DEX223: Benefits of Multichain Implementation

Today supporting multiple tokens on a DEX doesn't seem like a big deal, but the first DEX not only didn't support multiple networks, but also couldn't add arbitrary tokens for trading. 

It’s been seven years since the first DEX launched, and in that time, the DeFi sector has exploded—alongside a mind-boggling number of blockchains spanning various tiers and interoperability models. It was only natural that large DEXs were deployed on the most liquid and popular blockchains. 

DEX223 does not stay away from the multichain trend, but in addition to the traditional goals, another very important part of the DEX223 philosophy is pursued — the widest possible distribution of ERC-223.

Advantages of Multichain Implementation

• Access to liquidity. DEX platforms are typically deployed on blockchains that are unicorns with significant TVL. Or on blockchains that are rapidly gaining popularity, such as Base. This approach ensures that the DEX platform will receive an influx of liquidity in any case. For DEX223, Ethereum has been chosen as the parent blockchain, as it is the most liquid EVM-compatible blockchain. One of the goals of DEX223 is to cover as many EVM-compatible blockchains as possible.
• Increasing the user base. Each individual blockchain has its own philosophy, native coin, unique assets and people using it all. Attracted by new trading opportunities and incentives, users create an influx of liquidity on DEX.
• Within the same platform, due to inter-network arbitrage, additional transactions are formed, increasing fees. For D223 holders, this multichain implementation creates an additional income stream.    
• Widespread use of ERC-223. The ERC-223 standard is the foundation of the DEX223 philosophy. At this point, it can be said with 99.9% confidence that most token standards on EVM blockchains come from the Ethereum ecosystem. However, it is possible to accelerate the adoption and implementation processes by deploying applications and incentives rather than waiting for third-party developers to do so.  

Possible Drawbacks and Solutions

• Liquidity fragmentation. It is not unreasonable for critics of multichain implementations to say that DEX liquidity is eroding with each newly added blockchain. The fact is that often to attract an audience on a newly added network, the platform provides more generous bonuses than on the previous network. Users, using bridges and other means of transferring funds, start withdrawing funds from contracts and transferring them to the new blockchain. At the same time, the total package of incentives does not increase, as the tokenomics of projects is already formed and should be deflationary. This is how the imbalance and liquidity dilution is created. 
  Each platform tries to address this problem in different ways. Interoperable blockchains such as EOS or Cosmos are also being considered to solve this problem. While DEX223 has not yet been launched and details are yet to be revealed, it can already be noted that the D223 token will not be able to move between networks using the usual bridging method. On each new blockchain, the native token will only be available to those who deposit D223 into a special Ethereum contract at the time of deployment of Dex223 on a new EVM network.
• Complexity for the average user. The DeFi sector is still a very complex mechanism, it is necessary to understand and differentiate the ownership of price information, speed, and cost of transactions, availability of liquidity and other parameters. On top of that, bridges are added to the mix. Even designed to solve some of these problems, interoperable blockchains are not so simple and popular. 
  
  To improve the user experience, DEX223 is working on documentation, producing clear infographics and has a blog section where users can get the information they need. And also get help on DEX223's social resources. 

Conclusion

Multichain implementation is now a given in the DeFi sector with great potential. DEX223 takes the most out of multichain implementation. In addition to liquidity and user base, the adoption of ERC-223 is accelerating, hence the DEX223 plant itself with all the benefits for D223 users and holders.    

Following the deployment on Ethereum, the next blockchain scheduled for deployment is Ethereum Classic. As one of the long-lived ones, Ethereum classic is great for testing multichain implementations. For DEX223, a multichain implementation has been an integral part of the design since the initial phase, positioning it well to address existing challenges in current multichain solutions and set new standards in the crypto space.

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Note: This analysis is entirely the author's vision. It is not a call to action or investment advice. 
This article is for informational purposes only and does not constitute financial advice. Investing involves risk, and you should consult a qualified financial advisor before making any investment decisions. Original reporting sources are credited whenever appropriate and as required.