Introducing Flash Trade - A Pool-to-Peer Exchange on Solana
Explore the Best Perpetuals Trading Platform on Solana, Learn How it Works and What makes it Excellent.
Trading on the Solana blockchain offers users a unique and highly efficient experience within the cryptocurrency ecosystem. Because Solana distinguishes itself with its lightning-fast transaction speed and extremely low fees, it has become a widely loved platform for professional traders and degenerates seeking rapid execution and cost-effectiveness.
However, as seen with the majority of platforms that rose to provide decentralized exchanges (DEX) in the Solana ecosystem for both spot and perpetual markets, many depended on the Central Limit Order Book model 1 for matching orders between sellers and buyers. This which is known to have led to functional and economic exploits while trading. Maintaining a CLOB on-chain requires recording every order and its updates, leading to high transaction volumes but with high fees also. An economic limitation type is market inefficiency where orders are matched based solely on price-time priority. This can lead to an inefficient market for assets with low liquidity. 2
These limitations led to the development of a novel approach to trading by creating an asset-backed model called Pool-to-Peer. It is a new method of matching trades based directly on the platform’s liquidity. Flash Trade solves the problems facing Solana traders by implementing features engineered from the Pool-to-Peer approach such as zero slippage with the lowest fees possible in the entire blockchain trading scene.
Flash Trade
Flash Trade is a decentralized exchange that provides perpetual traders with instant fills and a deep liquidity pool that is accessible on demand. The decentralized exchange is built to execute large volumes of trade at the speed that Solana can support.
As prevalent in the ecosystem, liquidity provisioning for perpetuals on a DEX involves market makers depositing assets into liquidity pools which are used to facilitate trading through automated market-making mechanisms. In practice, this has been an Achilles heel for decentralized trading. This method restricts regular DEX users from benefiting from the market-making activities.
With the newly designed Pool-to-Peer model, any user of Flash Trade can provide liquidity by simply supplying an asset to mint FLP, the token used in the LP. The effect of this is the availability of deep liquidity with zero slippage and the opportunity for individuals to earn yield from their share in the pool. Before this model, institutional market makers earned the most from the pools while other market participants got sidelined. But with Flash Trade, the structure that provides incentives protects everyone involved in decentralizing the trading platform through its liquidity pool.
Flash Liquidity Pool
Flash Liquidity Pool (FLP) is an index like the commonly known S&P 500. FLP is an asset class made up of the top cryptocurrencies like BTC, USDC, SOL and ETH. Multiple assets made of different volatility tolerance in the FLP balance makes the FLP a balanced and stable liquidity base for powering all trading activities on Flash Trade such as spot and perps trading market-making, lending, trading and general DeFi implementations.
How does it Work?
The liquidity pool operates as an oracle-based index. This index offers exposure to the assets it contains. The prices of the assets in the index basket are algorithmically risk-adjusted with its fees dynamically based on data published by decentralized on-chain oracles. This ensures that any user can deposit into the pool and perform any action they wish to in a permissionless manner. In this pool, price feeds are not under the control of the flash trade team but from an industry-vetted oracle provider service known as Pyth. This mechanism gives everyone access to a decentralized free market quoted with precision. 3
NFTs and DeFi Walk into A Bar
Before Flash Trade, NFTs and DeFi have mostly been two distinct communities. The former comprises people interested in the collection and the trading of artworks while the latter group is made up of people with an interest in on-chain trading activities and DeFi components that make them work such as Oracles, Order books, Lending, etc.
Many NFT communities demand artists and founders of the project to provide financial incentives that they are not equipped for. These incentives can only come with ease from DeFi projects as most NFT creators are good with only the art part of their job. Art itself should be the utility but we can’t ignore the fact that questions like “Why is the floor price down” are bound to be asked.
Flash Trade provides an ideal union of both worlds by granting NFT communities access to non-superficial earning incentives based on their Flash Beasts holdings. As the first evolutionary 3D art on the Solana blockchain, Flash Beasts has a unique smart contract mechanism that upgrades a holder’s NFT design based on the volume traded on-chain, liquidity provisioning, referrals, and general Flash Trade usage.
Flash Beast NFTs were minted on 19th of December 2023 at 3 SOL per Beast (5,555 items) with a total of $1.3 million raised. None of the proceeds received from the mint is allocated to the team. They are channeled towards providing value for beast holders. As at the time of this writing, Flash Beasts NFTs holders have earned more than 10% of the mint proceeds.
As Flash Beasts holders earn passively from the fees generated by their share in the liquidity pool, over time, the beasts will generate for their holders the value they paid for it. This intersection of DeFi with the Beast NFT makes a cross-cultural impact among DeFi enjoyooors and NFT lovers (and degens). 4
Flash Fees and Revenue Structure
One of the most important parts of Flash Trade is the fee and revenue generation endeavors. In the simplest form, when traders enter and exit a position, they pay a certain amount in fees that are sent to the Flash Liquidity Pool for their trading exposures (keeping in mind that it is still the best fee for a perpetual protocol on Solana). All the trading volume and the fees earned on Flash Trade is accounted for in the daily revenue emission. All of these are channeled towards providing value to traders and Flash Beast holders as revenue is shared daily by the Flash contract.
Technical Features of Flash Trade
Flash Trade is made up of multiple components. Some of these are common to other decentralized exchanges such as stop loss and multiple RPC endpoints, but some are the essentials that make Flash Trade a superior DEX to all the current platforms. This section explains what to expect with the Flash Trade dapp.
Zero Slippage with Size
In any trade, the executed price might differ slightly from the intended price due to various factors like:
Limited liquidity: If an order is large relative to the available liquidity pool, the price might move slightly to accommodate the trade.
Rapid price movements: Market prices can fluctuate quickly, especially for volatile assets. By the time your trade is executed, the price might be different from the one you saw initially.
Flash Trade instantly fills trades regardless of the size. As seen below, it costs 0.6461SOL to open a $79k trade while it took 0.6471 to close the same trade. I own a Flash Beast, so there was a discount of 10% on the fees paid. The total fees paid for a trade also reduces with an increase in size for the trader.
Verify the transaction for trade opening here and trade closing here.
Multiple RPC and Pricing Endpoints
Having multiple options for RPC endpoints makes blockchain interactions and data access easier. Flash Trade provides two dedicated RPCs to choose from for any trade. Even though the RPCs are generally reliable, having a backup plan in case of any issues will give traders the opportunity to enter or exit a trade without the fear of an RPC downtime. Also, there is a custom endpoint where users can add their privately created RPC endpoints.
Flash Trade uses two Pyth Network endpoints and the Solana Mainnet as its oracle for getting live price feeds for all its assets. In case there is a lag with one, traders can select another one and save it as the primary price prediction.
Dynamic Priority Fees
In case of network congestion on the Solana mainnet (which happens sometimes), a trader can adjust the fees to be paid by increasing. This prioritizes the user’s transaction over the others since there is a need to process their transactions faster.
Synthetic Products
With Flash Trade, users get exposure to synthetic assets that are tradeable on-chain. Precious assets like Gold, Silver and some foreign exchange markets like Euro, Great British Pounds and the Australian Dollar are available to trade with speed and zero slippages.
Stop Loss and Take Profit
Flash Trade provides traders with industry-standard trading features such as Stop Loss and Take Profit. As seen in the image below, I opened a $963 short position on SOL while the entry price was $104.01 with 100x leverage. I knew I would be liquidated in a few seconds if the price of SOL hits $104.54 so I set a stop loss at $104.06. This translates to “if the price of SOL goes up against my trade and it gets to $104.06, close the position for me with the loss I would have accrued.”
Verify the trade here.
Flash Abstraction
Flash Trade uses account abstraction techniques to set custom rules and logic for how user accounts should interact with other contracts while maintaining a more precise control over their funds in the wallet.
Trade directly from the wallet: With Flash Trade, you don't need to deposit funds with a centralized custodian like on a traditional exchange. Your account can directly interact with the trading contracts.
Set parameters within transactions: Because of account abstraction built directly into Flash Trade, you can specify actions like stop losses, take profits, and other pre-defined conditions within a single, multi-part transaction.
NFT Associated Trading Accounts (NATA): Flash creates a separate data layer using Beasts as the wallet’s identity. With NATA, all trading activities like LP and trading with wallets that have Beast are executed in a non-custodial manner.
All of these components work together to give traders a tool they can depend on for executing trades satisfactorily.
What are Voltage Points?
This is an on-chain points system that accrues for traders holding the Flash Beast NFTs. The more volume traded, the more voltage points you get if you have a Beast in the trading wallet. Traders should set their NFT as the Primary Beast so that all on-chain voltage that can be gained will be applied to their beast once it reaches a certain number. Only these points can be used to push the Beasts into the next level where the 3D animation evolves into a more beautiful version. There are currently six levels of transformation for a Beast.
Additionally, the more voltage points received based on the volume traded, the more the discount rate is increased up till 35% off the standard fee. This also increases the referral rebates earned through new invites up till 17.5%.
Ways to Earn Voltage Points (VP)
You can earn voltage points through any of the following ways:
Trading: Every $10 worth of trades executed on Flash gives you 1 VP.
Liquidity Provisioning: For every $1 earned as a Liquidity Provider in the FLP, you get 50 VP
Referrals: For every $1 earned as rebates from your referral link, you earn 250 VP. Please note that only Flash Beast holders can refer new users to Flash Trade.
How to Provide Liquidity in the Flash Liquidity Pool
To supply liquidity, you need to have the balance to be supplied as collateral in any of the tokens available This is converted into its worth in FLP tokens. By toggling on the “Stake Tokens” button, once assets are converted into FLP, they are automatically staked for you. The reason is that it combines two steps into one since you are expected to stake the FLP and put it to work in the pool.
After staking, I was allocated 37 cents as what I have earned by staking in the pool.
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