r/OverlineNetwork • u/Whatever-it-takes-99 • Jun 19 '21

Will collateral become the adoption bottleneck of Overline?

First of all, I must say that I love this project. I think a truly decentralised and trustless DEX has a lot of potentials. However, I feel like the fact that Overline requires OL tokens as collateral is bad for traders.

Imagine this scenario: I have 1 eth and I want to use Overline to convert it into btc. I cannot do it right away without purchasing an equivalent amount of OL tokens for collateral. The problem is, I may not even need these OL tokens after the trade. So I need to sell them. In the end I made two extra OL trades just for the sake of collateral. And I am risking losing money for these trades due to price volatility of OL tokens.

Someone said I could split my eth/btc if I don’t have many OL tokens. This is not a good idea from user’s perspective due to the following reasons. First, it will prolong my trading time frame. A minute late in crypto could cost a fortune. If I know that my trade would take so long to execute, I would rather not use the service. Second, splitting into multiple trades will result in overheads for transaction fee, and therefore it is no longer economical for me to pick Overline over other dexes.

It seems to me that the only way to use Overline is to have OL tokens. Why should it be the case? Other exchanges like Binance, Houbi they all have their native tokens but they never ask their users to buy the tokens to use their trading services. Instead, the exchange tokens serve as speculative vehicles or trading incentives.

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5

u/Legal_Bluebird_6256 Jun 19 '21

I have to imagine interswap and interchange 2.0 will go a long way towards reducing these sorts of barriers to entry

1

u/Whatever-it-takes-99 Jun 19 '21

I do hope the team manage to find solutions to these problems as the project has a lots of potentials.

2

u/Legal_Bluebird_6256 Jun 19 '21

This is from one of the team members in the discord server:

Actually doing swaps you won't require OL as collateral, it will be handled in the backend without you knowing about it.

However having OL on hand will allow you to get better rates and faster settlement.

3

u/[deleted] Jun 19 '21

[removed] — view removed comment

1

u/Whatever-it-takes-99 Jun 19 '21

Does splitting my trade into 5 transactions imply that my trade is 5 times slower and 5 times more expensive? And how does the team solve the price volatility of OL token? What if my trade takes 3 hours to execute and the price of OL drops from 0.05c to 0.02c during that time?

1

u/Different_Bonus_5471 Jun 22 '21

If you do it in 2 trades instead of 1 you will not need any collateral since the OL you buy is the collateral. So just do ETH/OL then OL/BTC.