Trading is the absolute core of the crypto world, but different practitioners view the channels for completing trades very differently.

Centralized exchanges (CEXs) carry almost the entire industry’s trading liquidity. Platforms in a centralized model have high matching efficiency, good trading depth, and fast transaction speeds. However, for the native world of public blockchains, decentralized exchanges (DEXs) based on smart contracts are the core of on-chain trading and the liquidity core of on-chain business. DEXs feature permissionless trading characteristics similar to public blockchains, which stands in stark contrast to the “threshold” differences seen in CEXs.

When looking at each public blockchain individually, there is always a core DEX that revitalizes the entire chain’s business and ecosystem. On Ethereum and Solana, we even see a “full token business chain” built around DEXs.

In this cycle, the TON blockchain has risen to prominence, but TON’s ecosystem construction is still very early, and the DEX applications on the TON blockchain are overall “few and simple in function.” Compared to mature platforms like Ethereum and Solana, how should TON’s DEX applications develop further?

Established DEXs on Ethereum and Solana

Ethereum DEXs

The earliest DEX on Ethereum is Uniswap, which pioneered the AMM model by using token pools contributed in equal proportions as liquidity pairs. In the iterations of Uniswap:

• V1: The simplest AMM version.
• V2: Optimized trade matching and LP functionalities.
• V3: Introduced fixed price range liquidity, supporting professional liquidity providers. This is the currently running version.
• V4: In development, aiming to implement limit order functionalities.

Throughout its versions, Uniswap has continually enhanced asset management features for LPs while ensuring smooth user transactions, representing the direction of DEX optimization.

Besides swap and AMM LPs, Uniswap excels in MEV (Miner Extractable Value) and Oracle functionalities:

• MEV: As AMM pools constantly change token ratios, MEV presents arbitrage opportunities during trade matching. Uniswap maintains MEV resistance, preventing sandwich attacks and higher slippage.
• Oracle: DEXs provide the fastest and most comprehensive price data, making them preferable for many DeFi protocols over external oracles like Chainlink for direct price feeds. This allows DEXs to offer “oracle” capabilities as part of other DeFi data modules (e.g., lending protocols and derivatives markets).

Uniswap represents DEXs but requires other DEXs to supplement its features. Ethereum hosts various DEXs, such as Balancer, Curve, Sushiswap, and aggregators like 1inch, MetaMaskswap, and Matcha.

• Balancer: Enhances liquidity management with pools of different weights and multiple tokens, beneficial for liquidity supply and market cap management. It also replaced the Launchpad rules with LBP (Liquidity Bootstrapping Pool) for fairer token pricing.
• Curve: Focuses on stablecoin trading, essential for DeFi transactions and as a buffer in token economics.
• Other DEXs: Sushiswap, DODO, and others offer staking pools for multiple tokens, acting as supply chain roles for DeFi applications.

Overall, Ethereum has developed a mature DEX chain, although transaction confirmation speed can be an issue. Faster chains like Solana offer different development forms.

Solana DEXs

Solana’s DEXs, unlike Ethereum’s, provide a user experience similar to CEXs. With fast transaction confirmations, the role of DEXs and aggregators converges, shifting focus from “all on my platform” to “where are the trading pairs and LP pools?”

Support for LPs becomes more refined. Starting with Uniswap V3’s fixed price range LPs, innovative DEXs continue to manage prices for LPs.

• Jupiter: The most detailed DEX on Solana, rich in LP functionalities and token issuance features, including DCA (Dollar-Cost Averaging) for multiple token purchases.
• Meteora: Specializes in liquidity for specific trading pairs, offering detailed settings for LPs, including price ranges, token volatility curves, and ratios.

Additionally, Solana wallets often have built-in aggregation functions, eliminating the need for users to visit a DEX for swaps, thanks to fast transaction confirmations.

This design reflects the characteristics of high-speed blockchain DEX applications: modular and plug-and-play features, allowing quick integration of DEX trading modules for user convenience.

Current State of DEX on TON

Ethereum and Solana’s DEXs are already mature within their cycles, so how is TON currently? How much is the difference, and where does it lie?

TON’s performance and load capacity are the only ones that can match Solana among all public chains. However, TON’s ecosystem is a combination of Web2 and Web3 models. This combination tends to dilute Web3 in terms of usage while deepening Web3 in terms of technology.

This feature is very evident in TON’s ecosystem DEX.

For example, Telegram has built-in centralized trading pools to complete the recharge of stablecoins and TON, followed by the exchange of TON and other tokens. Functionally, it is already a simplified version, with an operational experience almost identical to CEX’s instant swap.

This function is the first feature of Telegram’s Wallet. The second feature is interaction with the TON blockchain wallet, TONSpace, providing an experience similar to using MetaMask on PC and mobile devices. If token exchange is needed, STON and Dedust within the ecosystem are more commonly used, but their functions are basically similar to Uniswap V1.

Clearly, this shows the shortcomings of TON in the DEX aspect. If Telegram Wallet bears the CEX experience, TONSpace and DEX can interact on PC and mobile ends. Finally, Telegram’s MiniApp and Bot will also serve as the trading front end for DEX or CEX functionalities. These designs meet the optimization of trading experience, but the backend native chain interactions are evidently lagging.

Currently, all seen DEXs, such as STON and Dedust, only provide trading functions similar to Uniswap V1. In our analysis of Solana’s DEX ecosystem, we saw that for high-speed blockchain DEXs, it is important to provide trading liquidity or modularize trading functions, making the advantages of liquidity the reason for user choice.

On TON, the trading front end will certainly exist heavily within Telegram. DEX still needs to increase the refinement of business like Jupiter, Balancer, etc., to balance all users, whether they are users, token providers, liquidity providers, or platform developers. Each role needs certain refined features to be well supported.

Projects Enhancing DEX on TON

Compared to Uniswap, Balancer, and Jupiter, TON has yet to see (or launch) projects that fully supplement all DEX functionalities. However, upon reviewing the design concepts of publicly available projects in the TON ecosystem, it has been found that the soon-to-be-launched LayerPixel DEX middleware has the potential to complete the missing DEX functionalities on TON.

LayerPixel, incubated by TON’s launchpad TonUP, is a DeFi solution designed for Telegram Mini Apps. Officially referred to as Layer 1.5, it offers services including wallets and DEXs (with various trading algorithms). LayerPixel provides PixelSwap for direct end-user interaction and an embedded SDK suite for other applications to develop swap functionalities based on Telegram Mini Apps.

TON needs corresponding roles in the entire asset-related chain. This chain includes asset issuance, asset trading, trade liquidity supply, oracles, asset pools, wallets, etc.

1. IDO (Initial DEX Offering):
   • IDOs function for asset issuance. On Ethereum, there are standard IDOs and LBP (Liquidity Bootstrapping Pool) styled auction IDOs. Regular IDOs can lead to high gas fees and token prices during the launch, causing post-launch price spikes followed by drops. The LBP mechanism mitigates this by reducing competition, allowing traders to buy in when prices meet expectations.
   • In the LayerPixel scenario chain, TonUP can offer IDO issuance and incorporates LBP rules for TON’s Launchpad.
2. DEX Interventions:
   • After the IDO, tokens need to provide liquidity and engage in trade combinations, necessitating DEX involvement.
   • PixelSwap: This is a DEX based on weighted pools, similar to Balancer, supporting LBP asset issuance. This Dutch auction style is suitable for small to medium projects with low FDV (Fully Diluted Valuation), commonly found in the Telegram ecosystem, especially in game/GameFi projects.
3. Refined DEXLP Design:
   • Detailed design ensures that DEXLPs (Decentralized Exchange Liquidity Providers) function like mature LPs in centralized exchanges, actively guaranteeing fund yield and isolating risks.
4. Oracle, Pool, and Wallet Services:
   • Oracle: This involves providing real-time prices from AMMs (Automated Market Makers) to external DeFi, DEXs, aggregators, lending platforms, asset bridges, etc., based on a rich AMM ecosystem.
   • Pool: Tools for users to stake multiple assets for compounded returns. In a rich DeFi ecosystem, various pTokens (like stETH from Lido) can be exchanged and staked.
   • Wallet: Beyond all trading platforms, wallets serve as user operation entry points supported by high-speed blockchains. They aggregate trading and Launchpad combinations, designing functionalities within the wallet for use with other applications.

LayerPixel integrates these components—IDO, token trading, wallet, oracle, pool—into its business chain. Communication with their team reveals their goal to address the design gaps in TON’s DEX and to become TON’s DeFi middleware through multiple functionalities based on LayerPixel.

Currently, it has been reported that LayerPixel’s code has been developed and submitted for auditing. For security, the audit is conducted by two separate companies. The mainnet launch will follow the completion of the audit results.

Conclusion

Upon observing TON’s applications, it becomes clear that TON heavily relies on Web2. This design aims to lower the barrier for Telegram users. However, based on experiences from the development of multiple high-speed public chains, Telegram’s official wallet may in the future serve more as a wallet verification tool. This would assist users in conducting more direct on-chain native transactions to ensure asset security and the correctness of Web3 interactions.

For public chains, DEX (Decentralized Exchanges) are the venues for unleashing on-chain vitality. The goal of every DEX is to become a mature financial trading platform, providing users with precise and sophisticated asset management capabilities.

TON has consistently reached ATH (All-Time High), and the value of its ecosystem is continuously growing. As TON thrives, the project’s value data will be concentrated on the trading pairs of DEX. Therefore, the more mature the development of DEX, the greater the chances for investors to seize opportunities will exponentially increase.

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