New Ethereum DEX Banks on Liquidity Rewards to Lure Traders
2 min read
Decentralized exchange Tokenlon is entering a new phase of its liquidity mining program, offering rewards to the full spectrum of exchange participants getting in its unique DEX design.
Tokenlon, an Ethereum-based exchange, announced today that Phase 2 of its liquidity mining incentive program will begin October 31, rewarding both traders and liquidity providers with LON tokens, which are used to pay trading fees on the platform, similar to Binance’s BNB token.
Tokenlon’s increasing monthly volume, nearing $1 billion for October, shows there’s still room for growth even as decentralized exchange volumes drop amidst a battle with their centralized counterparts for users and their trading fees.
Decentralized exchanges (DEX) use automated blocks of code known as smart contracts to allow users to swap between crypto tokens without a centralized third party, like a bank, facilitating the process.
Tokenlon uses 0x exchange APIs under the hood to power a unique trade matching system. User orders are submitted and evaluated off-chain—with different centralized and decentralized sources of funds compared—before being executed in swaps on-chain using smart contracts. That should help traders get a better price.
Liquidity incentive programs offer rewards to users of an exchange protocol for using the service. The second phase of the Tokenlon incentive program will allocate 10 million LON tokens to traders and market makers contributing to liquidity pools on Tokenlon over the next 50 days; 4 million LON of the total supply of 200 million were allocated to traders in the first phase.
The LON token address has not yet been released, so LON token allocations are non-transferable for the time being. LON tokens will be used to pay for trading fees on the DEX, which plans to release 65% of LON tokens to the community through the phased incentive program.
“Introducing better liquidity will allow Tokenlon to bring its secure and convenient decentralized exchange experience to more users around the world by providing them with the most competitive quotation and depth in the industry,” Tokenlon head of growth Lucas Huang said in a press release.
Singapore-based Tokenlon represents one of October’s most successful decentralized exchanges, expanding trading volume more than 65% compared to last month. By comparison, the largest DEX by volume, Uniswap, saw volume fall nearly 30% and overall DEX volume fell 28%, according to blockchain data aggregator Dune Analytics. Tokenlon is still a small operation by comparison, processing under $1 billion in October compared to Uniswap’s more than $10 billion.
Tokenlon was founded in 2017 as part of the larger imToken digital asset wallet product offering. Tokenlon, originally used within the imToken wallet as a token swap tool, was broken out into an independent decentralized exchange in July 2019.
