- Tackling the 3 Cost Components of Trading
- Appchains to the Rescue: Gasless Swaps
- How Gasless Swaps Work
- Volume as Spam Prevention
- Locking Instead of Fees
- Gasless > Topless
- Stay Informed
- About Mangata
Mangata is revolutionizing the world of decentralized trading with its new feature, Gasless Swaps. This innovation addresses the high costs and unpredictable fees that traders face in the current market. Gasless swaps unlock more traditional strategies like dollar-cost-averaging, which are prohibitively expensive on Ethereum but have no additional costs on Mangata.
By eliminating gas and Miner Extractable Value (MEV) as cost components, Mangata provides traders with one simple and predictable fee. This means that traders can participate in decentralized markets, no matter what their budget is, and have access to more capital-efficient trading strategies.
This article will explain the problems that gasless swaps solve and how Mangata does it while maintaining the security of the blockchain.
Tackling the 3 Cost Components of Trading
When it comes to trading in decentralized markets, traders face a range of complex topics that they need to be aware of. One of them is trading costs.
The cost structure of DEXes usually consists of 3 components:
- Gas: This component is variable and can cost a few cents or a few hundred dollars during peak times
- Exchange Commission: Usually costs 0.3% of the trade volume
- MEV: Up to the defined slippage, typically 0.5% of the trade volume
These 3 components make the true costs of trading very intransparent and hard to predict. They also prevent proven strategies like dollar-cost-averaging, as sending multiple transactions increases costs. In peak times, when transactions cost a few hundred dollars on Ethereum, this becomes unfeasible for regular people.
Appchains to the Rescue: Gasless Swaps
Mangata has the unique advantage of being both a chain and an app at the same time. As such, it can change the rules of the game and be optimized for capital efficiency.
Mangata eliminates Gas and MEV as cost components for trading. It only leaves the trader with one predictable, and simple-to-calculate fee: an exchange commission of 0.3% of the trade volume.
While it sounds great in theory, there is a big question we had to answer to make it happen. Gas solves a critical function on blockchains: it prevents spam attacks on the network. So how can a chain offer gasless swaps without giving up on spam protection? We thought long and hard about this issue until we found a solution.
How Gasless Swaps Work
Unlike traditional blockchains that rely on gas fees, Mangata X utilizes the 0.3% exchange commissions and a locking mechanism as an alternative solution. This not only improves the overall user experience but also provides a more sophisticated and efficient approach to controlling spam.
To understand how the network can only rely on the exchange commission and leave out gas costs, let’s deconstruct why we do have both in the first place:
- Gas is a fee that is charged for using the network
- Exchange Commission is a fee that is charged for performing a swap
In Mangata’s case, performing swaps is the core use case of the network. As such, it should be covered as a single cost component.
Volume as Spam Prevention
While “Gas” is commonly understood as the fee to use the network, there is an additional, more fundamental function it serves: a disincentive to attack the network. As each request is given a cost, an attacker must spend resources to attack the network. If the cost of attacking the network is high enough, it will act as spam prevention.
This means that as long as the exchange commission of Mangata is bigger than the gas costs, it will serve as an effective disincentive to attack the network, without the need for gas fees.
Essentially, volume works as spam prevention.
Locking Instead of Fees
In situations where the exchange commission is not sufficient to act as spam prevention, Mangata uses a locking mechanism instead of a transaction fee.
The locking mechanism involves temporarily holding a set amount of MGX tokens on a user’s account for a fixed amount of time (24h). This design aims to achieve a balance between the lock and unlock transactions to prevent overloading the network and helps with efficient use and access to the blockspace.
- For swap transactions involving a whitelisted token pair (against MGX), and the trade value above a certain threshold (10,000 MGX; approximately $10 as of the time of this writing) the no-fee mechanism applies.
- For swap transactions with a value lower than the threshold, a locking mechanism is used where a certain amount of MGX tokens (50 MGX per transaction) are locked on the user’s balance for 24 hours.
If a user sends another transaction during the lock period, the locked amount and the time period are increased. Tokens can be unlocked through either a swap transaction or a free, designated unlock extrinsic.
Gasless > Topless
Our unique “Gasless swaps” mechanism allows you to seamlessly swap between tokens without paying gas fees, simplifying the cost structure and improving the overall user experience. Gasless Swaps and Themis Protocol help users by removing two of the three cost components from trading activities. With Mangata X, users only pay the exchange commission, which incentivizes liquidity providers and serves as a spam prevention mechanism.
Say goodbye to excessive gas fees and enjoy a more capital-efficient and user-friendly trading experience with Gasless Swaps!
Mangata is on a mission to become the #1 DEX on Polkadot, offering traders and liquidity providers the best platform to access unique tokens and earn rewards.
Everyone should have the opportunity to participate in the decentralized economy and benefit from the power of blockchain technology. That’s why we are building a user-friendly platform that makes it easy for users to trade, provide liquidity, and earn from multiple passive income streams through double staking rewards, even if they are new to crypto.
Mangata will offer access to the widest array of Polkadot tokens, better prices for traders by mitigating MEV, and the ability to trade without gas.
At Mangata, we’re dedicated to building a fair and transparent platform that puts the needs of users first, offering the lowest fees for traders and the highest rewards for stakers. We’re committed to continuously improving our platform and offering new features that provide even more value to our users.
Join us on our mission to become the #1 DEX on Polkadot and unlock the full potential of the decentralized economy.