I understand this thread is about speculating on the price of Monero, so I will try to explain why I think a strong price discovery mechanism is highly related. (I imagine the OP of this reddit post https://www.reddit.com/r/Monero/comments/kp0hhg/monero_price_discovery_atomic_swaps_exchange/ tried to describe the same problem but I am not sure he was understood)

#1 Relying on other sources for price determination is bad

- If the atomic swaps system (that was funded for development) relies on other exchanges for price determination, the price will not increase even if the volume is high. If 5% of the global volume occurs on Binance, 5% on HBTC, 5% on OKEx and 85% on the atomic swaps system, the price will still be an average of the 15% volume occurring on Binance, HBTC and OKEx (thus all the volume occurring on the atomic swaps system won't have any effect on the price)

- The system wouldn't be fully decentralized as it wouldn't work without the price feeds of centralized exchanges

- Almost all of the recent exploits in Defi occurred because of price oracles manipulations


#2 Building a price discovery mechanism is hard

- Maintaining an order book on a blockchain is not effective because every bids and asks must be published on the chain (on the contrary, it is very easy for a centralized exchange because they just use a database...). On non smart-contract chains like BTC and XMR, this is almost impossible to implement. Even if it was, it would be very expensive (every bid and ask would incur a fee) and slow (you would need to wait for the next block to have your bid / ask validated). Layer2 would solve these problems but Lightning is for payments (not contracts) and no sight of Layer2 on XMR as far as I know...

- If the atomic swaps systems somehow implements a price discovery mechanism, but a clunky one (like on Bisq), buyers and sellers will just end up setting a "price + X%" (based on the average price of other exchanges, thus coming back to problem #1)


#3 AMM on smart contract chains is the way to go at the moment

AMM (Automated Market Maker) is a simple idea that fixed the order book on chain for the moment. It is not perfect (liquidity providers might occur impermanent loss at the profit of arbitragers) but it's the best decentralized solution until layer2 contracts are implemented. Uniswap (and clones) managed to capture huge volumes thanks to this simple idea


#4 A better system will be invented

Right now, all Defi occurs on Ethereum because it's so much easier to develop on. AMM is a temporary fix that will probably be replaced by true order books when a good layer2 solution is implemented. But all volume might shift to yet another chain if Ethereum doesn't scale quickly enough. I just want to insist that building a decentralized exchange with a true price discovery mechanism is not easy: some projects might do it better than others and maybe on chains that don't even exist yet


#5 The case for renXMR

The RenVM is a network of nodes acting as an inter-blockchain bridge (like WBTC but permissionless and decentralized). A tokenized version of XMR on other chains (renXMR on Ethereum for example) would allow us to use the best DEXes out there, in a fully permissionless and unstoppable way. I am not trying to shill Ren here (or Monero on Ren channels) but I am long term hodler of both and I just think that these two should really have a baby... I don't understand why an atomic swaps solution was funded while we might have a better solution with a REN bridge. I believe the price of XMR remained abnormally low because of the trading happening on centralized exchanges (which is defying the purpose of Monero), but atomic swaps don't look like the best way to me (especially after seeing Komodo fail). Note that REN is not even fully decentralized yet (see roadmap) and it's not cheap, but it allows me to use my BTC on the best defi protocols (exchange on Uniswap, earning yield on Yearn, use BTC as collateral on Aave, change for DAI if I want stability, etc...). I would love to do the same with my XMR and use Bisq as a fiat ramp only.


Please don't treat this post as a newbie obsession, I read this forum for a long time (and especially this thread) but I just signed up recently. In a way, I feel lucky I wasn't there at the very beginning or I would have probably gone through KYC like many of you had to. Hopefully, this "virgin" status will save me the day even CBDC's are traded on permissionless/decentralized exchanges! Also XMR is still a bargain right now (especially in BTC) so I don't feel late at all

Thank you, but I am not sure I understand. Do you mean a whole DEX will be built on purpose with its own price discovery mechanism? Would it use an order book or an AMM?

I was reading https://localmonero.co/knowledge/monero-atomic-swaps?language=en but I still don't understand how price discovery will work with atomic swaps. Can someone explain me? Will the system rely on the price of XMR/BTC on other exchanges?

Thanks for your answer.

I was looking for a true decentralized solution but I will take a further look at Nexo anyway.

As you say, I see no EUR derivative on https://coinmarketcap.com/derivatives/ indeed :-(

Hello, this is one of my first messages so I hope I am in the right section.

I don't like trading but I am interested in earning yield on some EUR I have "sleeping" on a bank account. My idea is to convert some EUR into stablecoins (DAI or USDC for example) and put them at work in a defi protocol.

But I'd have to protect this investment against USD / EUR variations. My first idea was to open a leveraged USD/EUR short position on a CFD (Contract For Difference) platform such as Oanda, FXCM or Pepperstone. So I earn via this position in case USD/EUR falls (and vice versa). See https://www.contracts-for-difference.com/strategies/CFDs-hedge.html to understand the technique.

Unfortunaly, most CFD companies available to europeans are located in UK, and new account creations are currently frozen because of brexit...

Do you know any cheap way to hedge USD/EUR in crypto?

If possible, I am looking for a solution as flexible as a CFD which allows me to:
- use leverage to hedge my investment. For example, I can open a 100,000€ position on a CFD with 5,000€ only (using 1:20 leverage)
- gradually decrease/increase the position on the CFD at any time when I decrease/increase the investment in USD-pegged stablecoins

I would love to agree with you. A delist leading to a pump (instead of a dump) would have been a big middle finger to the regulators. Unfortunately, Monero is not ready to live without custodian exchanges yet:

- Bisq is clunky (because it's built like a fiat ramp) and relies on central exchanges for the price determination
- Waves is empty (and I am not even sure it is fully decentralized)
- shapeshift copycats now refuse Tor

We should not show off until we have a true atomic swap solution, or a least a tokenized XMR to be used on other chains for its price determination (like a "renXMR" vs "renBTC" on Uniswap for example)... Until then, only shaddy custodian exchanges will use XMR so the price will be manipulated.

The truth is we knew this day would eventually arrive, but we are not prepared yet.

Other custodian exchanges will most probably delist XMR, just like what they did with XRP. Bisq looks to be the only true decentralized alternative at the moment but it relies on the average price on custodian exchanges with enough volume for the price determination.

How will the true price of XMR/BTC be discovered when XMR is delisted?