibility of an “FTX” moment that harmed so many individuals – a relic of a situation only possible in the ancient, centralized approach to finance.

Implementations in both Solidity and Golang afford the opportunity to deploy ONEX onto not only the Onomy Network, but also any EVM chain. This enables ONEX to serve pockets of loyal liquidity that prefers to remain on a particular EVM chain without the need for bridging.

The rationale for the orderbook + AMM model is that an orderbook is familiar to traders in traditional finance and forex markets. It is also known that orderbook exchanges dominate volumes in the crypto industry. As such, it’s important to offer orderbook trading. However, the AMM attracts an entire industry of LPs that have spawned to provide liquidity to AMMs – thus bootstrapping liquidity. The AMM is the counterparty to each trade, and so the exchange can operate with no intermediary, middleman, or centralized party. All exchange functions remain on-chain.

AMM DEXs today all charge a fee to traders. Average AMM fees are typically 0.3%, whereas centralized exchange maker/taker fees are .1%/.2%, and as low as 0 / .05% depending on volume traded. ONEX proposes to remove the static fee charged to traders all together, opting instead for utilizing its hybrid design to enable the AMM to capture spread between AMM price and the limit price in the orderbook - thereby acting as a traditional market maker. These earnings will then be automatically shared with LPs and partially used for a programmatic buy and burn of NOM.

STATUS: PEER REVIEW

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The following is the TLA+ specification for ONEX built in collaboration with Informal Systems.









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DAO design contributors would like to showcase the Onomy Exchange design.

Older version:

Newer version:

The design considerations to update the interface include:

  • From a UX point of view, making the interface simpler, and more readable, removing distractions, yet keeping it as functional as possible to enable both advanced and novice traders to take full advantage of the features provided.

  • Advanced customization modules are added, like resizable tabs and expandable data sets.

  • A dashboard is also added to provide a bird’s eye view of everything that is happening - portfolio data, market indicators, social trading, and more.

  • A white version is available for review to fit everyone’s preference.

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new design looks awesome, 0.1 $ transaction fee it is really good :slight_smile:

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very nice cant wait to see the CEX terminator live - but i guess we will have a test net first ?

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There is much discussion about Onomy. Im excited to dive deep into the documents!

This is good. But i think we need any major indicator on it. It should help people then :owl:

It is a good idea. Onomy should provide the testnet. Private testnet for user who have been staking amount of $Nom ( they will serve first) after that go public testnet :pray:. Or any idea

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Hi, looking foward to Onex!! It would be nice if the Portfolio interface could be customizable per user

A good idea rony. Lets see what :slightly_smiling_face:

Hi, I liked this. It is a great idea for Onomy!

ONEX has entered into a 3-phase testing journey to production launch. First was leveraging OIP-4 Replicated Security to create ONEX Consumer Chain. This has been launched on mainnet after a DAO vote with full validator set support. Next, ONEX logic was stress-tested via an alpha release to the community and Trading Competition #1. The focus was on logic, and not the interface. Feedback was gathered from over 4,000 testers and contributors made feature upgrades, squashed bugs, and improved many mechanics such as the Buy & Burn mechanism of NOM applying on a per-trade basis rather than only on redemption of liquidity.

Now, a beta version has been released alongside Trading Competition #2 with an upgraded user interface that will be continually upgraded with responsive features and a more traditional exchange look. Features of the interface live on the beta version include:

  • TradingView Charts
  • Orderbook
  • Order Forms
  • Improved Liquidity Management Screens
  • Trade History
  • Position History
  • And more!

After rigorous feedback and iteration cycles, contributors are working to release a production version with the production interface teased in this forum.

Now that we are up-to-date, considerations must be made on the maintenance, scalability, performance, and governance of ONEX as a consumer chain.

The Problem with Using $NOM for ONEX Governance

ONEX as a consumer chain has successfully been established, but the current utilization of $NOM for its governance and staking processes is cumbersome and inefficient. To interact with ONEX governance, a user must follow a convoluted procedure:

  1. Undelegating NOM: Users must first undelegate their staked $NOM.
  2. IBC Transfer: The $NOM must then be transferred to ONEX via IBC.
  3. Staking IBC NOM: After the IBC transfer, the user stakes the IBC $NOM for voting.
  4. No Staking Rewards: Staking IBC $NOM yields no rewards.
  5. Reversal: After voting, the entire process must be repeated in reverse to revert to the original state.

A More Elegant Solution: Introducing ONEX Coin

The proposed introduction of $ONEX offers a streamlined approach.

  • Minting of $ONEX Coin: A new digital asset, $ONEX, will be minted on the ONEX consumer chain.
  • Ease of Use: Eliminates the need for IBC transfers and multiple staking mechanisms.
  • Airdropped to $NOM Stakers: Those staking $NOM will receive $ONEX via an airdrop.
  • Unified Experience: Stake, earn rewards, and engage in governance without leaving the ONEX chain.
  • Utility Functions: $ONEX will serve for governance, staking rewards, and additional utilities as voted by the DAO. This may include reduced fees, access to launchpad sales on ONEX, or a number of other items the DAO may choose to implement.
  • Airdrop to $NOM Stakers: An airdrop will distribute $ONEX to all existing $NOM stakers.
  • Governance Streamlining: $ONEX will be utilized for all governance functions on ONEX, eliminating the complexities involved in using IBC-NOM.

Share your thoughts here in the forum or in Onomy’s social channels!

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Will unbonding period token will eligible for Onex airdrop?

Hi Khama, ultimately the DAO can vote either way - but the proposal Pendulum intends to make to the DAO will only include NOM stakers that are bonded during the time of the snapshot. Unbonding NOM would not be eligible.

Hello , please share the Onomy Exchange URL link , Thank you

Looks awesome, can’t wait to check it out. :nerd_face: