Money on Chain relies on gold market prices for its DEX.
DeFi Money on Chain, a stable coin issuer and lending platform based on Bitcoin’s RSK side chain (BTC), announced on Wednesday the launch of TEX, an automated token swap platform based on an order book, with a unique touch.
Instead of being available instantly, orders are processed in batches at a slightly variable interval of a few minutes. Each execution, called a tick, coincides with the orders sent to the blockchain.
Each trade that occurs at a given tick is made at the same average price among all the orders submitted by the traders. The limit orders sent by users indicate the maximum or minimum acceptable price. For example, a limit order to sell Bitcoin Method for USD 18,000 will not be activated if the average price is USD 17,900.
Max Carjuzaa, CEO of Money on Chain, explained to Cointelegraph that the system also uses an Oracle system for more accurate control. With so-called market maker orders, traders express a price with a certain percentage offset from the reference rate obtained by the oracle. This ensures that the orders will track the price changes that occur between ticks.
The design of the system was inspired by the London Spot Fix, a gold pricing mechanism in which a committee deliberates on the price of gold twice a day.
Automated market makers such as Uniswap are often seen as a necessity in light of the slow performance of blockchain-based systems. When asked if these concerns drove the design of TEX, Carjuzaa responded:
„No, the main reason it was adopted is the discovery of fair pricing. The method used in TEX is a way to avoid initial implementation and to ensure the discovery of fair prices, even at low volume“.
Price discovery and early execution are often considered to be major problems in MMA exchanges, but Carjuzaa also believes that its system „needs much less liquidity to operate“. For the same liquidity, he says MMAs will have more slippage compared to TEX. This benefit is „especially important in a new network and allows for organic growth in liquidity“.