Costs matter. In 2022, one billion USD have been stolen from you and other traders through MEV and traders paid 220m USD in gas for trades on Uniswap alone.
When it comes to trading, capital efficiency (paying the lowest price to get an asset) is important. Capital efficiency is affected by three primary drivers of costs: Exchange commission, gas, and MEV. Traders usually have a hard time understanding how the costs work.
This article helps you understand those cost components and points out what users need to keep in mind while trading to avoid bad surprises. It also shows how Mangata eliminates two of those three components and provides the most predictable and capital efficient prices on the market.
The Three Cost Components of Every Trade
Let’s go through the three cost components of every trade and give you a rough estimation of what you pay for each one:
Gas is the network fee that you pay for transactions on the blockchain. While it makes sense technically, this is an unreasonable fee from the perspective of a trader. Imagine you would have to pay the New York Stock Exchange a fee for their rent and operations of the building. Gas fees depend on network usage and token price, so they can range from less than a cent on small networks to five dollars on Ethereum during silent days and hundreds of dollars during the peak of the bull market.
Exchange Commission is the actual cost of doing business. It is what you pay as a taker fee to be able to trade. It is generally 0.3% for uncorrelated assets (e.g. ETH-BTC) and usually lower for correlated assets (e.g. USDT-USDC).
MEV is the value that informed actors in the network take from you by exploiting the technical weak points of the blockchain. It can go as high as traders set their slippage, which is typically 0.5%, but can go up to the full amount for careless traders.
Total Cost of Trading
If we sum all those values up, your trade might cost under bull market conditions 200 USD gas + 0.8% (0.3% exchange commission + 0.5% MEV) of your trade volume. This is completely unacceptable for regular traders.
How Mangata Fixes This
Mangata creates the most predictable cost structure for traders by eliminating two out of those three components.
Mangata offers Gas-free swaps. This eliminates unpredictable gas costs from the equation for the trader. Traders only have to lock-up small amounts of tokens for 24 hours. Additionally, Mangata minimizes MEV and eliminates deterministic front-running by the randomizing transaction order and supporting encrypted transaction submission.
This leaves Mangata traders with 0.3% exchange commission. Which is the lowest and most predictable price structure traders are currently offered on any DEX.
Fixing the Fundamental Problems of DeFi
Mangata is committed to fixing the fundamental problems of DeFi by learning from the previous generations of DeFi products and building an interchain protocol that is tailor-made for DeFi participants.
Check out our latest feature video If you want to learn more about the interchain exchange infrastructure:
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Mangata is on a mission to become the #1 interchain DEX, offering traders and liquidity providers the best platform to access native tokens and earn rewards.
We believe that everyone should have the opportunity to participate in the decentralized economy and benefit from the power of blockchain technology. That’s why we are creating 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 tokens from all chains, 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 interchain DEX and unlock the full potential of the decentralized economy.