Equiteez’s Proactive Market Maker (PMM) and Liquidity Pools

Traditional financial markets often rely on centralized market makers—financial entities that continuously buy and sell assets to provide liquidity and establish consistent pricing. However, regulatory constraints, third-party control of user assets, and the inherent limitations of centralized systems have prompted Equiteez to develop a more dynamic, decentralized approach to market-making through the Proactive Market Maker (PMM).

Equiteez’s Proactive Market Maker is an advanced algorithm that makes it easier than ever to trade ownership in tokenized real-world assets (RWAs), such as real estate, bonds, insurance-linked securities, commodities, or other valuable investments. With the PMM, you can buy, sell, and earn yields on these assets in a way that feels as seamless as trading stocks or cryptocurrencies. This algorithmic DEX reimagines market liquidity through DeFi principles, allowing users to contribute either RWA tokens (as base tokens) or stablecoins like USDT (as paired tokens) into a liquidity pool. This setup democratizes automated market-making, transforming a traditionally exclusive institutional function into an accessible and transparent process for all participants. It enables users to earn additional yields with full transparency and no lock-up periods.

How It Works:

Equiteez’s PMM leverages liquidity pools, which are baskets of assets provided by users to facilitate the automatic buying and selling of tokenized RWAs. Here’s how it all works:

• Instant Trades: Once assets are initially deposited in the pool, the PMM exchange enables users to buy and sell tokenized assets using USDT, enabling instant transactions. Unlike traditional limit orders that require waiting for a match, market orders executed through the PMM are fulfilled immediately.

• Stake To Earn Yield: By staking (or lending) your assets into the liquidity pool, you can earn additional returns. The algorithm charges users a small fee for executing trades, and a portion of these fees are distributed as yield to liquidity providers like you, allowing you to earn additional passive income from your staked assets.

Key Features of the PMM

• Staking and Liquidity Pools: Participants can stake their assets into liquidity pools, where the PMM algorithm utilizes these funds to allow instant trades. A safeguard mechanism ensures that no more than 20% of a property’s token supply can be staked in any pool, preventing liquidity concentration and maintaining overall market stability. However, the income model is dynamic, meaning a participant's exact asset ownership can fluctuate as tokens are traded within the pool.

• Dual-Income Model: One of the most innovative aspects of the PMM is how it manages dividend income for staked asset tokens. Participants earn both dividends and staking yields for compounding yields.

• Full Transparency: The platform provides complete transparency in all processes, with open-source code enabling users to verify and audit the system themselves. Fees charged by the PMM are clearly displayed during trade confirmations, and users can see potential slippage for large orders. The system also displays staking yields for each liquidity pool, enabling participants to make informed decisions. This open approach ensures that users have full visibility into both the platform's functionality and financial parameters.

How the DeFi Model Works

Instead of relying on a single institution to provide liquidity, Equiteez uses a decentralized finance (DeFi) model. In traditional markets, a market maker (like a brokerage) ensures there is always liquidity for buying and selling assets. But in the Equiteez system, the PMM exchange plays that role.

Here’s how it works:

• The liquidity pools are funded by users who stake their assets.

• The PMM automatically enables swaps between RWA tokens and USDT, enabling instantaneous transactions for buyers and sellers.

• In return for providing liquidity, you earn passive income from trading fees generated by the exchange.

Important Note: Equiteez never has access to staked funds, and stakeholders always remain in control.

By integrating RWAs with DeFi, Equiteez offers a decentralized way for people to trade real-world assets without relying on traditional intermediaries, thereby reducing costs, increasing security, and providing opportunities for everyone.

Liquidity Pools vs. Market Orders

Liquidity pools allow for the instant swaps of tokenized RWAs at market price, whereas Limit Orders allow for trading at predetermined prices. Here's a breakdown:

• Market Orders (Swaps): If you want to buy or sell RWA tokens quickly, you place a market order. The PMM will automatically execute the order by using liquidity from the pool. Market orders are fast but may experience slippage, where the price can shift based on the size of the order compared to the available liquidity in the pool.

• Limit Orders: If you prefer to set a specific price for buying or selling, you can still use traditional limit orders on the OrderBook DEX or the OTC Markets. The PMM doesn’t currently interact with limit orders but may do so in future versions for more flexibility.

Note: Slippage is important to remember, especially if you're placing a larger order. It’s always good to be aware that the price may shift depending on the available liquidity in the pool when executing large trades. If your order size will encounter slippage, your order preview will display that. Consider using the OrderBook DEX or OTC Market for larger trades.

Earn Yield with Liquidity Pools

By staking your assets in liquidity pools, you can earn additional yields on top of any rental income, dividends, or royalties your tokenized RWAs generate. Here’s how it works:

• Stake RWA Tokens or USDT: You can contribute tokenized RWAs or stablecoins like USDT to the liquidity pools. Unlike most DEXs that require you to stake an equal amount of tokens from both pairs (token + stablecoins), Equiteez allows you to stake RWAs, stablecoins, or both for additional returns.

• Earn Trading Fees: The PMM charges a small fee for facilitating trades. These fees are then distributed to liquidity providers like you, so you can earn passive income on your assets, even without buying or selling anything.

Risks & Rewards

While staking in liquidity pools offers great potential returns, there are some risks involved:

• Impermanent Loss: When you stake tokens in the PMM, your ownership in these assets may fluctuate as the assets are bought and sold in the pool. This is known as “impermanent loss” as the ownership balance fluctuates as assets are traded, and is not permanent unless the liquidity is withdrawn from the pools. This can cause changes in the rental income or dividends you receive, depending on the amount of tokens you hold in the pool. Make sure to check your balance prior to withdrawing from staking.

• Early Withdrawal: In order to ensure stability in the liquidity pools, there is a minimum staking time required for deposited funds. If a withdrawal is conducted prior to the allotted time, there may be penalties for early withdrawals.

Even though your returns may fluctuate temporarily, staking allows you to benefit from both asset appreciation and trade execution fees, creating a balanced and potentially lucrative investment strategy. Equiteez’s system is designed to help prevent volatility and encourage long-term staking, which benefits everyone in the liquidity pool.

Final Words

By staking your asset tokens or USDT, you can earn additional returns on top of any income (e.g., rent, dividends, or royalties) the asset may already generate. The PMM distributes a portion of trading fees back to liquidity providers, giving you a steady stream of passive income. You can buy and sell asset tokens instantly through market orders, without ever needing to interact with centralized third parties. You can lend your assets (whether property tokens, commodities, or USDT) to liquidity pools to earn additional yield, even without buying or selling any tokens.