Problems : Case studies

1. MEV Exploitation in Stablecoin Swaps

Scenario: A trader attempted a stablecoin swap involving $220K worth of assets. During the transaction, Miner Extractable Value (MEV) bots exploited the public nature of the order, effectively “sandwiching” the trade. The result? The trader received only $5K in return.

Impact:

• Catastrophic Value Loss: This drastic drop highlights how vulnerable standard DEX transactions are to MEV attacks and front-running.

• Urgent Need for Trustless Execution: A direct, atomic swap mechanism would ensure that funds are only exchanged when both sides meet the agreed conditions, eliminating such risks.

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2. Cross-Chain Direct Trading: Phantom to MetaMask

Scenario: A user holding a coin on the Solana chain in a Phantom wallet wishes to trade directly with a counterpart who uses MetaMask on an EVM-compatible chain. Traditional methods force the user into using complex bridges or intermediaries, which are often cumbersome and unreliable.

Impact:

• Wallet and Chain Incompatibility: The lack of a streamlined solution for direct cross-wallet and cross-chain trading creates a significant barrier for users.

• Missed Opportunities: Direct P2P swaps would allow seamless exchanges between different ecosystems without the need for multiple steps or third-party services.

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3. Escrow Complexities in Direct P2P Trades

Scenario: Two traders agree on a direct swap. However, due to the complexity and inconvenience of escrow services, one party must send their asset first while the other waits for confirmation. This process leaves one trader exposed to potential default or delays.

Impact:

• Inherent Trust Issues: The reliance on a third-party escrow introduces counterparty risk and delays in settlement.

• Inefficiency and Risk: A fully trustless, atomic swap would enable simultaneous exchange without the need for one party to be exposed to risk while waiting.

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4. High Slippage Due to Low Liquidity on DEXs

Scenario: In markets where liquidity is severely limited, executing a trade on a DEX can lead to slippage rates of several tens of percentage points. Traders attempting to swap even a modest amount may end up with significantly less value than expected.

Impact:

• Costly Trades: High slippage erodes trade value, making it difficult for users to obtain fair pricing.

• Liquidity Fragmentation: A trustless, direct exchange that aggregates liquidity across chains could mitigate these inefficiencies, providing more stable and predictable trade outcomes.

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The FTDX Advantage

These empirical cases underscore the critical shortcomings of current trading methods:

• No Escrow Required: By eliminating the need for intermediary escrow, FTDX's trustless atomic swaps ensure both parties exchange assets simultaneously, reducing risk.

• Fully Trustless Execution: Direct P2P swaps using HTLCs prevent MEV and front-running attacks, as trades only occur when all conditions are met.

• Cross-Chain Compatibility: Seamlessly connect different wallets and blockchains (e.g., Phantom and MetaMask) without the cumbersome bridging processes.

• Enhanced Liquidity: Overcoming fragmented liquidity across platforms, FTDX provides a unified trading experience that minimizes slippage even in low-liquidity markets.

By addressing these critical issues, FTDX paves the way for a next-generation trading ecosystem that is both efficient and secure.