Automation and Compounding

What makes Liquid + a stand out amongst other projects is the automation and transparency of any engagment with users. This is made possible through the use of Smart Contracts, and Decentralised Exchanges (DEX's), that lies in the heart of the platform. This allows for safe, and very much automated experience, which includes the compounding of rewards. There is no lock up of any assets - customers are free to remove liquidity (their assets) when they so choose. the process is easy, and immediate.

What Is a Smart Contract?

A smart contract is a self-executing computer program with the terms of the buyer’s and seller’s agreement directly embedded into lines of code. The program, along with the agreement it contains, is distributed across a decentralized blockchain network such as Ethereum or Ontology. A smart contract is automatically executed when certain conditions are met. Once the code is executed, it is virtually impossible to reverse or alter.

Smart contracts enable transactions and agreements to be anonymously executed among two or more parties that do not trust each other, without the need for a third-party authority, justice system or another external mechanism.

A smart contract is analogous to a vending machine, as opposed to a store where you have to pay a merchant to buy. With a vending machine, you don’t have to deal directly with the merchant (vending machine owner) since you can simply transact automatically by inserting coins in the machine and your chosen soda will drop. This direct way of transacting without the need to know or trust who you’re dealing with is what makes a smart contract favourable. In fact, businesses have already started implementing smart contracts in their systems as they provide better protection from losses, as well as make customers feel safe.

What Is a Decentralized Exchange?

Traditionally, trading cryptocurrency requires the use of a centralized exchange. CEXs match the orders of someone who wants to buy crypto with someone who wants to sell, and vice versa. They can be thought of as similar to securities exchanges. But there are several perceived disadvantages associated with traditional, centralized exchanges.

These platforms are owned privately. This means that there is a third party with its own motives and priorities — sitting in the middle of every transaction made.

As a result, these private companies have oversight of those transactions, and collect and hold details on all its customers. This is a direct challenge to one of the cornerstones of cryptocurrency: that there should be the opportunity for anonymity if desired by a user.

Just as importantly, transactions conducted on centralized exchanges are custodial — meaning the platform holds the asset that is being exchanged.

Decentralized exchanges tackle both of these issues, offering theoretically complete anonymity and, crucially, non-custodial transactions. This means the actual asset being exchanged never passes through the hands of an intermediary.

DEXs are seen by many as a vital part of the next wave of development in crypto.