White Paper 2021

EXPX.finance —
BINANCE SMART CHAIN
LIQUIDITY PROTOCOL
expx.finance

Slava Blockchain

* Our protocol is called expX because of eX grows faster than 10x

 2021

Abstract

EXPX is a new community driven decentralized trading protocol, farming platform and
automatic multi token portfolio manager launched on a rapidly growing Binance Smart Chain
(BSC). It provides incentives for liquidity providers to stake their funds in the protocol pools and
rewards them with governance tokens. In this article, the main principles of the protocol are
described. The principles giving flexibility to the protocol and adding value to the EXPX-token
are explained. Reasons for launching the protocol on BSC and the opportunities this provides
are also described.

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Contents

Introduction 4
What is EXPX 5
Why Binance Smart Chain? 6
EXPX Token and Governance 7
Portfolio balancing 9
Pool factors 10
Roadmap 11

Conclusion 12

References 13

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Introduction

As natively digital assets continue to grow, there is an increasing need for mechanisms of
exchange similar to those found in traditional financial markets. This has led to the growth of
centralized exchanges, and they function as trusted intermediaries in trades often acting as
custodians by storing and protecting user assets.

Over the last decade, a number of designs for automated market makers (AMMs) [1] have
been proposed. Unlike centralized exchanges, AMMs operate in a decentralized manner and
encourage passive market participants to lend their digital assets to asset pools.

Recently, the cryptocurrency community has constructed alternative automated market

makers, known as the constant function market makers (CFMMs) [2].

The advantage of CFMM-based protocols is that they make it possible to carry out exchanges
using several token types. Uniswap, a CFMM, whose pricing mechanism for comparing two
assets is relatively simple, has become an extraordinarily popular decentralized exchange [3].

Different CFMM types could be used for different tasks. For example, CFMMs used in
Uniswap, Balancer, Curve and Shell are quite different. [4]

Balancer has suggested a CFMM implementation allowing the creation of pools containing up
to 8 token types while maintaining a constant ratio of the value of the assets. [5]

The value function V is defined as:

Wt
V = ∏ Bt
t

Where:

• t ranges over the tokens in the pool;

• Bt is a balance of the token in the pool;
• Wt is the normalized weight of the token, such that the sum of all normalized weights is 1

This paper introduces EXPX, a decentralized trading protocol and farming platform based on
the same CFMM. The platform is created with a number of improvements in tokenomics and
with additional user incentives. It is implemented and operates on Binance Smart Chain whose
tremendous growth opens up additional benefits for the development of the protocol.

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What is EXPX

EXPX is a community driven trading protocol, farming platform and automatic multi token
portfolio manager.

As mentioned earlier, EXPX makes it possible to create pools containing 2 to 8 tokens per
pool and to carry out swaps in a truly decentralized fashion. The exchange rate changes after
every swap. It is calculated according to formulas included in smart contracts so that the assets
in the pool remain balanced in accordance with the settings specified when the pool is created.

For example, in a pool with the ratio set at 60% WBTC/20% BUSD/20% BNB, the exchange
rate will be calculated so that the value of WBTC in the portfolio remains constant at 60% of the
total regardless of how many WBTC are left in it.

Arbitrageurs play an important role in the work of the protocol. In case the exchange rates in
the pools start to differ significantly from the market rates, it becomes possible to earn money
on the difference between the exchange rates in our pools and in other DEX or centralized
exchanges. By using this opportunity, the arbitrageurs act as independent market agents and
keep the exchange rates in our pools at market levels.

In this way, the protocol becomes fundamentally useful for the market by enabling its
participants to purchase a certain amount of desired tokens at a market price at any time.

To allow the pools to function and to enable large swaps with minimal slippage, there needs
to be sufficient staked liquidity in them. For this, the protocol offers incentives to liquidity
providers (LPs) to stake liquidity in the pools. All the earnings from swap fees are distributed
among the liquidity providers in proportion to their staked liquidity.
In conclusion, EXPX is a platform facilitating the mutually beneficial cooperation of
participants acting in three different roles:

• Traders: swap tokens in a decentralized manner at market rates while paying a small
swap fee;
• Liquidity providers: stake liquidity into pools, earn swap fees and have their portfolio
rebalanced automatically;
• Arbitrageurs: those who maintain the price of assets within that portfolio in accordance
with the market price in exchange for a profit. Thanks to arbitrageurs, token prices
in pools are very close to those of the market. As such, EXPX could also be used as a
decentralised price oracle.

In fact, staking in pools for LPs is similar to making a bank deposit. If a user has tokens, they
may stake them in pools and earn money. Cryptocurrency exchange rates are very volatile and,
to diversify risk, users often invest in several crypto assets. In this case, they need to manage the
task of tracking the value of each asset and rebalancing their portfolio. Our protocol solves this
problem and makes it possible to earn income by staking the whole multi token portfolio in a
single EXPX-pool and having it automatically rebalanced.

This EXPX-protocol feature is unique for Binance Smart Chain, and offers clear advantages
over PancakeSwap and similar projects.

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Why Binance Smart Chain?

In September 2020, the largest cryptocurrency exchange, Binance launched Binance Smart
Chain (BSC), a competing offering to Ethereum. With about $1 per swap and transactions taking
no longer than 3 seconds, BSC is beyond doubt cheaper and faster.

In recent months, as the value of Ether rose to $3,600, the swap price has risen to as high as
US$200 per swap due to scalability issues of the Ethereum network. Unfortunately, this has
almost paralyzed swap activities on DEXs that rely on it.

This made people seek DEXs and farming projects with lower transaction fees. They found a
viable option on BSC. This has led to a huge influx to BSC projects and at the moment, it has 2 to
3 times more transactions than Ethereum.

This makes BSC an attractive launch pad for projects - even though competition still isn’t too
intense, its transaction volume is already tremendous.

Motivated by these market dynamics, we launched EXPX.finance on BSC.

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EXPX Token and Governance

Our aim is to make EXPX a fully decentralized community driven protocol. For this purpose
we have issued the EXPX token with a voting function. Token holders will have voting rights and
their voting power will be based on the amount of tokens they have. Token holders will be able to
debate, propose, and vote on all changes to the EXPX ecosystem. This makes the platform open
to improvement by its participants.

We will distribute 65% of the total token supply through LPs on a daily basis. Every day for
about 8,5 years, 21000 EXPX tokens will be distributed. We have adopted this approach to
distribute voting tokens among the maximum number of participants who take part in protocol
development.

Token Allocation

0,36M 3,5M 5,0M

DEX Pool Project Reserved
Ecosystem Fund
0,77M
Investors

3,85M
Advisors &
Market

6,52M
Private Rounds

65,0M
15,0M Protocol Users
Team Distribution

• 65 million tokens will be distributed to protocol users of which 21,000 tokens will be
distributed daily in proportion to contributed liquidity;
• 15 million to the team (2 years linear vesting);
• 6,52 million to investors on private round (linear vesting for 1 year and 10% at TGE);
• 3,85 million to advisors and marketing partners (2 years linear vesting);
• 0,77 million to investors on public round (no vesting);
• 0,36 million to the DEX (EXPX/BNB pool) (no vesting);
• 3,5 million to the project ecosystem fund (2 years linear vesting and 10% at TGE);
• 5 million reserved for later protocol development (1,5 years linear vesting).

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We believe that in the first months after launch, the voting function wouldn’t be enough to
stimulate investors to buy and hold EXPX-tokens. With this in mind, we are going to introduce
an EXPX/BNB pool with a 10x daily reward multiplier. To get a larger share in the daily EXPX
reward, participants will buy our tokens from the market. This will increase the utility of the
token as well as its demand which will ultimately drive up the price.

This approach will also increase the value of our daily reward (21000 EXPX) and will stimulate
liquidity providers to stake additional liquidity. We will use a quadratic voting procedure as
suggested by Vitalik Buterin [6].

Pool multiplicators
The situation in the competitive crypto market is very dynamic. Bullish market conditions
could change to bearish market conditions and vice versa. Therefore, the cost of the attracted
liquidity may change and the protocol needs to be able to respond to this quickly.

To encourage the liquidity investment in the pools that the protocol requires at the moment,
we will introduce additional multipliers to some pools. The amount of liquidity staked in the pool
EXPX/BNB will be multiplied 10x during the daily reward calculation.

At a later point, some additional multipliers could be implemented. The value of these
multipliers may be changed to support the sustainable development of the protocol.

At the first stage of the protocol, the decision to change such multipliers will be made by the
EXPX team, and later it will be made using community voting.

We believe that the flexibility given to the protocol by the multiplier mechanism right from
the start is a great advantage making the EXPX protocol superior to others. For example,
Balancer introduced such a mechanism only in V2.

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Portfolio balancing

As mentioned above, EXPX offers up to 8 tokens per pool unlike Uniswap that offers only 2.
Apart from helping to facilitate the swap of assets, the pools also ensure automatic portfolio
rebalancing.

In the world of conventional finance, if an investor wants to keep funds in a certain

proportion, they need to ensure that their portfolio is rebalanced regularly due to constant
changing of market prices. This consumes both time and money in fees.

EXPX enables automatic portfolio rebalancing. The proportion of token weights in the pool
remains unchanged due to smart contracts. Also arbitrageurs are incentivized to adjust token
prices in the pool to match market prices.

The portfolio owner, instead of paying portfolio rebalancing fees, gets profits via swap fees
for transactions using their pool.

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Pool factors

After careful analysis of evolution of existing protocols, we took into account some of the
challenges that these protocols have faced. We believe that for our protocol to flourish, we need
to attract as much liquidity to the pools as possible so that the best conditions for token swaps
through our smart contracts can be created.

Our protocol allows for the pools to be configured very flexibly. It is possible to select the
number of assets, specify their weights and swap fees. However, depending on the pool settings,
the value to the protocol of the liquidity staked in different pools will differ.

Therefore, we are introducing coefficients that take into account the “utility” of the pool for
the protocol. These coefficients affect the share in the daily EXPX Token Reward brought to the
liquidity providers by the staked liquidity.

Ratio factor
Since pools that are imbalanced contribute less to the trading volume (because slippage is
higher), we are introducing the Ratio Factor. This way, highly imbalanced pools (such as those
with 98%/2% weights) have a much lower weight in the final EXPX token distribution.

Fee factor
Since liquidity in pools that have lower trading fees contribute more to the protocol usage
than liquidity in pools with high fees, we propose to multiply the pool liquidity amount by a
feeFactor that weighs down pools according to their fee (in %):

2
feeFactor=e -( fee
2
)
feeFactor
This creates the following 1.00
bell-shaped curve for feeFactor
[7], which means, for example, 0.75
that a pool with a 0.5% fee has 0.50
a feeFactor of ~0.94, and a pool
with a 1% fee has a feeFactor 0.25
of ~0.78:
0.00
0 2 4 6 8 10

fee %

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Roadmap

Our aim is to be the leading Swap platform on BSC with a high trading volume and total value
locked. To achieve this we need to create a number of pools with swap conditions better than
those of our competitors (Pancakeswap, Bakeryswap). For this purpose, we have created pools
with minimal gas transaction fees, swap fees, and slippage.

Highlighted below is the projected roadmap of our project:

Q1 2021
• Connect TheGraph node to BSC
• Launch expX protocol on BSC mainnet
• Attract initial liquidity to the pools
• Launch token swap and Smart Order Routing
• Start governance tokens distribution on a weekly basis

Q2 2021
• Develop a tokenomics
• Finalize WP, marketing materials
WE ARE HERE • Initiate seed investment round
• Pass an independent smart contracts audit
• expX public sale

Q3 2021
• Build partnerships with DEX aggregators (like 1inch)
• Build partnership with existing farm projects
• Develop contributors community. Launch a program to encourage
third-party projects integration with expX (a separate token fund is
allocated for this stage)

Q4 2021
• Launch V2 of expX protocol
• List our tokens on exchanges

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Conclusion

The market of decentralized finance is rapidly growing and developing.

Our main aim is to create a truly decentralized community-driven protocol for this market.

To do so we have carried out extensive research of comprehensive technologies and market

opportunities. As a result, we have implemented a protocol with functionality and tokenomics
incentives unique for BSC.

We believe it will become one of the leading protocols by TVL and swap volumes.

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References

1. Abraham Othman: “Automated Market Making: Theory and Practice” (May 15, 2012)
http://reports-archive.adm.cs.cmu.edu/anon/2012/CMU-CS-12-123.pdf

2. Guillermo Angeris, Tarun Chitra: “Improved Price Oracles: Constant Function Market Makers”
(June 2020)
https://arxiv.org/pdf/2003.10001.pdf

3. Guillermo Angeris, Hsien-Tang Kao, Rei Chiang, Charlie Noyes, Tarun Chitra:
“An analysis of Uniswap markets” (November 2019)
https://web.stanford.edu/~guillean/papers/uniswap_analysis.pdf

4. Dmitriy Berenzon: “Constant Function Market Makers: DeFi’s “Zero to One” Innovation”
https://medium.com/bollinger-investment-group/constant-function-market-makers-defis-zero-to-
one-innovation-968f77022159

5. Balancer Whitepaper
https://balancer.fi/whitepaper.pdf

6. Vitalic Buterin: “Liberation Through Radical Decentralization” (2018)

https://medium.com/@VitalikButerin/liberation-through-radical-decentralization-22fc4bedc2ac

7. BAL Liquidity Mining

https://balancer.gitbook.io/balancer/core-concepts/bal-liquidity-mining

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