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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