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IDEX

IDEX is an Ethereum-based decentralized exchange and cryptocurrency that supports real-time trading and high transaction throughput. IDEX is known for its advanced features including limit and market orders, gas-free cancels, and the ability to fill many trades at once.The IDEX token is the exchange's native token.[1]

In November 2020, announced Multiverse, a multi-chain initiative that brings its trading experience to new blockchains, starting with Polkadot and Binance Smart Chain. As part of the initiative, IDEX is also issuing a new supply of tokens native to each blockchain to secure its operations and earn 50% of trading fees. These new Multiverse tokens will be distributed to Ethereum-based IDEX token holders beginning December 7, 2020.[2]

Overview

IDEX consists of a smart contract, a trading engine, and a transaction processing arbiter. The smart contract is responsible for the trustless storing of all assets and executing trade settlement, and all trades must be authorized by the user’s private keys.[2]

Unlike other decentralized exchanges, the IDEX smart contract is designed such that only the exchange is authorized to submit signed trades to Ethereum. This enables IDEX to control the order in which transactions are processed, separating the act of trading from the final settlement. As users trade their exchange balances are updated in real-time, while simultaneously their private keys are used to authorize the trade in the contract. This authorization prevents users from rescinding any completed trades and prevents IDEX from initiating any unauthorized trades.[3]

Authorized transactions are passed to the arbiter which manages the queue of pending transactions, dispatching them in sequence to ensure that each trade is mined in the correct order and that the smart contract balances stay in synch with the exchange balances. By controlling the transaction sequence, IDEX provides the speed and user experience of centralized exchanges combined with the security and auditability of decentralized exchanges.[1]

Fees

IDEX charges 0.2% for the market taker and 0.1% for the market maker. Users also pay gas fees to put their transactions on the blockchain.[3]

Maker & Taker Model

Market makers place new orders on the books and wait for another user to match them. They can be buys or sells. Market takers find existing orders on the books and fill them, thus taking orders off of the books.[2]

Market takers are responsible for covering the gas fees associated with each trade. The exchange must pay a gas fee, priced in ETH when dispatching the trade to the network and then deduct it from the balance of the market taker. When exchanging tokens for ETH the amount of ETH deducted matches that of the gas fee. When exchanging ETH for tokens, IDEX deducts the equivalent amount of tokens based on the price of the asset in ETH. This price is calculated using the average of the last 10 trades.[4]

Gas Fees

All transactions on the Ethereum network cost gas, a fee that is paid to miners in order to process the transaction. Trades on IDEX cost ~140,000 gas. Gas costs are about 1.5x higher than EtherDelta and slightly higher than 0x, but on IDEX there is no risk of competing for the same order and wasting this gas fee. Traders receive their chosen order regardless of how long the transaction takes to settle, so as the exchange grows IDEX can continue to use a normal gas price.[2]

Minimum Trade Orders

IDEX has instituted a minimum order of 0.15 ETH (equivalent) for makers, and 0.05 ETH (equivalent) for takers. IDEX’s design includes trade matching which ensures traders get matched with the best-priced orders on the books. However, this price doesn’t account for the cost of gas. If there were no maker minimums, then it would be possible for users to place tiny limit orders on the books that force takers to waste gas unnecessarily.[5]

IDEX Token

The IDEX Token is the primary utility token of IDEX. IDEX token also incentivizes platform adoption and trading volume through IDEX trading rewards which are automatically distributed to users’ wallets based on their monthly trading volume.[3]

IDXM stands for “IDEX Membership.” As the name suggests, IDXM grants token holders unique membership-style benefits on IDEX, which are accessible after the token incubates in one’s IDEX trading wallet for 1 week. These benefits include:

  • Reduced IDEX trading fees until 2021: Users holding 1 IDXM can reduce up to 100% off their IDEX trading fees until 2021. When holding less than 1 IDXM, these reduced fees are prorated accordingly (e.g. holding 0.5 IDXM entitles members up to 50% off trading fees). This does not apply to the gas fees collected by blockchain miners.
  • Increased IDEX trading rewards: Users holding 1 IDXM can also choose to receive up to 2x IDEX trading rewards for life. When holding less than a full IDXM, this benefit is prorated accordingly.
  • IDXM benefit allocation: Users can choose how to allocate IDXM benefits according to their preferences by using the slider in the “Benefits” tab within the IDEX platform. While more than 1 IDXM can be held by any user for future trading purposes, the maximum IDEX reward potential (100% off IDEX trading fees OR 2x IDEX rewards) is reached at 1 IDXM.[3]
  • Future IDXM uses: As IDEX continues to grow and add more functionality to the trading platform, IDXM will provide users with additional benefits. These could include things like voting, first access to new features, and more.[3]

IDEX 2.0

In August 2020, IDEX announced a $2.5 million seed investment led by G1 Ventures and Borderless Capital, including Collider Ventures, and Gnosis, to launch IDEX 2.0, a novel high-performance DEX. The new exchange will combine the speed and features of a centralized exchange (CEX) with the security of a DEX to create an uncompromising trading experience.[4]

On August 27, 2020, Quantstamp, a leader in blockchain security, gave IDEX 2.0 an official seal of approval following the audit of the new contracts. Quantstamp's Managing Director Don Ho shared:

“Cryptocurrency moves at breakneck speeds. However, it is important – especially while architecting new financial paradigms – that projects consider the impact of deploying unaudited code. It's not just about preserving your own position of trust in the crypto ecosystem; security breaches and hasty deployments reflect poorly on the entire landscape. We can’t expect DeFi to attract new participants and capital if we can’t protect the majority from expensive blunders. IDEX is operating with the level of maturity necessary for the continued success and security of the blockchain space.”

IDEX's 2.0 API sandbox is now live on testnet and traders can deploy trading bots natively with significantly reduced friction.[4]

IDEX Multiverse

In November 2020, IDEX announced IDEX Multiverse, an initiative bringing IDEX’s trading experience to new blockchains, beginning with Polkadot and Binance Smart Chain (BSC). Multiverse will continue to expand to other layer-1 networks, such as Algorand, as they launch and grow in popularity. The initiative also includes a new supply of tokens native to each blockchain, collectively known as Multiverse tokens, to secure IDEX’s expanded operations and earn 50% of trading fees. These new multi-chain IDEX tokens, IDEXP (Polkadot) and IDEXB (BSC) will be distributed 1-1 to existing IDEX stakers over a two-year period beginning December 7, 2020.  To incentivize early participation, IDEX will accelerate the token issuance rate by 2x prior to the launch of each platform[5].

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