The MetaDEX: Fulfilling DeFi’s Original Promise | Alex Cutler - Dromos Labs

All right. Hello. Uh, good morning everyone. Hope you've had a good ETH Denver. I don't know about you, but I'm exhausted and uh, ready to go somewhere a bit warmer, but uh, thanks for coming and joining for uh, one more session here.

Uh, I'm Alex. I'm the CEO of Dromos Labs and we are the core contributing development company behind Aerodrome and Veladrome. Uh so these two exchanges are both built on metadex02 and they dominate their respective ecosystems and this year uh very exciting they will be coming together as Arrow and Arrow is designed to be the unified liquidity layer for all of Ethereum. So today, what I want to talk about is how we got here and give you a little bit of a preview uh for what's coming up next here. So by the end of these 15 minutes we have together, uh I want everyone to be thinking about three things.

Uh first is that onchain systems must deliver maximum value to their users. It's not just the main competitive advantage that exists in this new onchain era, but it is the only way to align all the stakeholders of systems like these. Second, liquidity is essential to the onchain economy. Decentralized exchanges should not be just thought of as sort of simple applications but actually as liquidity networks and their tokens must be tools for coordinating these networks. Third, the infrastructure that wins in the aenic future uh must be both maximally efficient and built fully onchain with minimal centralized dependencies.

So at Dromos, we don't just see our work as building better products, but better systems, better infrastructure. And everything that we do in our work is guided by a belief that shared systems must create shared value. And we stand against uh centralized value extraction and concentration of power anywhere we see this occurring but especially when it comes to the critical infrastructure of modern society. And that's because we believe as I'm sure all of you do because you're here that there are better ways to build this infrastructure. So that is why we build common infrastructure that delivers uncommon value.

We combine leading technology with economic innovation to give everybody a larger stake in this new onchain economy. And we think this mission is especially critical right now because we are entering a new global economic era. And if we all have anything to do with it, we hope that this is a better economic era because just as the world came online, it is now coming online chain. And frankly, we are still in the earliest days of this. Uh Brian Armstrong, the CEO of Coinbase, recently predicted that as much as 10% of global GDP could move on chain in the next 5 years.

And as you can see here, that would represent a massive order of magnitude increase over the size and scale of our industry today. And I think everybody in this room knows why this is happening and why it will happen. Uh it's because products that are built onchain just like the disruptive digital products and services that came before are better. They're faster. They're cheaper than incumbent solutions.

And as just one tangible example, say you need to convert US dollars to euros. Traditionally, you would have to pay up to 3% in transfer fees and maybe wait 1 to 5 days for that to execute. Well, right now onchain, on base, on aerrrome, you can get execution that is up to 300 times better. We're not talking about the future anymore. We're talking about now.

And the reason that this is possible is because onchain systems and their core technology, the token, represent the biggest revolution to coordination since the very invention of the firm. Because when systems can run autonomously, the distinctions between insiders and outsiders flatten. Everybody from the teams to the foundations to the investors to the participants, they all simply become users. Users of the same shared system. Which means that the systems that will win will be the ones that deliver the most value to those users to all the participants.

And this is fundamentally the thesis that drives us that any industry or any product built on centralized value extraction or frankly any onchain firm that extracts value to teams or insiders will struggle to defend itself against these hyperefficient onchain firms that internalize and distribute value maximally. And this will be especially true uh at one of most one of the most essential layers of this onchain economy. So we've seen this play out over the last 10 years and it is why Ethereum is still the world's computer. And in 2026, I believe we'll see focus shift to the next most essential layer of any economy, the liquidity layer. Decentralized exchanges already generate more value than the EVM chain layer itself.

And I love this stat because I think it's not well known, but last year exchanges generated $5 billion in fees versus EVM chains collectively generating about three billion. And as chains become faster and cheaper, this gulf in value acrruel is only going to widen. And this is because the liquidity layer is as essential to the functioning of this onchain economy as the very chains themselves. Without it, nothing else can happen. And so just like Ethereum, we should expect the winning liquidity infrastructure to be four things.

First, neutral, not competing with other layers, but enabling them. Second, open a network where anyone anywhere can contribute and be rewarded proportionally to that contribution. Third, aligned. Uh the interests of all these different user groups uh need to be aligned by incentivizing behaviors that strengthen the system as a whole. And finally, efficient because better execution will always win.

And this is going to be especially true in this new aenic world. And at the heart of all of these things is the token. At the chain layer, maximally useful tokens are essential. And since we're all ETH fans here, I think this should sound familiar. Ethereum uses its token to coordinate block space and secure the network.

And a functioning liquidity network is actually no different. It requires a tool for coordination that organizes and secures capital, aligns stakeholders, and optimizes the marketplace. And the truth is that for most of the history, DEX tokens have not done this job. And this is where the Metadex comes in. Launched in 2022, the Metadex wasn't just another exchange.

It was a DEX operating system, the technical and economic operating system that powers a liquidity network and is designed to solve the DEX trillemma. Simply put, a winning exchange must align the interests of three critical stakeholder groups. traders who just want the best execution, liquidity providers who just want the best rewards, and token operators who must be rewarded for coordinating the network. And this requires a token that is not an afterthought, that is not slapped on after the fact, but like ETH is maximally useful. a token that when used represents a claim on the full productive value of the exchange and of the network.

And by the way, in our case, this isn't just 100% of the trading fees. These are additional streams like launch payments and liquidity payments. And that claim is continuously redistributed by providing the most value to the system. And for a DEX, what that means is the users who are providing active liquidity. This is who gets the claim on all of that collective value because traders depend on that liquidity.

And this kicks off a sustainable flywheel of growth. Higher rewards attracts more liquidity, which drives better execution. Better execution drives more revenue. More revenue attracts more token operators who direct better rewards back to liquidity providers. And the cool thing about this is every single one of these groups is merely acting in their rational self-interest.

And in doing so, they strengthen the collective network. And let there be no doubt, this system works. Metadex is the first DexOS to dominate legacy exchange models almost anywhere they compete head-to-head without a dollar in VC funding. They have captured a commanding 74% of flows against the category leader and that is the power that comes with aligning incentives and they are also amongst the top revenue generating protocols anywhere onchain. Over the last year, Aerome actually ranked number five in the entire onchain economy just behind Ethereum and Salana.

And yes, they continue to even lead the category leader despite servicing just 1if of EVM today. And in Q2, Metadex's will be getting a massive upgrade with the launch of the all-new Arrow built on our latest DexOS, Metadex03. Arrow is designed to be the first unified liquidity layer for all of Ethereum and it's a step that will take Arrow to a new level of scale transforming it from the leading exchange on L2s into the exchange layer of the entire onchain economy. So I'm going to quickly share some core features. First, we have these all new economic engines.

The air engine will make emissions dynamic and responsive to the market. The rev engine enables new revenue streams for Arrow, fueling realtime buybacks of the token. And the result of this is the air engine reduces inflation while preserving value for LPS. The Rev engine supercharges token buybacks, increasing yield for token operators. And simply, this just means more in and less out.

And according to our back testing, these two engines could reduce realized inflation by a whopping 85%. Second, institutional power. Slipstream V3 will include an upgraded dynamic fee module, Robin Hood Citadel style fee rebates, and the first AMM to internalize me value via auctions built directly in. Third is user experience. With MetaSwaps, Arrow will introduce the first fully unified swapper, bridge, and aggregator allin one, which means users can discover tokens on any chain and swap without any of that complexity and autopilot, which will make it very easy for everybody to automate um and tap into all of these systems.

So under the hood, it all comes back to Arrow. By vertically integrating all of this into a single exchange, expanding across EVM, aligning every market under a single token, Arrow will operate at a scale no other token has ever ever reached. And just to show you the the opportunity scale here, decentralized exchanges generated over 5.5 billion in fees. That's 20 times what Aerodrome and Veladrome generate today.

And if I'm skipping ahead because I know we're out of time, this means the scale of the opportunity for the winner of the exchange layer across EVM is larger than any in the entire industry. In crypto history, no token has ever aggregated multiple verticals and networks in this way. Only chain tokens manage anything close and they are restricted to their individual ecosystems. And because Arrow will remain an open network just like Ethereum, anyone can participate, builders, traders, institutions, all connected by a single economy. So thank you so much.

Uh we will be launching in Q2. And just because you know when you're on a stage like this, you want to drop a little teaser. We have not announced uh everything that will go live with Arrow um in Q2. So please stay tuned.