X7 Initial Liquidity Loans help reduce slippage by increasing liquidity > While there are several types of AMM models, the constant product formula is the most widespread one. Since it requires a constant balance between the pair components, a standard AMM is prone to price slippage because of the price impact, which can be affected by the liquidity pool size and the order size. When a trader places a buy or sell order, the AMM algorithm calculates the new price based on the change in the ratio of tokens in the pool. Low liquidity can lead to significant slippage, as large orders tend to cause imbalance.

In this post I am going to cover a few different subjects as I explain my journey to uncover what could be an interesting opportunity for X7 and its community: - the trouble I was having buying X7 NFTs on BNB - what I tried to solve the problem - what that solution was built on - could this help X7 deliver better prices/higher liquidity to its users - could this be a way to provide unified governance across chains (I am concerned less then ideal actions on one chain could negatively effect other chains) - in addition to the above, should we be talking to this solution about integrating with X7 **The trouble I was having buying X7 NFTs on BNB** I wanted to buy X7 on all the chains X7 is going live on to show my support for the project. I had never used Binance or BNB before, so I bridged some DAI across to the BNB network. So far so good. Now I wanted to swap the DAI for BNB tokens so I could mint the NFTs and this is where I ran into problems. Because I did not have any BNB tokens in my wallet I could not pay the gas fees in BNB to convert DAI into BNB. Sort of a chicken and the egg problem. **What I tried to solve the problem** Use a CEX to buy the BNB. I believe in Defi and really want to use Defi where possible. So this was going to be my last resort. Buy BNB via MetaMask using Moonpay or Transak. I wasn't keen on this idea either, but I figured lesser of two evils. After going through some very intrusive identification and account verification procedures - all of my credit and debit cards refused to allow transactions through Moonpay or Transak. Grrrrr Then I stumbled across [Squid Router](https://www.squidrouter.com/). It is sort of a combination between a bridge and a dex in that you can swap a token on one network to a different token on another network. It worked perfectly - 20 minutes later I had some BNB in my wallet to pay the gas fees to convert my DAI to more BNB to buy the X7 NFTs I wanted. Problem solved. **What was Squid built on?** I am nothing but curious especially when something solves a problem for me. So I dug in a little deeper to see what Squid was built on and the answer is [Axelar](https://axelar.network/) which focused on cross chain activities and sets out 3 specific use cases: - **Composable liquidity** - Create a cross-chain DEX or AMM that connects liquidity from multiple chains. - **Cross-chain governance** - DAOs can coordinate activity anywhere on Web3. - **Cross-chain NFTs** - DeFi: use NFTs as collateral on other chains. Gaming: any asset, anywhere, becomes currency or credential. So that brings you up to date on my journey, now here are my questions. **Could Axelar or something similar help X7 deliver better prices/higher liquidity to its users?** X7 is going to have Xchange running on at least 5 different networks. To help users get best pricing, it is going to route orders to the Dex on that network with the deepest liquidity pool. But what if a better price is available on a different network? Should Xchange be using Axelar or something similar to route that order across to the Xchange on the network with the better price? One problem might be timing - Squid takes 20 to 30 minutes to finalize transactions like a lot of bridges do. But maybe because Xchange controls the liquidity pools on both networks that could be negated? **Could Axelar or something similar provide unified governance across chains?** At the moment each version of Xchange on each different network will have it's own DAO. This could be a positive as it may make the Xchange on that network more reflective of and responsive to the needs of that particular network. But look 5 years down the track - Xchange on each network could be very different with very different reputations based on the decisions of each different DAO. One bad apple may spoil it for all other networks. Would it be smarter to use Axelar or something similar to provide more unified governance across chains to protect the X7 Xchange brand and image long into the future. **Should we be talking to this solution about integrating with X7 Xchange?** Regardless of the above, maybe we should be talking to the devs behind SQUID and Axelar about integrating with X7 Xchange. I noticed Axelar have developer grants that might be available to help that cause.

Axelar goes far beyond sending wrapped assets with General Message Passing, which carries any payload securely cross-chain. Applications can call any function on any connected chain, and deliver a one-click experience for users on any other connected chain. This is a new kind of dApp development that puts users first and lets developers build on the platform best suited to their use case. Cross-chain communication is easy. Secure cross-chain communication is hard. Most solutions today are permissioned multisigs, based on proof-of-authority, which has lost hundreds of millions in security exploits. Axelar network security is based on delegated proof-of-stake: a permissionless, dynamic validator set applies a consensus approach that is similar to the networks Axelar connects. Atop of the Axelar stack sits an application-development layer, used to compose across any number of chains. Developers go cross-chain without new programming languages or added complexity. They focus on building the functionality that differentiates their dApp.

Squid allows any token to be swapped between blockchains, and unlocks access to apps across chains in a single click. Use Squid to build seamless user experiences that tap into cross-chain liquidity and scale to reach anyone with a crypto wallet, no matter what chain they’re on. Squid’s API and SDK supports swaps between any token type, and enables multiple swaps and on-chain function calls to be linked together across a large list of integrated chains, so developers and users can explore new ecosystems in an instant.

cross-posted from: https://exploding-heads.com/post/83909 > I was checking out [X7 Finance](https://exploding-heads.com/c/x7finance) and stumbled across one of their investors [CULT DAO](https://exploding-heads.com/c/cultdao). > > What got me intrigued was their [manifesto statement](https://cultdao.io/manifesto.pdf). Their world might be crypto whereas we live in the Fediverse, but tell me some of this does not feel familiar: > > - There are of course those who do not want us to speak. Why? Because while the truncheon may be used in lieu of conversation, words will always retain their power. Words offer the means to meaning, and for those who will listen, > the enunciation of truth. And the truth is, there is something terribly wrong with this world, isn’t there? > > - Cruelty and injustice, intolerance and oppression. And where once you had the freedom to object, to think and speak as you saw fit, you now have censors and systems of surveillance coercing your conformity and soliciting your submission. How did this happen? Who’s to blame? > > - There were a myriad of problems which conspired to corrupt your reason and rob you of your common sense. Fear got the best of you, and in your panic you turned to the only place you could, the government. They promised you order, they promised you peace, and all they demanded in return was your silent, obedient consent. > > - *“There is a time when the operation of the machine becomes so odious, makes you so sick at heart, that you can't take part! You can't even passively take part! And > you've got to put your bodies upon the gears and upon the wheels ... upon the levers, upon all the apparatus, and you've got to make it stop! And you've got to indicate to the people who run it, to the people who own it, that unless you're free, the machine will be prevented from working at all!”* - Mario Savio > > - The more I learnt, the more miserable I felt, I tried politics, starting out on the right as somebody with a mind for economics, and slowly drifting further and further > left, socialism, marxism, communism, I joined extinction rebellion, became a full blown anarchist and yet all I found was disappointment, unwillingness to do what was necessary to do. Political infighting exhausted and wasted all noble causes. > > - Anarchism and libertarianism are supposed to be opposite ends of the political spectrum, but they in my view are the only sides of the spectrum that can agree on a universal truth. Humans need freedom. > > - You have an economic system that cannot function without maximum employment, whilst you have a technological age that is automating jobs faster than we can produce bullshit service industry jobs to replace them. > > - We have social media spreading the truth, and lies, quicker than the media can run their own narratives, society is escaping the leaders of the old world, the beginning of the end is here, the borderless society is coming and with it, the death of sovereign nations. > > - It is the SYSTEM that is defective, SOCIETY that needs > changing, a functioning society does not have 20% of its population medicated for depression. It is time we stop blaming ourselves. You are not defective. That is how > the economic model NEEDS you to feel, they need you to feel as if it is you that is the problem, so much so that millions on millions are prescribed pills to keep up this > illusion of normality. > > - The Many should not live in fear of their governments, it is the governments who should live in fear of the many. > > - The current financial system serves to keep the people poor, a society built on debt needs inflation to function, > and inflation serves to rob the poor and allow them to never catch up with their overlords in the ruling class. > > We talk alot about issues like this on the Fediverse, but here is what caught my attention. They are taking things a step or two further. > > They are building a vehicle that will fund ventures that further the cause of decentralization and reverse the evils of centralization.They call it Decentralized Venture Capitalism. > > Now I do not know if this is the right vehicle, but if nothing else it serves as a model of a way we could take our talk and turn it into meaningful change. > > Crypto has a culture all of its own, just like the Fediverse does. Too many of us, parts of the Crypto culture seem downright scammy (apologies to my new crypto friends). But maybe to be successful it would be worth learning more about their culture. We might learn how to reform the financial system to take the power back from the Ruling Class and build new organizations that reflect the will of the people. > > One thing I like about the crypto community is they leverage everybody's propensity to act in their own self interest to produce outcomes that serve the greater good. > > This is not investment advice. I am not telling you to buy [Cult Dao](https://cultdao.io/) or [X7 Finance](https://x7.finance/). But have a look and let the wheels in your head turn. What can we learn? > > Read about how each of their DAOs (Decentralized Autonomous Organization) function - could this be a better way? > > You will probably see more of these types of communities popping up on Exploding Heads as I seek to learn more myself. Please share what you find.

$CULT DAO chose to invest in #X7Finance because you fight centralization and further decentralization.

X7’s founding team believes that capital should be available to those with great ideas and that the unflinching reliability of code and distributed consensus can provide capital while eliminating significant downside risk.

An example is the apis it uses to function and operate. Uniswap is built using the Infura API Suite which is a centralised service provider to querying blockchain data, meaning they also rely on other companies for them to function. Infura API was used by Tornado Cash which they disabled access to. Uniswap has the ability to delist tokens via its interface meaning that the tokens won’t be displayed but the liquidity pair still exists as they are not the owner of this liquidity pair. They also have a partnership with TRM Labs. TRM Labs processes wallet addresses which are connected to the Uniswap app. This is deemed to be done for monitoring wallets that perform criminal activity but all wallets are monitored . This data sniffing can then be used to block wallet addresses from using the Uniswap service, if the block is in error it requires you emailing a support address to liaise the unblocking. **Xchange is fixing this centralization problem.** The starting point is to remove centralised API’s which has been done. Xchange is relying solely on on-chain data for the swap functionality. The governance token $X7DAO was a stealth launch which fairly allows anyone to purchase the token to propose and vote on the future of the project. The user experience. We’re currently at a time where transaction fees are relatively low but it wasn’t too long ago people’s first complaint was transaction fees and slippage price impact. Xchange will have its own liquidity pair factory to create its own pools but during a transaction if there is better liquidity on another DEX it will perform cross chain DEX liquidity routing to get the best rate. The routing algorithm will select the most advantageous route to take either on Uniswap, Xchange, or across multiple pairs on both exchanges. The routing algorithm will initially be solely client side (with contract support to make the optimal swaps in a single transaction). In the future Xchange will provide a limited on chain cross-dex routing algorithm to allow for on-chain integrations. Xchange is just one component of X7 Finance which will integrate the factory and token pairs in with their lending pool.

X7D is a wrapped ETH token which will be the capital injected into the Lending Pool. X7D is minted at a 1:1 face value with ETH, and is redeemable at 1:1 for Eth. The rewards earned are… “in the form of a perpetual annuity that performs against the growth of liquidity within the ecosystem”.

When the initial trading pair is set up, the value of the ETH added (in USD) will be the same value as the total amount of the project tokens. Say you created a pair for your new project called ART; you added $1000 worth of ETH and 1000 ART tokens. This would give you an initial price of $1/token. If you borrowed an additional $9000 worth of ETH from the lending pool and added that to the initial liquidity, you would now have $10,000 worth of ETH paired with 1000 ART tokens, which will give you an initial price per token of $10. All projects launch with different tokenomics. In most cases, project creators will hold a portion of tokens in reserve; this could be for the team, advisors, marketing, etc. If you launched your project with 10x the liquidity by borrowing funds from the Lending Pool, then your initial token price will be 10x the price had you not borrowed liquidity. This will give the tokens that you held in reserve a much higher initial value. “The whole reason to build a leveraged DEX is to enable those without large capital, access to institutional scale capital” An initial liquidity offering “lowers cost to launch a project, increase liquidity, and reduces the amount of capital locked to a pair”

“X7 is a globally distributed collective of developers. We strongly believe that who we are is irrelevant. Our expectation is that all actors, ourselves included, will act in a self-interested manner while building and operating the X7 ecosystem. The smart contract interactions and the DAO governance will express a system design built on this core thesis. The game theory driving actor behavior will enable the system to iterate to a globally optimal system state free from intervention by any one individual or state actor” “Trust no one. Trust code”

“X7 is designed to address the needs of four major quadrants within decentralized finance. The symbiotic nature of each segment in the X7 Finance ecosystem provides fluid insurance for lenders and mutual funding for all other market participants” X7DAO provides the means for you to be intricately involved in the governance of the project, and be rewarded handsomely for your efforts. Keep in mind that if you want to make a proposal, you’ll need to stake a minimum of 500k tokens. I am of the opinion that active, voting X7DAO holders will be privy to exclusive opportunities within the ecosystem. As investors, X7 Finance provides us with many opportunities; maybe you have a passion for X7 Finance and want to get involved as an X7DAO voter, or perhaps you would prefer a more hands off approach with the X7R token. Then again, active traders may be eager to take advantage of the arbitrage & swing trading opportunities that the Constellation tokens provide. X7 Finance is still very early stage, and over time, as the ecosystem grows, so will the number of opportunities grow.

Let’s face it, when investors discover that a project they like has an anonymous team, red flags are raised & rightly so. Many potential investors won’t even consider investing in a project if the team is anonymous. I also have an aversion to anonymous teams, but in the case of the X7 Finance team, I actually consider it a good thing, allow me to explain…

Think of it as a #DEX with the potential to address all the current challenges facing centralized and decentralized exchanges. For #DeFi to thrive, capital & access must be available to those with great ideas. The reliability of code and decentralization CAN provide capital while eliminating major downside risk.

Under Collateralized Initial Liquid Loans provide a way to add initial liquidity to an automated market making trading pair using borrowed capital. The terms and conditions for borrowing and returning this capital allow both the lender and borrower to manage their cost of capital and repayment schedules. Initial Liquid Loans terms are defined by standalone smart contracts that outline the loan origination fee, retention premium fee schedule, principal repayment conditions, maximum loan duration, and liquidation conditions. Currently, loan durations are limited to 10-90 days. The borrower receives Liquidity Tokens and has full control over them, but they cannot be redeemed for liquidity while a loan is active. In the case of default through a violation of the terms specified in the ILL, the loan becomes eligible for liquidation.

Here is an interesting twist. The X7 development team are anonymous and only communicate with the community through blockchain messages. The community then copy those blockchain messages into this Telegram channel for easy viewing. It made me feel uneasy at first, but the dev team seem to be delivering and by being anonymous they cannot be pressured into censorship or privacy breaches. Has anybody else heard of a set up like this?

Whiteboards out all the different parts of the X7 ecosystem. Not sure if it is 100% accurate - but a nice head start to get an overview

More competition coming as X7 will be launching on Arbitrum and will be looking to take market share as a DEX offering under collateralized leverage. > Arbitrum doesn’t yet have a dominant DEX, according to Walter Teng, vice president of digital asset strategy at Fundstrat Global Advisors. "No de facto DEX on Arbitrum (yet) means the market will look to find a Velodrome equivalent,” he said to CoinDesk, referring to the most popular automated market maker on rival layer 2 network Optimism. Velodrome boasts a TVL of $216.32 million, per DeFiLlama.