IntentX: The Future of Decentralized Derivatives

Protocol Overview

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IntentX is a decentralized, intent-based perpetual futures trading protocol. Its intent-based architecture allows it to benefit from the liquidity of CEX trading – deep liquidity, seamless execution, tight spreads, and low fees – while retaining the trustless and permissionless benefits of DEX trading.

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In contrast to AMM-based protocols, which struggle with price discovery and often require integration with external liquidity venues and reliance on oracles, IntentX’s intent-based structure allows it to act as a derivatives liquidity aggregator, which optimizes for price discovery, reduces reliance on oracles and minimizes price impact of large trades.

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Currently, IntentX offers 250 total trading pairs, and can quickly add markets, which AMM-based perpetual DEXs cannot do, as they struggle with adding long-tail alts due to oracle manipulation, CEX manipulation, and potential LP losses.

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IntentX abstracts away backend processes from the end-user to offer a friendly and CEX-like trading experience, including web2 login options, direct onboarding from traditional banking and a gas management system which abstracts gas costs away from users. The protocol also recently launched a progressive web app to offer a mobile experience.

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Central to IntentX is INTX, the protocol’s native governance token. INTX can be staked to offer real yield to holders. The staked token, xINTX, earns 85% of the USDC revenues the exchange generates.

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Protocol Mechanics

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Solvers and Intents

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IntentX uses an intent-based approach for on-chain trading. Traders express their trading intentions which are executed by solvers (market makers). An intent is a user’s desired outcome, submitted to third parties (solvers), who fulfil it.

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IntentX utilizes SYMMIO as a settlement layer and uses SYMMIO-Core contracts to settle trades and facilitate bilateral trade agreements directly on-chain. SYMMIO is an intent-based, on-chain peer-to-peer derivatives trading backend that offers OTC derivatives trading through their symmetrical contracts: a set of trustless and permissionless smart contracts inspired by "bilateral agreements”.

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Symmetrical contracts continuously verify the solvency of all participants and mediate potential parameter disagreements, to enable trustless and permissionless settlements of derivatives between parties. At a high-level, SYMMIO matches a requesting party (PartyA) and a responding party (PartyB), and executes by locking them into an isolated, symmetrical trade.

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We can walk through a trade example to better see how IntentX and SYMMIO work:

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1. Intents are submitted by users through the IntentX frontend. Each intent comes with specifications for position size, requested price, order type, deadline, position type and whitelisted solvers.

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2. When an intent is made by a trader, solvers first check if they are whitelisted (i.e. if the user has whitelisted the solvers address as an intent parameter) to see if they can act on the intent.

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3. Solver’s use subgraphs or event-listeners to monitor intents made by traders on the blockchain.

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4. The solver who locks the intent first can open the position. When doing so, solver’s need to review if the intent aligns with their own policies and specifications (regarding risk, access etc.).

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5. If an intent suits their policies and the solver has enough balance to fill the trader, the solver can lock the quote by calling the lockQuote function. If they do not have an adequate balance, they can call the AllocateAndLock function, where they first must acquire the tokens, and then lock in the quote.

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6. Following this, the solver may hedge the position with an exchange, broker, or OTC desk on a secondary market. Solver’s can also choose to not hedge at all.

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7. A solver’s open position has the following parameters: the ID of the pending intent that the solver wants to fill, the amount that they can or willing to fill, the average fill price and an oracle signature for both parties’ unrealized profit and loss.

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8. This oracle signature is necessary to ensure that both the trader and the solver are solvent and forbids solvers from initiating a position if it could lead to the liquidation for either party. A neutral third party tracks the solvency ratio of both solvers and traders.

Limit Orders

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Solvers can open the position for the trader when the price reaches the desired level to open the position.

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Market Orders

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Solvers need to be cognizant of deadlines, but instead of waiting they can call LockandOpen (when a solver has enough balance to fill the trader, they can lock the quote immediately) and AllocateAndLock (where solvers first must acquire the tokens, and then lock in the quote).

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Intents can expire or be cancelled before becoming a position. Limit orders by default have an infinite expiration time. For market orders, if the solver does not open a position within specified time frame, they will no longer be able to open it and the trader, or a third party can let the intent expire.

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Traders can cancel an intent that is not immediately claimed by a solver. If the intent has been claimed, the solver is given a forced cancellation cooldown, in which the solver can accept the cancellation or choose to open the position.

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Limit closes and market closes work the same way as described above, except solvers do not have to hedge their position, but instead can choose to close their hedges on secondary markets.

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If closes are not fulfilled within the designated time frame, the position status shifts to open again. If the trader chooses to cancel a closing position, the solver can either close the position or cancel the close request. There is also a ‘force close’ mechanism in which a user can unilaterally close the position if the solver is not responding to the close request in a specified time frame. This ensures the solver is responsive and provides a safety mechanism to the trader.

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Liquidation

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If a position is liquidated by either party, the solver can close and cancel the corresponding hedge that they set up on a secondary market. Positions are generally liquidated by liquidation bots; however, solvers can also call on the liquidator to put the position into liquidation status as a redundancy. Importantly, each part in the bilateral trade agreement must deposit collateral + a CVA. The CVA is remit to the party subject to liquidation to compensate them for loses they may incur as a result of forced unwinding of the position. This protects solvers who may be at a loss unwinding their hedge position, and also traders who ensure the solver will stay solvent for the duration of the trade.

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Funding Rates

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Funding rates are periodic payments exchanged between traders and solvers who hold open positions. Solvers inform the funding rates on the platform based on their source of liquidity cost. The funding rate mechanism ensures that the price of the perpetual contract remains close to the underlying asset's spot price.

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Account Abstraction

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The backend of IntentX and the filling of a user’s position is largely abstracted away from the end-user to get a simple, CEX-like experience when trading. IntentX takes advantage of several features to create a best-in-class UI/UX for traders, such as:

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• ‍Sign-in: When onboarding, IntentX allows users to sign up using web2 login options such as Twitter, email, Facebook, phone & Discord.

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• ‍Fiat & Crypto Ramps: After a user has signed up, they can use the readily available fiat on/off ramps to deposit funds for trading. IntentX integrates directly into the traditional banking system via a third party zero-knowledge third party provider. This allows users to onboard and offboard funds directly to their bank accounts or credit cards. If a user prefers to deposit crypto, they can do so by sending their supported crypto collateral to a deposit address on Mantle chain. This deposit transaction is setup within the app, walking the trader through depositing to the correct address. Further, as IntentX expands to more chains, there will deposit addresses on each chain IntentX is deployed on.

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• ‍Trading & Gas Management: Users can make single-click trades without having to conduct separate approve and execute transactions. Additionally, IntentX uses an in-house gas management system so gas costs for users are abstracted away. The gas management system is a custom build relayer specific to the IntentX application to reduce gas fees and have higher control over allowance parameters. Gas costs will be either subsidized by IntentX, or alternatively have a built in an auto gas deposit function to reserve gas fees and help users top up when their balance is low by rotating capital out of the futures account back to the spot account.

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Front-End As a Service

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In addition to offering intent-based trading through their own platform, IntentX is also developing a Front-End-as-a-Service product. The purpose is to become the "Meta Front-End", by collaborating with protocols to provide a standardized and high-quality front-end solution through the SYMM Service Provider program.

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Through this, IntentX aims to address the fragmentation and competition risks in the SYMM ecosystem, caused by multiple front-end providers independently developing their solutions. By offering a front-end service, IntentX will allow other protocols (current partners include Thena, Core Markets, Fenix and Based Markets) with existing user bases to introduce new, intent-based products and diversify revenue streams, while avoiding the inefficiency of developing similar front-end solutions. In return, IntentX will earn a share of the revenues, specifically 10% from supported front-end partners, distributed to xINTX stakers.

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Tokenomics

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Token Utility

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INTX is an ERC-20 token that can be staked for xINTX. A user deposits INTX and receives xINTX in return, like any single-sided staking vault. xINTX is central to the exchange and is the main value capture mechanism for the platform, earning 85% of the USDC revenues the exchange generates.

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The staking of INTX enables:

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1. Yield - 85% of platform revenues are distributed in USDC to INTX stakers via the xINTX pool. INTX stakers will also earn 10% of revenue from supported front-end partners.

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2. Governance rights - Staking INTX enables you to participate in governance votes.

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3. Long term alignment - Holding xINTX long term enables an ever-increasing share of protocol revenue as early unstakers are charged an exit fee.

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4. Referral program rewards.

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5. Access to unique strategies & products - such as new perp markets, spot markets and gamified perps.

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The exchange rate between INTX and xINTX will initially start at 1:1, meaning for every INTX you deposit, you receive 1 minted xINTX. This ratio is dynamic however and changes based on the exit fee applied to users who unstake early.

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Long term INTX stakers are incentivised to hold their INTX through two mechanisms which play out over a 16-week epoch. These two mechanisms are a dynamic exit fee (for early unstaking) and a dynamic revenue boost / reward multiplier for holding.

Dynamic Exit Fee

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When unstaking xINTX, users pay a minimum 0.5% redemption fee. This fee is dynamic based on duration of staking.

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At the start of the 16-week epoch, the exit fee is 25%, decreasing linearly to 0.5% at the end of the 16 weeks. This incentivizes stakers to not unstake early and hold until the staking epoch expires. If a staker does unstake early, their early unstaking fee goes to increasing the dynamic pool ratio of INTX to xINTX, which proportionally increases the value of all remaining INTX stakers. Essentially, the early unstaker is charged a fee between the flat redemption fee of 0.5% to the maximum redemption fee of 25%. This fee reduces the unstaker’s INTX and adds this INTX to the pool backing, increasing the INTX backing each xINTX. This mechanic rewards long-term stakers at the expense of early unstakers.

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As you can see below, the unstaking penalty decreases linearly from 25% to 0.5%. The INTX backing xINTX should naturally increase with any unstaking since there is a flat fee of 0.5%, even if a staker remains for the full 16-week epoch.

Reward Multiplier

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INTX stakers benefit from a dynamic reward multiplier. At the end of the 16-week staking epoch, the maximum boost is 2.5x, meaning if a staker holds their INTX for the full 16 weeks the rewards they earn will be multiplied by 2.5x. The rewards multiplier starts at 1.0x on week 1 and increases linearly to 2.5x. Past 16 weeks, this 2.5x multiplier will remain at 2.5x unless a user unstakes.

xINTX Design Choices & Token Model Comparison

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The resultant effect of these xINTX design choices is that long-term stakers are:

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1. Rewarded via earning maximum revenue through the dynamic reward multiplier.

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2. Disincentivised to redeem early due to the high exit fees.

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3. Rewarded with 85% of platform revenues & an ever-increasing INTX to xINTX ratio.

The xINTX token model takes inspiration from other token models we have seen in the space, for example GMX’s multiplier points system, Spookyswap’s xBOO Dynamic ratio & BeethovenX maBEETS time weighted boosted emissions.

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GMX Multiplier Points

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In GMX’s token model, a user can stake their GMX to earn a cut of platform revenues in the form of ETH. A staked GMX also earns Multiplier Points (MPs). Each MP, when staked, has the same earning power as 1 staked GMX. These multiplier points are accumulated at a rate of 100% per year, therefore if you have 1 GMX staked for 1 year, at year end you will have 1 MP. If a user unstakes some amount of GMX, a proportional amount of multiplier points are burned, sacrificing the user’s ability to earn boosted yield.

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This MP system devised by GMX was a great success, incentivising long-term staking & disincentivizing unstaking, despite GMX token volatility. The GMX token saw staking rates up to 80% and the project's tokenomics were influential in the platform's adoption.

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One quirk of the GMX MP system was that the MP’s were uncapped, meaning a staker would earn MPs at the same rate, forever. This led to the unintended consequence of early GMX whales & stakers earning a vastly outsized share of the revenues (currently benefiting from 220-235% MP revenue boosts), since they had been compounding and earning MPs for much longer than new stakers. The resulting effect of this is that new GMX stakers are disincentivised to stake.

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xINTX takes inspiration from the long-term incentivisation of GMX’s MP system and implements a 16-week dynamic reward multiplier system so there is no longer a large discrepancy between early stakers and new stakers – a new staker can enjoy the same benefits as an early whale after just 16 weeks of staking.

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SpookySwap xBOO Dynamic Ratio

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The SpookySwap xBOO model is very similar to the xINTX pool ratio we mentioned earlier. Revenues from SpookySwap are used to buyback BOO on the open market, before placing this BOO in a pool which backs xBOO stakers. Therefore, as the number of BOO in the backing pool increases, the exchange rate between xBOO to BOO increases.

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IntentX also allows for an ever-increasing xINTX to INTX ratio, while remaining fair and equal to new xINTX entrants. This is enabled via the dynamic exit fee and the flat redemption fee charge to stakers. Unlike SpookySwap, IntentX platform revenues are generated in USDC and this USDC is returned to xINTX holders.

BeethovenX maBEETS

maBEETS enabled boosted emissions and voting power based on the maturity of a staked position. The dynamic reward multiplier functions in a similar way. The longer that users stake maBEETS for, the higher the share of emissions they receive.

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Token Distribution

The INTX token has the following distribution:

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Trader Incentives

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20 million INTX are devoted to trader incentives, with a release schedule of 3 years.

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3 million INTX will be retroactively airdropped to users who were active on the platform during its open beta period. These 3 million INTX will be claimable in the form of xINTX. This initial beta airdrop will be proportional to, and based on, the total volume traded and PnL during the open beta period.

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17 million INTX will be distributed to reward top traders on the IntentX full launch. The emission schedule of these 20 million tokens looks like this:

2 million INTX will be allocated to market makers (ie, solvers), to incentivize growth of the solver network.

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Treasury

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The IntentX treasury is allocated 15 million INTX (15%) with no vesting requirements. The allocation will be used to promote the long-term growth of the project including:

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• Liquidity incentives as DEX bribes to deepen INTX liquidity.

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• A strategic treasury swap with SYMM to align long-term interests, which will be completed at TGE. 1,408,128 (1.4%) INTX Tokens will be swapped for 8,800,800.75 (1.0%) SYMM Tokens.

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• Staking a portion as xINTX to generate long-term income for further development.

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• Marketing, grants, partnerships, and exchange listings.

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The treasury tokens, while technically liquid, will not form part of the circulating supply until utilized. They will remain liquid to quickly and easily allocate toward the growth of the project.

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Team

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The team allocation is 20 million INTX (20%) and has a 24-month linear vest. Upon vesting, the team tokens are claimable in xINTX, therefore incurring a redemption fee at unstaking.

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Seed Round

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Seed investors have been allocated 20 million INTX (20%) with a shorter, 12-month linear vest. Again, these tokens will be claimable in staked xINTX.

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IntentX raised $2.5 million in their seed round led by Magnus Capital, which saw participation from Prismatic Capital, Agnostic Fund, MS2 Capital, Coral DeFi, Contango Digital Assets, Castle Capital, as well as other angel investors and funds.

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Strategic Round

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Strategic round investors have been allocated 10 million INTX (10%) with a shorter, 12-month linear vest. Again, these tokens will be claimable in staked xINTX. The strategic round was led by Selini Capital, with participation from Orbs, Mantle Ecofund, Mirana, Kronos Research, and Manifold Trading.

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Token Generation Event (TGE)

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The TGE will distribute 10 million xINTX tokens (10%). These 10 million will be claimable in staked xINTX with no vesting.

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Advisors

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Advisors to the projects have a 3 million INTX (3%) allocation, which will entail a 6-month cliff from TGE, followed by a 2-year vest.

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Liquidity Seed

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At TGE, 2 million INTX (2%) will be paired with stables for seed liquidity on a host DEX.

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Emissions Schedule

29% of the INTX tokens will be circulating immediately post token launch. One year later, just under 75% of the INTX supply will be circulating, meaning there is high inflation in the first year. Past the 12-month mark, the rate of inflation decreases, with the remaining ~25% of tokens coming into circulation over the following 2 years.

Team

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The IntentX team is comprised of 12 core team members, 6 of whom are engineers. The team, particularly the cofounders, have a strong background in the DEX and DeFi space.

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Levy: Founder, working on the business side. He’s been in crypto since 2016 as an investor and trader, both discretionary and algorithmic. He has a background in the vAMM space and experience at Solidly DEX as a researcher and contributor.

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Roux: Co-founder and CTO, with an enterprise background at OpenWare solution OpenDAX, specialising in a hybrid orderbook exchange model with shared liquidity between clients.

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Moab: Smart Contract Engineer.

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Lemon: Full Stack Developer and Security.

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Nark: Back End Developer.

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Morbid: Front End Developer.

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0xZeta: Lead Designer.

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Fenrisal: Product Manager.

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Rens: Marketing.

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Apart from the core team, IntentX has 5 advisors:

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Advisors:

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-Lafa: Founder of SYMMIO, an intent infrastructure provider.

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-Murad: Founder of STFX, a DeFi and SocialFi protocol that allows users to co-invest in vaults created by other users.

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-Humble DeFi Farmer: Currently works at LayerZero, previously an engineer at Amazon and Coinbase and on the liquid side at ROK Capital.

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-Huf: Founder of Pear Protocol, a DeFi protocol that allows users to put on pair trades.

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-Ace Da Book: Co-founder and CIO at Four Moons Capital.

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Roadmap

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IntentX launched its platform on November 15th, 2023, beginning with phase 1: the public Open Beta. This initial phase is currently available on Base L2, allowing users to engage with the core functionalities of IntentX. During this phase, users can earn xINTX tokens through a retroactive airdrop, based on their trading volume. For this, 3,000,000 INTX tokens are allocated, with fair distribution ensured by anti-sybil measures. Airdrop points are allocated daily, tied to users' trade volumes and referrals. There is no need for registration to participate in the airdrop.

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Concurrently, phase 2: the xINTX Token Generation Event (TGE). This phase features the launch of xINTX, which operates on a first-come, first-serve basis and is hard-capped. A total of 10,000,000 xINTX tokens (representing 10% of the total supply) are available during this event, with contributions being made in ETH. This phase not only continues the momentum of the Open Beta but also initiates the xINTX trader incentive program, which is set to emit 20% of the total supply over the next three years.

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Currently, IntentX has achieved all its planned milestones for Q4 2023 and Q1 2024, and is now focusing on its Q2 2024 roadmap, which includes several key launches. The planned initiatives for the upcoming quarter encompass the TGE, the introduction of xINTX staking, and expanding the platform's presence through multi-chain deployment on networks such as Mantle and Arbitrum. Additionally, the platform has recently rolled out advanced order functionalities, including stop-limit and stop loss orders, as well as funding rates to facilitate the turnover of inactive open positions. In the near term, IntentX plans to implement a comprehensive analytics dashboard and enhanced trader tools. Another significant development in progress is account abstraction, aimed at optimizing the trading experience.

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On the platform side, developments are underway to enable scaling of open interest (OI) with improved capital efficiency. This involves setting up vaults to support market-making activities using liquidity pool resources, similar to the Hyperliquid HLP concept. Concurrently, there are ongoing efforts to enhance the efficiency of current solver systems.

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Competition Analysis

Derivatives trading volume is largely dominated by centralized exchanges, which benefit from a cycle of high liquidity attracting traders, which in turn brings more liquidity. This dynamic poses a significant challenge for DEXs, which often struggle with lower liquidity, leading to higher slippage and fees. This environment makes it difficult for DEXs to attract liquidity without a substantial existing trader base, and vice versa, creating a liquidity conundrum.

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In addressing these challenges, various models have been developed, each with its own set of strengths and limitations. Order book-based protocols provide market transparency and efficient price discovery, key attributes for traders who prefer control over their trade prices and direct interaction with the market. They enable an environment where buyers and sellers can directly place orders against each other. However, these models face significant challenges, particularly in blockchain environments like Ethereum, where throughput limitations are a critical constraint. To address these issues, some protocols have moved operations off-chain or to specialized blockchain infrastructures to manage the transaction speed, which raises concerns about centralization.

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AMMs have automated the market-making process with liquidity providers depositing funds into pools for facilitating trades. While they offer simplicity and the ability to provide continuous liquidity, AMMs depend on external incentives to attract lenders for necessary leverage. They also struggle with price discovery, often requiring integration with external liquidity venues and reliance on oracles. A significant downside of AMMs is the absence of a derivative price, leading traders to bear borrowing costs for leveraging positions.

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vAMMs represent a novel approach by creating virtual tokens for trading, thereby reducing the initial need for traditional liquidity providers. This model allows for high leverage and innovative liquidity provision methods. However, vAMMs also encounter challenges like slippage in virtual reserves and the need for complex mechanisms to align market prices with real-world values, often depending on oracles. While vAMMs bring certain efficiencies and flexibilities, they confront issues in maintaining stable pricing and managing the risks associated with high leverage.

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In contrast, the intent-based architecture merges the liquidity advantages of centralized exchanges (CEXs) with the security benefits of decentralized exchanges (DEXs). This model offers the liquidity aspects of CEX trading – deep liquidity, seamless execution, tight spreads, and low fees – while retaining the trustless and permissionless benefits of DEX trading. It transforms the traditional Request for Quote (RFQ) process into an “automatic market for quotations” (AMFQ) system, where market makers respond in real time with customized quotes to traders' stated intentions. This results in a more efficient and user-friendly trading experience.

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The intent-based architecture distinguishes itself in the decentralized derivatives market with high leverage, a variety of trading pairs with deep liquidity, and competitive fees. It enables capital-efficient trading, contrasting with traditional order book systems where market makers' orders represent a commitment of capital. Additionally, it optimizes price discovery by acting as a derivatives liquidity aggregator and minimizes the price impact of large trades. The architecture operates with reduced reliance on oracles and ensures transparent risk management within its bilateral agreements, facilitating a clear exchange of risk and automatic liquidation in cases of insolvency.

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Hyperliquid

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Hyperliquid is a central limit order book (CLOB) based perpetuals DEX. The DEX resides on Hyperliquid L1, a dedicated Layer 1 blockchain utilizing Tendermint consensus protocol, designed to manage orders, cancellations, trades, and liquidations, all occurring on-chain with low block latency. Currently, the chain can handle up to 20,000 orders per second.

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As of March 2024 Hyperliquid has a TVL of $339M, and has traded a cumulative volume of $119B over the past 10 months. Over the past month, Hyperliquid has averaged more than $14B in volume per week. Hyperliquid’s success has come from their ability to quickly list new tokens, even those not trading yet (such as JUP), and their rewards and referral program. As part of Hyperliquid’s points program, which started on November 1, 2023, Hyperliquid is distributing 1M points weekly to users, to incentivize volume. Although the team has not released information regarding the token yet, it’s likely that their governance token will be distributed pro-rata to Hyperliquid users based on their points.

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GMX:

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GMX is an AMM-based decentralised perpetual and spot exchange built on Arbitrum and Avalanche. Since its launch on Arbitrum in 2021, GMX has processed a total volume of $193B on Arbitrum and Avalanche combined.

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As part of GMX v1, traders could trade ETH, BTC, LINK and UNI against the GLP pool. Liquidity providers in GLP take the opposite side of trades that traders take. With GMX v2, individual liquidity pools were launched. In contrast to GMX v1 where liquidity providers in GLP had to hold a broad basket of assets, with GMX v2, LPs can choose assets they wish to hold. However, like v1, LPs still take the opposite side of trades, and therefore can incur losses.

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As of March 2024, GMX has $600M in TVL. Notably, GMX TVL is larger compared to non-AMM based protocols (such as Hyperliquid and IntentX), since these protocols do not rely on locked liquidity to facilitate trades. GMX has averaged above $1.6B in volume per week since January 2024.

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One of the main reasons for GMX’s early and continued success has been their tokenomics. As part of GMX’s tokenomics, users can stake GMX for esGMX and earn real yield in the form of ETH, which is generated from platform revenues. IntentX will likely benefit from simliar tokenomics, with xINTX holders (staked INTX) receiving 100% of platform revenues in the form of USDC.

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Vertex Protocol

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Vertex Protocol is a DEX on Arbitrum, which offers spot trading, perpetuals, and a combined money market. It’s a hybrid central limit order book and automated market maker protocol, where liquidity pool markets from the AMM contribute to the order book.

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Vertex has an entirely on-chain trading platform and risk engine, and an off-chain sequencer to create a hybrid orderbook-AMM decentralized exchange. The off-chain sequencer acts as a high-speed orderbook, quickly matching orders sent to the protocol layer. Vertex's on-chain clearinghouse merges perpetual and spot markets, collateral, and risk assessments into one cohesive system.

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Vertex’s native governance token is VRTX. By staking VRTX, users contribute to the safety of the Vertex ecosystem and in return, generate a voVRTX score. This system not only rewards users for various levels of contributions but also for their long-term participation in the protocol. The voVRTX score serves as an incentive boost for stakers, with the boost amount being proportional to the duration of their VRTX staking.

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Additionally, staking in the Insurance Fund not only provides a yield but also enhances the voVRTX score, thereby contributing to the overall health of the protocol. Moreover, long-term contributors can earn rewards from trading fee revenue, with the amount being proportional to their voVRTX score.

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As of March 2024, Vertex has $81.69M in TVL. Since launch, Vertex has had over $70B in cumulative volume, and has averaged more than $2.5B in volume per week over the past month. Notably, Vertex has had an ongoing trade to earn rewards program since November 2023 - which led to increased volume and liquidity on the protocol.

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There are dozens more perpetual trading platforms in the market; far too many to list in this report. The above overview frames a selection of different models, with the above chart of trading volumes showcasing market leaders.

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Potential Catalysts / Narratives

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CEX Crackdowns

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One trend we have seen play out over the past 2 years is the increasing market share of DEX exchanges as opposed to CEX exchanges. This has happened for many reasons - improving UI/UX on DEX, regulatory crackdowns on CEX’s and users preferring to use non-custodial services.

A key theme we find is the incessant crackdown on centralised venues, from Huobi’s shutdown in China in 2021, to mandatory KYC across all relevant exchanges and most recently the SEC indictment into Coinbase, Binance and Kraken. IntentX offers a global exchange with no KYC or geo-blocking and as authorities clamp down on centralised providers, participants migrate to open systems.

Product Market Fit via Listings

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One of IntentX’s greatest strengths versus competing perpetual exchanges is their ability to quickly deploy new markets.

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Exchange models such as GMX utilise a pool-to-party model where the pool of assets (GLP) is the counterparty to traders. Due to a variety of reasons, including oracle manipulation and centralised exchange market manipulation, this model cannot add the long tail of alts into the pool and thus trading pairs remain limited to the most liquid markets. We saw this market manipulation and systematic gaming of the GLP system occur when a user manipulated the price of AVAX on CEX’s to take profitable positions on GMX with GLP as the counterparty.

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The other predominant model we see on-chain is the CLOB, with leaders such as dYdX taking the lion’s share of perp DEX volume. Despite launching in July of 2017 (on Ethereum L1), dYdX only serves 34 markets. This is largely due to the cost of liquidity - CLOBs pay a lot of money in token incentives to market makers to support liquidity and therefore, the higher the number of pairs, the higher the cost.

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Market makers on IntentX simply quote prices instead of committing capital into a maker order. After an intent is submitted, a market maker delivers just-in-time (JIT) liquidity to fill the position. In this sense, the adding of a new trading pair is seamless and entirely on the solvers side; to list a new market, the solver simply starts quoting a new asset that they’d like to offer. The main constraint for listing new markets is therefore the market makers ability to find secondary markets to hedge their book, which isn’t much of a problem since most liquidity is off-chain. Currently, IntentX’s primary market maker Rasa Capital is hedging via Binance, so any pair listed on Binance can be added seamlessly.

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IntentX could find product-market fit by quickly deploying high volume and high interest perpetual markets to satiate the more ‘degen’ side of crypto trading. We have seen this play out with Aevo, who have pioneered pre-listing perpetuals and as such have attracted a lot of volume. IntentX is positioned well to capture this volume and mindshare with their 188 total trading pairs listed and their ability to quickly add markets (as we have seen with BONK & JTO).

Referral Campaign

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Marketing and referral links have proven to be powerful tools for driving the growth of trading platforms by attracting new traders and boosting transaction volumes. The success of this approach is evidenced by the significant achievements of platforms like FTX, Binance, and more recently GMX, which have all seen their communities and trading volumes flourish thanks to the effective use of referral systems. IntentX’s adoption of this proven marketing strategy could very well set the stage for a similar trajectory of success, leveraging the power of their user base to expand reach and enhance platform vitality.

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Up until TGE, referred accounts get 15% bonus on rewards and referrers get rewards on 15% of their trade volume. This will be claimable in xINTX post TGE.

Value Accrual to xINTX

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IntentX’s native token, INTX, has strong value accrual mechanisms via its staking function. Since 85% of platform revenues accrue to xINTX holders in the form of USDC, the INTX token generates a sustainable yield.

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From our xINTX yield sensitivity analysis, we can estimate that a reasonable yield can be generated from staking INTX. At TGE for example, assuming $20M per day in volume, a 3bps open fee, 40% of INTX circulating supply staked and a price of $1 per INTX (i.e., $100m fully diluted valuation), the APY a user can expect from staking their INTX would be 18.9%. This includes fees from Intent-X trading only. When factoring fees from its front-end partners, APY can be expected to be higher.

Bull Market Volume and Increasing Market Size

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As market sentiment has improved over the past several months, derivatives and perpetual volumes across decentralized exchanges have increased. Compared to January 2023, weekly volumes across decentralized derivatives exchanges have quadrupled (from approximately $5B to $20B). Increased derivatives volumes lead to increased fees earned by protocols. Since IntentX returns 85% of revenue to xINTX holders, this would lead to increased fees earned by holders.

Risks

Smart Contract Risk

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IntentX, like all decentralised applications, faces the risk of exploitation due to the nature of smart contracts. Even some of the most battle-tested dApps (e.g., Curve and Aave) have had serious vulnerabilities and exploits.

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IntentX has taken steps to diminish this risk by utilising SYMMIO-Core v0.81 contracts for trade settlement which have undergone a full Sherlock Audit. IntentX’s staking and token contracts are audited by Quantstamp. Once IntentX’s contracts are published, they will hold a bug bounty.

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Pseudonymous Team

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The team is pseudonymous. While this has worked out for some projects, especially given the current regulatory climate, it typically means the team is able to walk away from the project or pursue other goals easier. We saw that throughout 2022 where many pseudonymous teams wound down their projects or slowly stopped contributing.

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Competition Risks

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The perpetual DEX derivative landscape is highly competitive, with clear leaders taking the lion’s share of trading volume. dYdX, with their new implementation as an app-chain, continues to process the most volume as they transition from v3 to v4. GMX continues to be one of the best venues to facilitate large BTC & ETH trades on-chain. In this sense, IntentX has an uphill battle to gain market share from the incumbents and since the underlying technology of SYMM can easily be built upon, IntentX may face fierce competition from similar protocols if they start achieving success. Currently, three other protocols are building on top of SYMMIO:

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-Thena is building ALPHA, a perpetuals trading platform on BNB Chain.

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-Based Markets is building a perpetuals trading platform on Base, an Ethereum Layer-2 solution built by Coinbase.

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-Pear Protocol is building a pairs trading protocol which offers users low-margin long-short trades.

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To minimize potential competition risk, IntentX announced that they will be offering a front-end-as-a-service product.

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Regulatory Risk

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IntentX faces regulatory risk, like most of DeFi and crypto exchanges. Throughout 2022 and 2023 we have seen a concerted effort by regulators to enforce legal action against the top centralised exchanges, most recently with Binance agreeing to pay a $4B fine. Further, we have seen a CFTC issue orders against operators of three DeFi protocols for offering illegal digital asset derivatives trading. It is clear the regulatory environment in the US for DeFi projects, specifically derivative and spot exchanges is not welcoming. Although IntentX is a global exchange, crackdowns in key regions could stunt their growth via IP bans and regulatory action.

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IntentX’s tokenomics are attractive since they are value accruing, however this is a double-edged sword. Protocols with value accruing tokens may be targeted by regulatory agencies. The underlying mechanics of the aggregation and distribution of yield could break securities law.