Kicking off this series on the MetaDEX, Part 1: On DEXs breaks down the business model of a Decentralized Exchange (DEX) and outlines the core challenges leading DEXs have faced. The MetaDEX’s primary design change to address these challenges has been economic, and central to this change has been the token design. To introduce the MetaDEX, it is best to begin by discussing the role of the native token in DEXs.

Decentralized exchanges (DEXs) are a wholly new implementation of liquid markets and a fundamental primitive of entire Decentralized Finance (DeFi) ecosystems. Unlike traditional centralized exchanges, which use a single entity to facilitate transactions and hold user funds, DEXs leverage automated market-makers (AMMs). AMMs allow trustless and permissionless token swapping.

The MetaDEX is the DEX model underlying Aerodrome and Velodrome, the central trading and liquidity hubs on Base and Superchain. It combines the best features of Curve, Convex, and Uniswap into one streamlined, powerful design.