How to Trade on YFX V4 Protocol
What is YFX DEX?
Launched in June 2020, YFX draws its roots from the fundamental mathematical expression y=f(x), encapsulated in their motto “In Math, We Trust; In Blockchain, We Trustless.” This platform is a pioneering force in the realm of decentralized perpetual exchanges.
Evolution of YFX
Since its inception, YFX has undergone significant development, evolving through four major iterations by 2023. It now operates under a community-driven governance model, with key figures like the community representative, 0xEuler, playing a pivotal role alongside a team of adept developers. This transformation aligns with the rising demand for decentralized financial solutions, particularly in perpetual contracts, leading to the launch of their latest innovation, the V4 version.
The YFX V4 Protocol
The YFX V4 version stands as a sophisticated framework within the perpetual protocol landscape, distinguished by its low-cost, high-efficiency trading environment. This version enables both traders and liquidity providers to leverage up to 200x, thus significantly enhancing capital utilization within the platform. Additional features like the Premium Index and Market Price are designed to maintain equilibrium between long and short positions. Moreover, the introduction of an earning system and a referral program allows participants to accrue YFX tokens at minimal costs while enjoying commissions at a rebate rate of up to 75%.
How to Trade Perps on YFX V4
To get started, go to YFX.com and launch the v4 app.
Connect your web3 wallet. In this demonstration, we are going to be using MetaMask.
YFX allows users to trade USDC perp contracts, so first I’m going to swap some USDT for USDC.
Now that we have some USDC available, let’s go ahead and take a position. We are going to use $10 to take a LONG position.
Give your wallet the necessary permissions and set your spending cap.
Pay the gas fee.
You can also verify the approval on the Arbiscan block explorer.
Now we can go ahead and place our LONG.
On the dashboard, you’ll be able to clearly see the leverage and be able to adjust it, you’re also able to see the fees you’ll pay for the transaction, the liquidation price, entry price, slippage and more before confirming your trade. 
Give your wallet permission.
Pay the gas fee.
Our position is confirmed and since we placed a market order the order will open on our entry price.
YFX offers Hedge mode, where you can open a counter trade which means you can open LONG and SHORT positions simultaneously.
So in this demonstration, we’ll also open a SHORT positions.
The process is similar, we have to give our wallet permission to interact with the YFX smart contracts.
Set the spending cap if you want to control how much you can spend on each trade.
Confirm your position.
Pay the gas fee.
You can see here that we now have taken two market order positions LONG and SHORT.
If you prefer to make a LIMIT order, the process is the same, just select ‘limit’ instead of ‘market’ when placing your order.
In this demonstration, we take a short limit order position.
Confirm your LIMIT order.
Pay the gas fee.
You can verify your transaction on the block explorer.
Features of YFX V4
PvPool Trading Mechanism
First introduced in 2021, the PvPool trading mechanism allows direct interactions between traders and liquidity pools, a model that has been adopted by numerous mainstream perpetual protocols today.
Single Asset Pool
For liquidity providers, the platform supports both linear (USD-Based) and inverse (Coin-Based) contracts within single-asset pools, eliminating concerns about impermanent loss.
Leveraged Liquidity Pool (LLP)
The V4 update introduces the Leveraged Liquidity Pool, which allows liquidity providers to engage with up to 100x leverage, maximizing capital efficiency significantly.
How to add Leveraged Liquidity
Go to the pools tab.
Choose the amount of leverage. The winning rate could be higher than actual trading. You can also see how much YLP you will receive.
Pay the gas fee.
You can also confirm the transaction on the block explorer.
You can see your open LP positions on the dashboard.
LPB-AMM
A novel addition in YFX V4 is the LP Balance Automated Market Maker (LPB-AMM), where trading depth is influenced by the balance within the liquidity pools, enhancing or diminishing trading conditions based on the liquidity available.
Diverse Earning System and MPC Wallet
The platform now supports a multi-faceted earning system where actions like trading and liquidity addition are rewarded. The integration of Multi-Party Computation (MPC) wallets further lowers the barriers to entry, making decentralized finance (DeFi) more accessible through familiar interfaces like email and social media platforms.
$YFX Token
YFX Token and Economic Model
Introduced in May 2021, the YFX token is central to the platform’s utility and governance. Token holders benefit from staking mechanisms, earning 30% of transaction fees and participating in crucial governance decisions. The YFX ecosystem also includes mechanisms for fee distribution, such as regular buybacks, burns, and ETH distributions to the community through mining operations.
Why Opt for YFX?
YFX is not only a leader in decentralized trading mechanisms but also emphasizes security and user experience. Its contracts are open-source and audited, ensuring robust security measures are in place. The platform offers seamless trading without the need for registration or KYC, supports a wide range of cryptocurrencies, and provides advanced order types including limit orders and stop-loss/take-profit options.
YFX V4 Referral System
YFX V4 allows for up to 70% rebates and 20% discounts on trading fees. Channels that align with our criteria can apply for the Genesis Referral Nodes.
For details on the referral rebate system, refer to: https://docs.yfx.com/yfx-v4/referrals
Earning System
Prior to opening the earning (Mining) system, we aim to verify the robustness of YFX V4’s trading system. The earning system will commence once total trading volume exceeds $100,000,000, with an official announcement specifying the start time.
The new earning system will reward participants of V4 with 10M-15M YFX over the next six months and will utilize part of the trading fees for the buyback and burning of YFX. The detailed mining regulations will be disclosed later, including:
- Staking YFX (using YFX for mining)
- Trade Mining (utilizing UTP from trading for mining)
- Position Mining (earning rewards by maintaining positions)
- LP Mining (earning rewards by providing liquidity)
- Lock YFX (staking YFX for a designated period for mining)
For more details on the Earning System, please visit: https://docs.yfx.com/yfx-v4/earning
Developed over three years, YFX V4 is a highly community-driven iteration. All revenues are returned to the community via rebates or mining rewards.
Conclusion
YFX’s continual evolution and its latest V4 version offer a comprehensive solution in the decentralized finance space, characterized by enhanced capital efficiency, a robust earning system, and a user-friendly approach to DeFi trading. As the platform progresses, it remains committed to innovation and community-driven development, paving the way for a more inclusive and efficient blockchain-based financial system.
