Level 2.0: The Next Frontier in Decentralized Trading

5 min readOct 31, 2023

In the dynamic landscape of DeFi, continuous evolution is paramount to staying competitive and meeting the ever-changing needs of traders. When Level Finance debuted in December 2022 on the BNB chain, it marked the beginning of a promising journey. Our significant market share was a testament to our robust platform. With the transition to Arbitrum, we recognized the imperative for evolution. Hence, the genesis of Level 2.0 was conceptualized, aiming to raise the bar in decentralized trading.

Tailored for the Professional Trader

Level 2.0 is envisioned as a full-fledged decentralized exchange with an on-chain orderbook system, carving a niche for professional traders. Unlike its predecessor, Level 2.0 extends its asset support beyond crypto pairs, welcoming Forex and potentially synthetic stocks, commodities and other asset classes to its trading arena. This broader asset spectrum is complemented by much higher available leverage on trades, facilitated through cross-margin, allowing traders to deposit BTC, ETH, or stablecoins as collateral. The quintessence of Level 2.0 is to provide a professional trading platform & liquidity marketplace while ensuring users retain control over their assets.

An Enhanced Trading Experience

Top notch user experience has always been paramount at Level. Similarly, the user-centric design of Level 2.0 brings a slew of advanced trading utilities, elevating the trading experience to be more akin to what traders would expect from centralized exchanges. The intuitive UI/UX, coupled with a host of functional trading features, provides a seamless trading environment, even for those relatively new to blockchain and DeFi.

Transition of Level 1.0: Staking and Market Making As a Service

As Level 2.0 takes the center stage, Level 1.0 pivots to a model of “staking as a service” or “market making as a service” (MMaaS) creating a symbiotic relationship between the two. Users with assets like ETH or USDT can earn yields in a risk-isolated environment. Level 1.0 will play a vital role as a market maker for Level 2.0, facilitating liquidity as we transition towards an on-chain order book system. The Level DAO Treasury currently holds $10M in bluechip assets, which can be utilized effectively for Level 2.0.

A Sustainable Ecosystem for Future DeFi Projects

We chose not to launch a separate project or token, believing our innovative existing dual token system with LVL and LGO lays a solid foundation for future DeFi projects. This system operates at full reserve, with all protocol profits and fees backing a redeemable token. Such a structure fosters the development of innovative and creative products, marking a significant stride towards a sustainable DeFi ecosystem.

Streamlined Cross Chain liquidity

Level 2.0 introduces groundbreaking cross-chain liquidity. Tokens traded can be effortlessly settled on their native chains, be it BTC on Bitcoin or ETH on Ethereum L1. Beyond this, we address a common DeFi challenge: fragmented liquidity pools. With Level 2.0, traders can tap into unified pool liquidity, eliminating inefficiencies and providing a smoother, more consolidated trading experience.

The Road Ahead: Fostering an Open Marketplace

Level 2.0 is set to break away from the constraints of the Automated Market Maker (AMM) model, transitioning to a setup where the AMM is a participant rather than the platform itself. This shift paves the way for a free market ecosystem, distributing the platform’s value among liquidity providers and token holders. The roadmap reflects our ambition, albeit with adaptable timelines to ensure the delivery of a robust and reliable trading platform.

Q4 – 2023: On-chain Orderbook Testnet

Users can explore the brand new trading UI on the Arbitrum Goerli testnet.
Features will be refined and improved based on user interactions and feedback.

Q1 – 2024: Stress Test Bounty on Testnet

Users can participate in an extensive testnet trading contest with huge bounty rewards available.
Stake LVL to earn faucet testnet tokens in order to trade on level 2.0 Alpha.

Q1 – 2024: Synthetic Liquidity Pool and Market Making as a Service

The liquidity pool will operate in a manner akin to the current Level liquidity pool. Through our MMaaS, the protocol will initiate long positions on Level 2.0 and short positions on the synthetic liquidity pool, generating facilitation fees in the process.

Q2 – 2024: Level 2.0 Beta on Main net

Comprehensive Beta release with the majority of features enabled.

Envisioning a Blockchain-Agnostic Liquidity Marketplace

Level 2.0 strives to bridge the gap between the blockchain realm and traditional trading platforms. By abstracting many blockchain interactions and exploring solutions like trustless bridging and cross-chain settlement, we aim to offer a seamless experience even for users unfamiliar with blockchain.

The voyage from Level Finance’s inception to the unveiling of Level 2.0 encapsulates our relentless endeavor to cater to the diverse needs of the trading community. As we near the launch, we invite traders to catch a glimpse of what’s to come on our newly designed landing page live now at level.finance. Level 2.0 is not just an upgrade; it’s a significant leap towards fostering a holistic and user-friendly trading environment in the DeFi space.

Continued Growth and Innovation

While Level 2.0 offers advancements, Level 1.0 is not being forgotten. As it shifts towards new service models, users can expect consistent improvements and updates. Our commitment ensures that Level 1.0 remains a vital part of our evolving trading ecosystem. Stay tuned for more enhancements on the horizon.