At 00:00 UTC every day of the year, something interesting happens.
Funds are distributed from a non-profit trust in London to almost a thousand Web3 wallets by an automated protocol, settled on the blockchain.
The owners of these wallets have all contributed to the DXS Liquidity Pool, which funds the operation of the DXS trading platform. In return, they get a share of the trading losses generated on the platform.
It’s all automated and it pays out every day of the year. Like clockwork.
It’s an interesting model: DXS is a CFD trading platform that operates 24/7 globally. But rather than financing trading through large ‘closed shop’ commercial liquidity groups, DXS has a public, independent liquidity pool.
A pool that is funded by ordinary people rather than institutions. Many of these people are DXS traders.
Which means that at DXS you can do more than just open a trade — you can also earn income from the pool of funds that bankrolls the whole operation.
And this pool of liquidity is designed in a very clever way that increases your returns over time. (More on that in a moment).
So if you want to add reliable daily income to your more variable trading gains, you’re in the right place.
Here’s how it works
When you close a profitable trade on DXS, the money has to come from somewhere to pay you. In general, the money that goes into your wallet for a winning trade has come out of the collected losses of traders that closed losing trades.
But sometimes that isn’t enough.
When trading profits are higher than trading losses during any 8 hour trading session, winning traders get paid from the Liquidity Pool.
The Liquidity Pool stakes 0.33% of its capital, every trading session, for this purpose.
In return, it earns 3% of all trading losses every session, while also absorbing excess losses.
That’s it in a nutshell. If you put funds into the pool yourself, you earn a share of that 3% of trading losses as income, every single day. Solid, dependable, automatic payments, directly into your wallet.
Currently paying out around 10% p.a. on contributions, generated by roughly 1,000 monthly active traders.
Solid, consistent growth
As we mentioned earlier, the design of the Liquidity Pool is clever.
It has to be — it finances the entire trading platform.
And it needs to grow for the business to succeed — because if it shrinks, the money eventually disappears, and it’s over.
To ensure the growth of the pool, there is a protocol that allocates funds to and from the pool according to a set algorithm.
An algorithm that has seen the Liquidity Pool grow consistently over the almost 2 years since DXS opened its doors:
It’s the way this pool of funds grows that makes it interesting.
There are two ways for the Liquidity Pool to grow. The first is conventional — Liquidity Providers add more funds into the pool of capital, to earn a share of the daily returns.
As the Liquidity Pool grows, so does the .33% share of the pool that is staked to pay the profits of traders each 8 hour session on the DXS platform.
This means the number and volume of trades can increase.
The pot grows, and the betting gets bigger. Simple.
But there’s another way that the pool can grow — and this is where the real magic happens.
The Liquidity Pool, the fund that finances the trading on DXS, also grows by accumulating losses of traders.
When trading losses exceed the profits paid out in any session, the excess goes into the Liquidity Pool.
Little by little, but consistently over time, these losses accumulate. Right now, in September 2022, they have grown to the equivalent of 50% of the Liquidity Pool funds contributed by Liquidity Providers.
So, the Liquidity Pool currently consists of around 35% from accumulated losses. And this portion is steadily increasing.
Here’s where it gets interesting.
These funds aren’t owned by anyone. Not by Liquidity Providers. Not by DXS. They are an ‘unowned’ portion of the Liquidity Pool, which itself is entrusted and overseen by a non-profit foundation called the Bitcoin Trading Protocol Foundation in London.
These inflows, from trader’s losses, increase the size of the Liquidity Pool, which enlarges the DXS business, as described.
But unlike the funds contributed by Liquidity Providers, this money is cost-free. There are no interest obligations, and it doesn’t need to be paid back to anyone. The income this capital generates is paid to the Liquidity Providers.
Can you see what this means?
As a DXS Liquidity Provider, your returns are derived from an ever-increasing pool of Unowned Liquidity, as well as your own contribution.
You effectively get paid on more than the amount you put in.
And increasingly more over time.
This type of opportunity (and risk) is usually only available to institutions, or the very wealthy. The capital required necessitates deep pockets, so ordinary people don’t get a look-in.
But at DXS, anyone can get involved (subject to the Liquidity Provider Agreement).
You can provide liquidity with $1 or $10 million or anything in between, and it works exactly the same way for everyone. No special treatment for larger contributors like in the traditional financial markets we all know.
Everyone is simply paid pro-rata, based on the size of their contribution.
You can’t get any fairer than that.
Now as you can imagine, there’s risk involved. These risks are explained in the links provided below.
But if you have an appetite for risk and want to be a part of this business, the process could not be simpler.
Just download a wallet, fund it, and connect to DXS using your wallet.
On the platform, hit the ‘provide liquidity’ button, like this:
But before you do that, make sure that you read the following sections from our FAQ:
Reliable and transparent
In the current crypto down-turn, DXS has got you covered. While other platforms are halting trading, preventing withdrawals, under investigation, being sued or going out of business — DXS is going strong 24/7. In fact liquidity payments are (on average) higher during downturns.
While DeFi platforms are offering low returns, getting hacked and losing investor’s money, the DXS liquidity pool is secure and continues to grow and function smoothly, returning income to liquidity providers every day without fail:
And you always know exactly what’s going on with the business, as our operations are completely transparent.
The act of logging every transaction to the blockchain creates an indisputable record of events, which reduces (or eliminates) opportunities for fraud, and simplifies the resolution of disputes.
You can even view the performance of your contribution and the entire Liquidity Pool in real time on your personalised liquidity dashboard on the DXS platform:
You can view every transaction of the DXS hot and cold wallets here.
And if you want to check out our interactive public dashboard, with detailed information on DXS operations, go here.
🚀🚀 Looking Forward
Just to speculate — if DXS can successfully increase its user numbers with a slightly larger share of a very large market, the current level of payments to liquidity providers could increase significantly (You can read more about yield on DXS here).
Even without major growth, the current returns of 10% p.a. on average from the original BSV liquidity pool is still an attractive proposition, considering the current economic environment of high inflation and poor real returns on traditional investments.
In fact, this yield is quite impressive considering that DXS operations to date have basically been an ongoing live-market beta test conducted in a tiny quiet corner of the crypto space.
However our platform’s use of the functionally superior (but notoriously unpopular) BSV blockchain has limited the size of our addressable market and created obstacles to growth — which does not sit well with our team.
So things are changing.
A stable future
The DXS platform is set to launch a USD pool to allow for USD-backed trading. This will launch the DXS operation mainstream.
Our custom built Fiorin wallet allows users with USDC or USDT to connect to the platform and trade or contribute liquidity in just a few clicks.
For starters, this means that Liquidity Providers will not see their contributions devalued due to the market price of the Liquidity Pool asset decreasing. Liquidity contributions will maintain a consistent dollar value. That’s a win on its own.
Secondly, it means DXS users will not have to deal with BSV in order to make use of the platform. They can now use USDT or USDC — two of the most mainstream and easy to use assets on the market.
The result? The addressable market is increased — in a big way:
Here’s another way of looking at it: currently, Liquidity Providers earn around 0.015% p.a. return per Monthly Active Trader on the platform, from less than a thousand traders. With stablecoin liquidity and trading, these numbers are set to sharply increase. On existing metrics, 5000 traders will generate a 76% p.a return to liquidity providers. 10,000 traders yield a 150% return.
But let’s not get too far ahead of ourselves. This is just an idea of the potential. It’s what gets the DXS team up in the morning.
The reality is, we’re a start-up launching our product mainstream, and we might not hit our targets overnight.
We are confident, however, that more traders are coming to DXS. The increased trading volumes will generate larger returns on liquidity contributed to the pool.
And there’s only one way to get a share of them.
Become one of the people getting paid from the London-based trust at 00:00 UTC every day of the year.
Hit up DXS now to take part.
Past earnings are not an indication of future returns. This discussion includes predictions, estimates and other information that may be considered forward-looking. While these forward-looking statements represent our current judgement on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this discussion (September 2022). Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.