What’s DEX-NIBI?

Introduction

NibiruChain is a Layer 1 blockchain and smart contract ecosystem based on Cosmos, offering superior throughput and unparalleled security. Nibiru integrates leveraged derivative trading, spot trading, staking, and joint curve liquidity to provide a seamless user experience, allowing users from over 40 blockchains to engage in leveraged trading using a composable suite of decentralized applications. NibiruChain powers a decentralized and entirely on-chain perpetual futures exchange called NibiPerps. Nibiru aims to address several open issues through this exchange: minimizing latency during high volatility periods, minimizing imbalances in position sizes, increasing the number of independent traders on the platform, and reducing losses from perpetual funds. One of the primary tasks of Nibiru’s perpetual contract protocol is to ensure that the funding rates of listed perpetual contracts remain consistent with those of all other perpetual futures exchanges while monitoring arbitrage opportunities.

Architecture

An interoperable, multi-chain smart contract platform CosmWasm’s WebAssembly smart contract cross-chain communication (IBC) built for the Cosmos ecosystem provides a connection bottom layer for the multi-chain future and enables permissionless transmission between blockchains.

Consensus

Because it uses Tendermint’s consensus, the network can tolerate up to one-third of node failures (whether due to failure or malicious behavior). If a network partition occurs and neither part has more than two-thirds of the nodes, the network will be stopped to prevent any forks or double spending. This is because Tendermint prioritizes safety (consistency) over liveness (availability). In the event of a node failure, the network will continue to operate as long as more than two-thirds of the remaining nodes are operational. If a failed node comes back online, it can synchronize with the rest of the network and resume its operations. Key aspects at the core of Tendermint include:

Instant Finality: Once a block is proposed and verified, it is committed to the blockchain and is immediately considered final. Users can be confident that their transactions are completed as soon as a block is created, without the need for multiple confirmations or wait times (unlike blockchains like Bitcoin and Ethereum). This improves user security.

State machine replication: Tendermint can build arbitrary applications through the Application Blockchain Interface (ABCI). This means it doesn’t just apply to cryptocurrencies, but to any decentralized application.

Byzantine Fault Tolerance: Tendermint uses a Byzantine Fault Tolerance (BFT) consensus protocol, specifically the Practical Byzantine Fault Tolerance (PBFT) method. This ensures that all nodes in the network agree on the order of transactions in the blockchain, even if up to a third of the nodes are Byzantine (i.e. malicious or malfunctioning). PBFT uses a two-phase submission process to reach consensus, with nodes first proposing a block and then validating it through a series of voting rounds. This process ensures that all nodes in the network agree on the order of transactions and prevents malicious nodes from compromising the integrity of the network.

Rotating Proposers: To increase fairness, the right to propose the next block rotates based on the interests of validators and the number of times they have proposed a block.

Four Major Products of Nibiru Chain

The real technical core of Nibiru lies in its product ecosystem. Currently, the Nibiru ecosystem consists of four core components:

Nibi-Perps. Most of the current centralized contract exchanges are based on off-chain order books. Nibi-Perps provides complete decentralized on-chain contract transactions, allowing users to trade with up to 10x leverage on popular crypto assets such as BTC, ETH and ATOM. Stakers of $NIBI will have Nibi-Perps governance rights and transaction fee discounts.

It has several features: ● Supports both cross-margin and isolated margin; ● $NIBI stakers have Perps governance rights (parameter changes/reward mechanisms, etc.); ● VIP service. Stakers of $NIBI receive discounts on trading fees. ● Black swan event early warning mechanism: For contract transactions, extreme price fluctuations will bring catastrophic consequences to the protocol. Nibiru handles black swan events through the Ecosystem Fund (EF) and Treasury (Treasury). Among them, the financial vault is the last layer of guarantee mechanism to maintain the normal operation of the protocol. It was initially managed by multi-signatures by the core members of the team, and eventually transitioned to completely managed by the community. ● The initial supply of Ecosystem Fund EF comes from the creation community token allocation. The later growth of EF reserves comes from three parts: 1) Perpetual contract transaction fees; 2) Liquidation fees; 3) Capital investment income. EF reserves are mainly used to balance long and short positions, compensate for bad debts caused by failure to liquidate in time, etc. Nibi-Swap Nibiru’s spot trading DEX, Nibi-Swap is one of the four core components independent of contract trading. Nibiru V1 architecture supports 2 different LP pool types: StableSwap pool and constant product pool. Nibiru’s StableSwap is based on Curve and supports stablecoin NUSD. Nibiru introduces its fully collateralized stablecoin, $NUSD. Its first supported collateral is the stablecoin $USDC. Users mint NUSD by providing $NIBI and collateral (such as USDC), with the specific ratio determined by the collateral ratio (CR). If CR = 70%, it means that to mint 100 NUSD, users need to provide collateral worth 70 NUSD and $NIBI worth 30 NUSD. In the future, Nibiru Chain will support more types of collateral, and currently, $NUSD is more akin to the Cosmos ecosystem’s $FRAX.

Most blockchain networks utilize third-party oracles (such as Chainlink, Pyth, etc.) for asset price feeds, but Nibiru takes a different approach by developing its own decentralized oracle. In the Nibiru network, validator nodes play the role of oracles.

On the Nibiru blockchain, validator nodes act as oracles by voting on the exchange rates between cryptographic assets. The x/oracle module of the Nibiru Chain manages the provision of off-chain prices in a fair and decentralized manner.

A voting period, called VotePeriod, occurs every few blocks. During each VotePeriod, the protocol tallies the votes to create a vote for each exchange rate. To deter malicious actors, oracles are rewarded for publishing “good prices” and penalized for publishing “bad prices”. The weighted median of the votes then becomes the on-chain exchange rate.

In 2024, Nibiru Chain aims to expand its ecosystem, with major developments including integration with leading DeFi projects across multiple chains, listing on top centralized exchanges, completing parallel optimistic executions, and achieving comprehensive EVM compatibility.

Financing Situation

Nibiru has conducted three rounds of financing in total, the first of which was an $8.5 million seed round in April 2023 with a valuation of $100 million. Tribe Capital, Republic Capital, NGC Ventures and Original Capital co-led the investment. The second round was Coinlist’s community sale completed in January 2024, selling a total of $6 million of tokens NIBI at $0.05. The third round was a$12 million financing completed in February 2024, with participation from Kraken Ventures, ArkStream, NGC Ventures, Master Ventures, Tribe Capital and Banter Capital.

Ecosystem

There are currently 100+ projects in the ecosystem, and there are currently 600,000 fans on twitter and 500,000 on discord.

Token economy

The total token supply is 1,500,000,000, and currently, there is no information available on the initial circulation. However, according to the whitepaper, it should be 400 million in the first year. Currently, the price is around $0.54, with a peak of nearly $1 during the initial launch. Regarding token distribution, 60% goes to the community, 15.3% to core contributors, 8% to public sales, 8.5% to seed rounds, and 8.2% to early contributors. From this perspective, the project seems quite fair, as the community receives a significant portion while the project team takes a smaller share. All tokens will be released over 8 years.

In conclusion, this project appears to be one of the current projects focusing on cross-chain derivative Automated Market Maker (AMM). Many people compare it to DYDX, but in reality, it’s not the same. DYDX currently only supports a few chains, and if you want to switch, it’s cumbersome. Nibi, on the other hand, is built on Cosmos, which is inherently cross-chain and offers some advantages. However, it has poor user experience. Although the mainnet has been launched, it’s not usable yet, only available on the testnet. Therefore, the project team seems to be rushing to list the token before the product is fully developed. Looking at the size of the fan base, it seems promising. The product concept is good because there is indeed a demand for cross-chain AMMs. On centralized exchanges, you don’t care which chain your USDC is on; it could be ETH or any other chain. So, achieving a seamless user experience is the evolution of DEX. Hence, there is a demand for the project. However, in terms of the market landscape, it seems a bit low when compared to DYDX’s $3 billion FDV.

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