Since 2018, DeFi has developed to its sixth year. In the past six years, it has spanned the upward phases of three rotation cycles, namely "2017-2018", "2020-2021" and "2023-2024", and DeFi has experienced three periods of rapid growth respectively.
In 2018, DeFi was still in its early stages of development, and had accumulated basic technologies such as token exchange, AMM, and staking. In 2021, DeFi Summer began. With the help of the already very complete infrastructure, DeFi achieved exponential growth in both transaction volume and locked-up volume.
After 2021, DeFi applications began to iterate towards refined functions. For example, Uniswap's iteration from v2 to v4 almost developed DEX's AMM business to its peak. Balancer, Aave, etc. on Ethereum also made more in-depth complementary developments on basic technologies such as AMM and liquidity supply promoted by Uniswap.
This is even more true for other popular ecosystems. In the past two cycles, DeFi on high-speed chains such as Solana has also completed the complementary development from basic application functions to rich functions. For example, Solana not only has Raydium, but also Jupiter with more complete functional design and Meteora, which focuses on liquidity supply.
Every ecosystem will increase the richness of data and technology during its growth period. This is the inevitable direction of ecosystem growth. In the bull market of 2024, the TON ecosystem is growing rapidly, but the DEX function of the TON ecosystem is not perfect. The main DEX only provides functions such as Uniswap v1, and it is urgently needed to quickly complete the development of other complementary functions.
In DEX, investors exchange tokens with three main demands: first, getting chips at a lower price; second, exiting with liquidity; and third, making reasonable asset allocation and compounding. Balancer is the best at this.
In the TON ecosystem, LayerPixel is a modular middleware platform that is trying to supplement TON's full-process asset trading business. It is bringing the combined capabilities of Uniswap and Balancer to TON.
Why do we need Balancer?
Uniswap is the founder of AMM. In the transaction matching market dominated by order books, Uniswap's AMM technology has become famous and has become the basic function of DEX. In the v1 version, its main functions are swap and LP. In v2, the function of transaction routing in swap is corrected, that is, the precise matching of transactions in AMM. V3 provides liquidity within a "fixed price range" for the LP function. The upcoming v4 will continue to supplement the refined function of liquidity supply, allowing LP to better manage liquidity.
In addition to the handling of swaps, because there are a large number of token trading pairs, Uniswap also takes advantage of this to have its own oracle and can also provide data for other DeFi.
So, since we have Uniswap, why do we need Balancer? Balancer focuses on three other parts:
First, weight settings are added to the LP part of the AMM; second, users will supply through the LBP pool when bidding for the IDO opening; third, multiple liquidity pools are added as compound interest products.
It is obvious that Balancer's role is carried out from the perspective of complementary development. In terms of basic technology, it mainly supplements the liquidity supply function of the AMM pool.
Unlike other AMM pools that only offer 50/50 weighting, Balancer weighted pools allow users to build pools with more than two tokens and custom weights, such as pools with 80/20 or 60/20/20 weightings.
Weighted Pool Example
The advantage of weighted pools is that different weights adjust the liquidity level of the entire token transaction, which can also achieve directional management of the token market value, and is more suitable for small and medium-sized project teams. At the same time, for LPs, because the higher the weight of the token in the pool, the less Impermanent Loss they suffer when the price soars, the weighted pool allows users to choose the proportion of liquid assets to invest, and use a freer number of assets as much as possible to avoid greater Impermanent Loss.
As for IDO business, Liquidity Bootstrapping Pool (LBP) can play a role. Most tokens will have a short-term extreme premium when they are listed on DEX. LBP uses a weighted algorithm with time-related weights. The starting and ending weights and time are selected by the pool owner. LBP will play a role when the IDO opens, gradually reducing the token price until it reaches market equilibrium or market recognition level.
In this cycle, most of the newly launched tokens opened with extremely high premiums. When BTC and ETH rose or fell, prices often plunged, which reflects the importance of token price control after listing.
In addition, in terms of project market value management, most projects do not have sufficient funds to deal with market value management. By using LBP to launch tokens that have not yet been fully allocated, projects can use the least amount of start-up capital to achieve the listing and market value management process.
LayerPixel originated from complementary development
The TON ecosystem is booming, and the TON Foundation is also vigorously promoting it, whether it is the price control of the TON token, or the support of project tokens, on-chain transaction volume and locked volume. However, tools that fail to achieve refined functions are unlikely to play a role in promoting ecological growth.
Currently, the overall TON ecosystem is on an upward trend. The demands of investors and projects for the ecosystem can be summarized as follows:
1. Investors hope to find early projects and get early chips.
2. Small and medium-sized projects hope to reduce development costs.
3. Small and medium-sized projects hope to make markets at the lowest cost.
These requirements all point to open source application protocols and middleware platform projects.
LayerPixel is a mature team rooted in the TON ecosystem. Under the complementary development concept, it has integrated a middleware platform for the entire business process, including token issuance, token trading, liquidity supply, oracle services, and staking pools.
It can provide services for early projects in the entire ecosystem through its business integrity, providing an entry point for users to discover early projects, while also providing front-end, SDK, API and other support on the technical side.
LayerPixel’s DeFi Solution
LayerPixel's solution mainly includes four business parts: TonUP, PixelSwap, Pixacle, and PixelWallet.
TonUP is the launchpad on TON. It was launched in August 2023 with the support of the TON Foundation. It has held multiple IDOs for DeFi, GameFi, etc. in the TON ecosystem. The highest market value of its token UP transaction exceeded 100 million US dollars. LayerPixel is the infrastructure incubated by TonUP, which includes the decentralized exchange PixelSwap.
PixelSwap is currently the only DEX on TON that supports AMM, weighted pools, and LBP at the same time. It allows users to customize specific token exposure while providing liquidity. In addition, on top of this function, PixelSwap can also enable direct exchange between Jetton assets, even if there is no liquidity pool between the trading pairs. PixelSwap will also help liquidity providers maximize their income through various staking pools. Through the seamless integration of staking, lending, and liquidity mining, users can enjoy the best returns.
Because the TON native asset protocol Jetton is different from Ethereum in terms of technical thinking, it is difficult to implement the functions on Ethereum directly in the TON native environment. In order to complete the entire technical part, LayerPixel designed the Settlement Layer based on the existing TON network Jetton standard. This is a set of smart contracts similar to banks. Users can deposit funds in the Settlement Layer and authorize third-party contracts that meet the standards to call these assets. In this way, LayerPixel has realized the functions of asset authorization and atomic exchange.
This means that in the Telegram Mini App scenario, users only need to call up the TON wallet (such as Tonkeeper) once to allow the developer of the mini app to call a specified number of specified tokens. This will greatly improve the user experience, and LayerPixel is currently the first protocol on TON to implement this function.
It is worth exploring that in terms of external liquidity supply, PixelSwap still retains the interface of the underlying assets, allowing other projects to use liquidity. In the future, it may become a liquidity supply node on TON like Balancer to Ethereum and Meteora to Solana.
Based on PixelSwap's natural quotation capabilities, LayerPixel has also developed an oracle module - Pixacle. This is a lightweight oracle based on PixelSwap that allows developers to directly obtain the latest transaction price of assets by calling smart contracts.
The above are the launchpad, swap and oracle functions of LayerPixel. Based on these three functions, other application parties can try to develop various types of applications, such as integrating with aggregators, developing more sophisticated DEX, lending platforms, derivatives platforms, etc.
In addition to the above functions, LayerPixel will also launch PixelWallet in the future to add an external wallet entrance. At the same time, the entrance and functional modules will be open to all partners to help projects use wallets to import users. Of course, the wallet will also integrate all functions to complete a unified design.
Finally, in addition to business, developer friendliness is also something LayerPixel values. In addition to cooperating with game platforms and game developers such as Bot Gameyard, LayerPixel will also use SDK to provide itself as an embedded service to developers of Telegram applets, aiming to lower the user threshold.
The development language of the TON public chain is completely different from the EVM language. Therefore, FunC language and tact programming are already difficult, and DeFi access to the Telegram Mini App front-end is also difficult. Application developers will also encounter issues such as the sensitivity of user asset security and systematic risk control.
Therefore, for developers, the first thing they need is the lightweight composability brought by the modularity of the protocol, and the second is developer-friendly auxiliary adaptation.
LayerPixel also uses the middleware idea to solve this pain point. LayerPixel can be called a Layer 1.5 based on the TON network, that is, it does not have an independent consensus and sequencer like Layer2, but creates a "smart contract set" that can interact with the TON network to realize atomic transactions, contract interactions, etc.
Furthermore, based on the MiniApp feature of Telegram, LayerPixel first made front-end adaptation and is promoting convenient development at the SDK and API levels. In LayerPixel's vision, future Telegram Mini App developers no longer need to understand complex blockchain support and learn new programming languages, but only need to use its tools and functional modules.
The LayerPixel team mentioned their views on TON chain assets in an online event. In the view of the LayerPixel team, there will be many long-tail assets on the TON chain. These long-tail assets may be based on Telegram Mini Apps, such as small game releases. These long-tail assets are characterized by low market capitalization and liquidity, but especially native trading groups, and a certain number of transactions. LayerPixel wants to help such project parties issue assets faster and better.
Final Thoughts
The emergence of LayerPixel has created an example of a standard business closed loop in the DeFi track of the TON ecosystem. On Ethereum or Solana, such a DeFi closed loop is the most normal process for the operation of ecological assets and is the key to supporting the value of the ecosystem.
In the past cycles, the richness of Ethereum DeFi has allowed Ethereum to maintain extremely high TVL data, firmly supporting ETH's economic model.
For TON, although the goal of LayerPixel is to make up for the lack of ecological functions, the most important thing is to give ecological developers an opportunity to think divergently and create. The characteristic of the middleware platform is to make standardized replication and provide the impetus for large-scale development. The booming TON needs LayerPixel, and also needs developers who can carry out secondary development based on LayerPixel's liquidity, data, and development modules.
