Quickly understand Reya Network: How to build a modular L2 optimized for trading scenarios?

Original Title: Why create Reya Network

Author: Reya Network

Compiled by: Hailsman, ChainCatcher

This article is excerpted from the official Reya Network documentation.

Why Create Reya Network?

Reya Network is not just another generic L2, nor is it another meaningless hype narrative. Instead, we address real problems in DeFi scaling that cannot be solved through generic design. As a DeFi OG team, we know what these problems are. Most importantly, we have found ways to solve them.

The most significant limitation of DeFi scaling is the large-scale fragmentation of liquidity that has already emerged, with each new exchange built on generic Rollup competing for a limited supply of liquidity. This leads to shallower markets across all exchanges, harming the interests of traders and market participants. Generic designs also inherit issues like front-running and harmful MEV, and they have performance limitations due to the inability to execute in parallel.

Reya Network changes the way we think about scaling. We believe that a network does not need to be generic but can be optimized for a single use case. By focusing on a single use case, we are not limited to technical improvements but also pay attention to financial logic and liquidity. Therefore, Reya Network focuses on DeFi trading, optimizing for the three pillars of liquidity, capital efficiency, and performance.

The Three Pillars of Reya Network

Reya Network liberates the DeFi application layer by creating autonomous, specialized, and optimized infrastructure to address the following three core pillars:

Liquidity

The capital invested in Reya Network is effectively utilized to support trading through a novel passive liquidity pool mechanism. This design creates instant shared liquidity for all exchanges operating within the Reya ecosystem, enhancing market depth, lowering market entry barriers, and improving the user trading experience.

But the benefits of liquidity go beyond that. By integrating financial logic into the network design, Reya acts as a cross-exchange clearing protocol. This eliminates liquidity fragmentation and allows liquidity to be organized across exchanges as a network.

As market makers can freely share liquidity across exchanges, the growth of the ecosystem enhances the potential trading conditions of each exchange. In this way, we have created the "interoperable liquidity" flywheel for the first time in DeFi.

Capital Efficiency

Margin logic is embedded within Reya Network itself, meaning users have a margin account that can be used across multiple exchanges. In many ways, this creates the first decentralized clearinghouse.

The margin engine logic of Reya Network is the most advanced in the cryptocurrency space, providing traders with up to 3.5 times capital efficiency and offering LPs up to 6 times capital efficiency. Any exchange on the Reya network will automatically inherit this logic as long as it operates on the network.

Performance

Performance improvements are crucial, so we made Reya Network lightning fast. Reya Network has a block time of 100 milliseconds and a throughput of up to 30,000 transactions per second, making it one of the fastest EVM rollups.

Additionally, transactions are executed on a "first in, first out" (FIFO) basis with zero gas fees, eliminating front-running and harmful MEV. This feature is built using the Arbitrum Orbit technology stack. Over time, more optimizations will be made, including continuing to transfer application-specific logic into the network design itself.

The importance of performance cannot be overstated—currently, DeFi accounts for less than 5% of the total cryptocurrency market, partly because it cannot compete with the high performance and robust user experience of CeFi venues. However, when performance improvements are combined with modularity and underlying financial logic, why can't we ultimately capture CeFi volumes and bring them on-chain for the first time? This will not only bring significant trading volumes to DeFi but also greatly enhance the transparency, robustness, and composability of all traders joining our DeFi ecosystem.

The Team Behind Reya

Reya Labs is the creator of Reya Network, operated by a DeFi OG team that has previously launched several successful startups, including Voltz Protocol, which saw its nominal trading volume grow to over $30 billion in just 12 months.

We have the support of some of the most well-known figures in the industry and have raised nearly $10 million from venture capital firms such as Framework, Coinbase, and Wintermute.

Roadmap

Reya Network is a phased revolution.

As a liquidity network, the logical first step is to kickstart the network through the influx of liquidity. That’s why our roadmap begins with the Liquidity Generation Event (LGE) scheduled for April.

After the LGE, we will prove the concept of the Reya Network by deploying a fully functional permanent DEX, Reya Exchange. Reya Exchange will be the first exchange on the network and will serve as a tool to attract more liquidity and traders, creating strong network effects for subsequent exchanges.

Subsequently, Reya Network will open up to other exchanges, ultimately becoming the foundation for the next generation of DeFi.

Liquidity Generation Event

The Liquidity Generation Event (LGE) is the time for Reya Network to guide liquidity before trading begins. Since liquidity is crucial for trading, our goal is to attract as much liquidity as possible.

The earliest LPs will receive XP boosts.

For example:

LPs who deposit into the mining pool first can earn 10 times the yield. This means that instead of accumulating (for example) 50% annualized XP, they earn 500% annualized XP on the capital deposited during that period.

LPs who deposit later may receive 2 times the yield.

If multiple deposits have different boosts, the final boost will be calculated as a capital-weighted average. For example, if you deposit 10,000 rUSD with a 10 times boost and 5,000 rUSD with a 2 times boost, your final boost calculation would be as follows:

LPs will continue to benefit from the capital deposited during the LGE until they withdraw. When withdrawing, you will lose the multiplier on the withdrawal amount (but retain the amount deposited).

• The mechanism is simple; just stake assets to participate in the LGE. Assets eligible for the phase are USDC from the Ethereum mainnet or USDC.e from supported L2s. Other assets will be introduced later.
• Funds on Reya Network are non-custodial and can be withdrawn at any time. A withdrawal button on the dApp is coming soon to improve user experience, but in the meantime, you can withdraw directly from the Reya Network smart contract. However, if you withdraw funds, you will permanently lose the XP boost associated with the withdrawn funds.
• The LGE starts at noon UTC on April 22 and lasts until noon UTC on May 6. Reya Perp DEX will subsequently launch at noon UTC on May 7, which means trading will begin.
• EVM-compatible wallets can be used to connect to the LGE page. Funds can be deposited from the Ethereum mainnet, Arbitrum One, Polygon PoS, and Optimism mainnet.

Related event link: https://reya.network/lge