Dfyn Version 2 Goes Live With On-Chain Limit Orders and Enhanced DEX Security

Multichain decentralized exchange (DEX) Dfyn on Tuesday released its version 2, which makes enhancements to security, trading features and order matching, developers told CoinDesk.

The new version features dedicated vault contracts to protect against liquidity pool exploits, which have accounted for upward of $300 million in user losses since the start of this year.

These vault contracts will store and handle all user funds as opposed to storing them in pool contracts. The vault allows users to borrow tokens through a Flash Loan mechanism, also known as a One Block Borrow, where they can borrow a certain amount of tokens, given that they pay them back before the end of the same transaction.

"The technology we’ve developed eliminates the challenges of impermanent loss and liquidity mining, which will enable us to scale and create an inclusive multi-chain [decentralized finance] ecosystem with a feature-rich, easy-to-use DEX at the heart of it," Ramani Ramachandran, co-founder of Dfyn, told CoinDesk.

Limit orders currently available on DEXs are centralized and prone to hacks and manipulation from bad actors who sell order book flow to high-frequency traders. Decentralized limit orders solve these issues by matching trades at the exact prices between users transparently via the use of smart contracts.

Dfyn will offer concentrated liquidity on individual ticks, resulting in better security and enhanced price precision. Each tick corresponds to a specific price and liquidity, enabling users to add liquidity at a precise price, similar to how order book exchanges operate.

Version 2 also gives users access to Signal, a smart contract-based order routing system that finds the optimal trade path – or the steps taken to execute a trade – when users swap two assets. This gives users access to the best trades, which are highly capital-efficient, and the best prices, guaranteeing minimum slippage and no maximal extractable value (MEV) risk.

MEV is sometimes referred to as an “invisible tax” that miners can collect from users – essentially, the maximum value a miner can extract from moving around transactions when producing a block on a blockchain network.