Let’s be real, once the Stakenet DEX is released there is factually no need for any other L1 DEXs or CEXs to exist. So realistically how large of a disruption to the crypto space can we expect? Is this THE black swan event if 2020?
I’m posting this here for reference but it was originally posted in r/satoshistreetbets. However, I have been doing my research on this project for almost a year now. I honestly can’t find anything else that rivals this projects potential for global disruption. I’m finally being more vocal about the project as it seems the Prometheus stage of its public launch is set to occur within the next couple months. I’d love to get everyones thoughts on my personal opinions and your own opinions about the project. Here is the post.
“Stakenet - First 2nd layer DEX with instant BTC<->ETH<->ERC-20<->EVM chain token (BSC, Thorchain, etc.) swaps with the capability to add other chains as demand appears. 34M Marketcap. Puts and end to wrapped assets for good. Trade REAL assets Instantly, Privately with tor integration, Securely, no on-chain fees, no KYC, globally available for trades, and obviously 100% decentralized.
Preface
Full disclosure here; I am heavily invested in this. I have picked up some real gems from here and was only in the position to buy so much of this because of you guys so I thought it was time to give back. I only invest in Utility Coins. These are coins that actually DO something, and provide new/build upon the crypto infrastructure to work towards the end goal that Bitcoin itself set out to achieve(financial independence from the fiat banking system). This way, I avoid 99% of the scams in crypto that are functionless vaporware, and if you only invest in things that have strong fundamentals in the long term you are much more likely to make money.
Introduction
Stakenet is a Lightning Network-ready open-source platform for decentralized applications with its native cryptocurrency – XSN. It is powered by a Proof of Stake blockchain with trustless cold staking and Masternodes. Its use case is to provide a highly secure cross-chain infrastructure for these decentralized applications, where individuals can easily operate with any blockchain simply by using Stakenet and its native currency XSN.
Ok... but what does it actually do and solve?
The moonshot here is the DEX (Decentralised Exchange) that they are building. This is a lightning-network/connext network DEX with interchain capabilities. That means you could trade BTC directly for ETH; securely, instantly, cheaply and privately.
Right now, most crypto is traded to and from centralized exchanges like Binance. To buy and sell on these exchanges, you have to send your crypto to wallets on that exchange. That means the exchanges have your private keys, and they have control over your funds. When you use a centralised exchange, you are no longer in control of your assets, and depend on the trustworthiness of a 3rd party, which in this case are CEX centralized systems. We have in the past, of course, seen infamous exit scams by centralised exchanges like Mt. Gox and other hack like Bitgrail.
The alternative? Decentralised exchanges. DEX's have no central authority and most importantly, your private keys(your crypto) never leaves YOUR possession and are never in anyone else's possession. So you can trade peer-to-peer without any of the drawbacks of centralized exchanges.
The problem is that this technology has not been perfected yet, and the DEX's that we have available to us now are not providing cheap, private, quick trading on a decentralised medium because of their technological inadequacies. Take Uniswap for example. This DEX accounts for over 60% of all DEX volume and facilitates trading of ERC-20 tokens, over the Ethereum blockchain. The problem? Because of the huge amount of transaction that are occurring over the Ethereum network, this has lead to congestion(too many transaction for the network to handle at one time) so the fees have increased dramatically. Another big problem? It's only for Ethereum. You cant for example, Buy LINK with BTC. You must use ETH.
The solution? Layer 2 protocols. These are layers built ON TOP of existing blockchains, that are designed to solve the transaction and scaling difficulties that crypto as a whole is facing today (and ultimately stopping mass adoption) The developers at Stakenet have seen the big picture, and have decided to implement the lightning network (a layer 2 protocol) into its DEX from the ground up. This will facilitate the functionalities of a DEX without any of the drawbacks of CEX's. The DEX's we have today don’t allow BTC to be traded seamlessly with other tokens as they aren’t truly chain-agnostic and rely on wrapped assets. Stakenet has already accomplished this for the first time in crypto history with real native assets.
Heres someone much more qualified than me, Andreas Antonopoulos, to explain this. Also included a clip of one of the largest whales in crypto sharing the same sentiment about industry standard true DEXs such as Stakenet.
'Once we have efficient, well designed DEX's on layer 2, there wont even be any DEX's on layer 1'
Progress
The Stakenet team were the first to envision this grand solution and have been working on it since its inception in ~2018. They have been making steady progress ever since and right now, the DEX is in an closed beta stage where rigorous testing is constant by themselves and select public members. For a project of this scale, stress testing is paramount. If the product were to launch with any bugs/errors that would result in the loss of a users funds, this would obviously be very damaging to Stakenet's reputation. By the looks of it the X9 developers are playing this extremely conservatively and it seems like a wise approach.
As of now you can trade BTC, USDT, ETH, XSN, LTC, and select ERC-20 in the closed beta. Ethereum is being traded using the Connext Network which is built to facilitate 2nd layer swaps on the Ethereum network. As development moves forward more lightning network and atomic swap compatible coins will be added to the DEX, and of course, the team are hard at work on Connext - this will allow ETH and tokens on the Ethereum blockchain to be traded on the DEX between separate blockchains (instantly, cheaply, privately) This is where Stakenet enters top 50 territory on CMC if successful and is the true value here. Connext is well underway in being tested in a closed public group.
The full public DEX with Connext is expected to release by Q2-Q3 this year. Given the state of development so far and the rate of progress, this seems realistic.
The larger target base for the team seems to be HFTs (high frequency traders,) and as we know they can easily make upwards of 90% of some of the larger CEXs volume. The team has been working with a team if HFTs and have already fully develop an API to allow these traders to connect their bots to the Stakenet DEX. By being the first DEX to allow bot trading on such a large scale its easy to get carried away when estimating the amount of potential volume being brought to the DEX. Especially with masternode reward calculators such as https://stakenetmasternodecalculator.web.app
Tokenomics
2.6 Metrics overview (from whitepaper)
- Name: Stakenet.
- Ticker: XSN. Currency type: Coin.
- Consensus: Minting Proof of Stake, Trustless Proof of Stake.
- Coinage: Enabled, 24 hours.
- Encryption Algorithm: X11.
- Block generation time: 60 seconds.
- Block size: 1-4 MB.
- Final block reward: 20 XSN.
- Block reward distribution: 45% Masternodes, 45% staking, 10% treasury.
- Masternode collateral: 15 000 XSN.
- Governance: Decentralized democracy.
- Funding: Decentralized treasury, no initial coin offering, no premine.
- Lightning Network: Activated on mainnet.
- On-chain scalability: 240 tx/s. On-chain transaction costs: ~0.00001 XSN/kB.
- Off-chain scalability: Theoretically infinite tx/s.
- Off-chain transaction costs: Virtually zero.
- Cross-chain interface: Lightning Swaps, Tokenization Swaps.
XSN is slightly inflationary, much like ETH as this is necessary for the economy to be adopted and work in the long term. There is however a deflationary mechanism in place - all trading fees on the DEX get converted to XSN and 10% of these fees are burned. This puts constant buying pressure on XSN and acts as a deflationary mechanism. XSN has inherent value because it makes up the infrastructure that the DEX will run off and as such Masternode operators and Stakers will see the fee's from the DEX.
Conclusion
We can clearly see that a layer 2 DEX is the future of crypto currency trading. It will facilitate secure, cheap, instant and private trading across all coins with lightning capabilities, thus solving the scaling and transaction issues that are holding back crypto today. I dont need to tell you the implications of this, and what it means for crypto as a whole. If Stakenet can launch a layer 2 DEX with Raiden Integration, It will become the primary DEX in terms of volume.
Stakenet DEX will most likely be the first layer 2 DEX (first mover advantage) and its blockchain is the infrastructure that will host this DEX and subsequently receive it's trading fee's. It is not difficult to envision a time in the next year when Stakenet DEX is functional and hosting hundreds of millions of dollars worth of trading every single day.
At $34 million market cap, I cant see any other potential investment right now with this much potential upside.
This post has merely served as in introduction and a heads up for this project, there is MUCH more to cover like vortex liquidity, masternodes, TOR integration... for now, here is some additional reading. Resources
- Breakdown of rewards for stakers and masternode owners https://medium.com/stakenet/hydra-dex-network-upgrade-proposal-4b00a3a3fb8
- Whitepaper https://stakenet.io/Stakenet_Whitepaper.pdf
- Quick rundown https://medium.com/stakenet/multi-currency-wallet-and-lightning-swaps-stakenet-solution-7d0dafe99105
- X9's contributions to LTC https://medium.com/stakenet/litecoin-foundation-and-x9-developers-announce-collaboration-510ca985b6
- Exertive Proof of Stake https://medium.com/stakenet/exertive-proof-of-stake-epos-4a999807f9e4
- Great write-up of Cross Chain Proof of Stake (i.e. stake XSN, receive BTC) https://medium.com/stakenet/posw-weekly-ccpos-cross-chain-proof-of-stake-de1ac87055cd
- The Cypherpunk Standard of Banking https://medium.com/altcoin-magazine/the-cypherpunk-standard-of-banking-88f84a834180
- Further reads https://medium.com/stakenet
TLDR; Just read the whole thing I promise its worth it.”
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