🤖What Issues Does Cadence Solve?

There are two main issues prevailing the DeFi landscape:

1. Liquidity fragmentation

2. UI/UX Inefficiencies

Crypto derivatives account for $3T in monthly volume and 80% of all cryptocurrency trade volume. However, nearly 99% of derivatives trading happens on Centralized Exchanges (CEXs) and less than 2% of these trades are completed on decentralized perpetual protocols, which opens up a massive market opportunity.

CEXs are not without their cons and to name just a few of their many inherent issues:

• Front-running and sandwich bots feed on user’s and their accounts

• Centralization and the covert operations that are only ever uncovered inevitably after its too late

• Constant regulatory pressure, censorship, and KYC requirements that cause shutdowns without much warning and puts users into the crosshairs of their respective governments

• The lack of self-custody which in recent years have only proven the need for true ownership that lies at the very ethos of crypto

• Solvency and Contagion concerns which create ripple effects around the entire industry

Liquidity Fragmentation

The DeFi ecosystem has reached an inflection point. Within the past two years, liquidity has been completely fragmented across chains. Ethereum dominance is down to nearly 50% since 2021 and with new chains popping up seemingly everyday, liquidity fragmentation will only exponentially increase over time.

Protocols and chains are competing for the life source of DeFi – liquidity. As this trend continues to increase exponentially, the entire DeFi space will suffer as traders are forced to migrate to centralized exchanges with higher liquidity.

UI/UX Inefficiencies in Onchain Trading

Furthermore, the repercussions of liquidity fragmentation have severely impacted the user experience of DeFi applications. Currently, in order to trade on a perpetual protocol, users must complete a number of preliminary steps.

Typical User Flow to Open a Trade on an L2

The typical process includes:

1. Finding a protocol that has the liquidity for the specific asset they want to trade

2. Locating a secure bridge

3. Waiting over an hour for their assets to arrive

4. Buying the native token to pay the gas fees (typically on a CEX)

5. Transferring that token to their MetaMask wallet

6. Finally signing multiple transactions to enable the trade

Even for an experienced crypto trader, this is a time-consuming and risky process. For a complete novice, this could take over 8 hours, which often deters them from even entering this space.

Cadence's Solution

The current system is not sustainable or scalable for the the future of crypto. While, on-chain derivatives are primed to grow over the next couple years, existing decentralized derivatives exchanges have fallen short in combating these issues and have been unable to offer a seemless, intuative trading experience where chains, bridging, wallets and all base layer infrastructure is abstracted from the user. Many protocols believe the solution to this is UI/UX design, but it actually is backend architecture design.

Cadence is pioneering novel developments to overcome the current challenges for on-chain derivatives:

1. Liquidity Sourcing, Path Finding and Instantaneous Execution: Cadence's innovative intent-based trading architecture will allow for the unification of liquidity among chains and protocols and offer a simplified trade execution on-chain all at low costs.

2. Redefined User Experience: Cadence will use Account Abstraction Smart Contract Wallets, gas management, fiat on / ramps, simplified user interfaces, and one click trading to drive retail adoption and enable the base layer infrastructure to be abstracted away from the user removing the pain of bridging, swapping, confirming multiple transactions, etc.