Dialogue with Shadow's Chinese Promotion Head: x(3,3) Reshape Liquidity Incentives, MEV Drives Stronger LP Protection + Fee Capture

Written by: Deep Tide TechFlow

The market is bleak, and while many people are caught in the anxiety of “the more they operate, the more they lose,” some have discovered:

$x33 of Shadow Exchange automatically compounds weekly, with weekly returns exceeding 30% APR for the past six weeks.

At the same time, when high volatility arrives, Shadow's dynamic fees better protect LPs from massive impermanent loss, while capturing fees and profits comprehensively, enabling better support for users and achieving higher protocol revenue and trader rewards.

This has sparked the curiosity of many people and created an opportunity for an in-depth conversation with Dr. Wu Wei Xiong, the Chinese promotion director of Shadow Exchange.

As the leading DEX in terms of trading volume and revenue within the Sonic ecosystem, the core innovation of Shadow Exchange is the x(3,3) model. This model features three main tokens: the native token $SHADOW, the governance token $xSHADOW , and the liquidity version $xSHADOW of $x33 , aimed at better coordinating the interests of traders, LPs, and token holders, establishing a benchmark for DeFi liquidity incentives.

Talking about the underlying value logic of $x33 , Dr. Wúwěiqū stated:

On one hand, users can mint $x33 using $xSHADOW 1:1. Since Shadow allows users to exit $xSHADOW locked positions at any time, an early exit incurs a penalty of up to 50%. This penalty is fully returned to the holders through the PVP Rebase mechanism, ensuring that $x33 has a minimum price guarantee, which is always no less than half of the price of $SHADOW .

On the other hand, since $x33 automatically reinvests once a week, the quantity of its underlying asset $xSHADOW only increases and does not decrease, which constitutes the intrinsic value foundation of $x33 . The overall investment appreciation rate is relatively fast, so holding it for the long term is the best strategy to achieve reinvestment returns.

As the DeFi facade of the Sonic ecosystem, when discussing the current overall market downturn and the decline in discussions surrounding the Sonic ecosystem, Dr. 无尾熊 expressed confidence:

The activity level of the Sonic ecosystem has declined, and Shadow's earnings have also correspondingly decreased, which is an unavoidable reality. However, Sonic has been dynamic recently, including personnel changes, the launch of the new project Flying Tulip (FT), and the Sonic Foundation continuously providing support for new projects. Any activity that occurs on-chain will have a positive impact on Shadow.

In addition to the support from the Sonic ecosystem, the Shadow team is also continuously advancing product development and technological innovation. Recent updates include the integration of Circle CCTP, the launch of Limit Order and Time-Weighted Average Price (TWAP) features, among others. Regarding future focuses, Dr. 無尾熊 revealed:

The team is focusing resources on developing new MEV solutions, dedicated to providing Shadow users with richer platform value and a better user experience. We believe that these enhancements in underlying capabilities will bring users more long-term and sustainable benefits, and help Shadow establish a solid foundation to better meet future market opportunities and challenges.

In this issue, let's follow Dr. Wúwěiqiú's sharing and delve into the core mechanism of Shadow Exchange's vision of “maximizing LP protection + better fee capture,” and understand Shadow Exchange's future competitive strategy within the soon-to-be-launched MEV module multifunctional matrix.

Sonic's largest DeFi protocol: Entering the core competitive advantages of Shadow

Deep Tide TechFlow: Thank you for your time, and welcome to introduce yourself (including educational background, the opportunity to join the crypto industry, and your entrepreneurial/career experience in the crypto industry, etc.).

Dr. Koala:

Hello everyone, I am Dr. Wúwěiqióng, the Chinese promotion director of Shadow Exchange, and I am very happy to communicate with you all.

I have a background as a computer engineer, with a major in network systems. I occasionally return to the university to give lectures, but currently, I am focusing more on the cryptocurrency industry.

In 2025, I joined Shadow Exchange and initially created a lot of Chinese content, including a series of introductory tutorials. As the Chinese community of Shadow Exchange gradually started to flourish, I officially took over the Chinese promotion of Shadow in conjunction with Sonic's newly launched promotion in the Asia-Pacific region.

Deep Tide TechFlow: What attracted you and your team to choose the Sonic ecosystem? And why did you choose to build a DEX based on Sonic?

Dr. Koala:

Sonic blockchain possesses sub-second finality, low gas fees, and FeeM reward features, which are several key reasons why Shadow chose to build on Sonic. Sub-second finality allows transactions to be completed quickly, low gas fees enable ecosystem users to trade easily, and the FeeM rewards of the Sonic chain provide additional incentives for projects, allowing project teams to invest more effort in optimizing their projects and providing a better experience for users.

Deep Tide TechFlow: The market is not lacking in DEXs, and this year's DEX competition is particularly fierce. As the largest DEX protocol in the Sonic ecosystem, what are the key differentiated competitive advantages of Shadow Exchange?

Dr. Koala:

The team has been focused on the development of the (3,3) model since the Solidly V1 period, accumulating deep experience. At the same time, the team has been continuously operating multiple ve(3 and 3) projects on six other blockchains, further expanding their practice and understanding.

In order to promote the evolution of the ve(3 economic model, the Shadow team has innovatively proposed the x)3 design and successfully deployed it on the Sonic chain. We are very honored to be a leading DEX in the Sonic ecosystem and are satisfied with the achievements we have made so far.

At the same time, the Shadow team has been continuously working on the project. Since its launch in January, we have consistently released new features and content updates every month, continuously optimizing the product experience and promoting protocol development.

Comprehensive value capture + Maximum LP protection

Deep Tide TechFlow: The economic model is the lifeline of DeFi. What groundbreaking innovations does the Shadow Exchange's x(3,3) model, as a further evolution of the ve(3,3) model, bring? How does the value cycle formed by the three major tokens $SHADOW, (, and ) better achieve the balance of interests among traders, LPs, and token holders?

Dr. Koala:

x$xSHADOW 3,3$x33 The model includes three major token mechanisms:

SHADOW: The Shadow ecosystem native token, which has utilities such as trading and liquidity mining, with an initial supply of 3 million. The protocol will adjust the token emission based on the protocol revenue for each cycle, with a maximum supply of 10 million tokens. Users can stake SHADOW to earn $xSHADOW.

xSHADOW: Shadow ecological governance token, users can obtain $x33 through xSHADOW;

x33: the liquidity version of xSHADOW, users can mint $x33 through (, thereby retaining governance rights and earnings, while obtaining the liquidity of the token; users can also buy directly from the market.

The model x)3 re-packages governance tokens that were originally non-transferable into a freely tradable token, referred to as $x33.

x33 automatically reinvests once a week, and the amount of its underlying asset xSHADOW only increases and does not decrease, which constitutes the intrinsic value basis of $xSHADOW . Due to the high frequency of reinvestment (once a week), the overall investment appreciation rate is relatively fast, so holding for the long term is the best strategy to realize reinvestment gains.

At the same time, ( supports exit at any time, allowing users to directly buy or sell in the market. The selling pressure of ) itself is relatively low, as it has a price floor protection: users can use $x33 1:1 to mint $x33. Since Shadow allows users to exit $x33 staking at any time, an early exit incurs a penalty of up to 50%. This penalty is fully returned to the holders through the PVP Rebase mechanism, therefore $x33 has a minimum price guarantee, with the minimum price always being no less than half of the price of $xSHADOW .

As long as there is transaction volume on the Sonic chain, the value of $xSHADOW will continue to grow; even in the absence of transaction volume, the Rebase mechanism of Shadow will still distribute profits to holders of $x33 .

Deep Tide TechFlow: x$SHADOW 3,3$x33 model empowers Shadow Exchange with a stronger “ecological value capture + feedback” capability. Could you please share how this more powerful “ecological value capture + feedback” capability of Shadow is specifically manifested compared to other DeFi protocols?

Dr. Koala:

Since the launch of Shadow, we have been committed to giving back to our users. For example, the transaction fees and Gems rewards obtained from the Sonic network are returned to users at 100%.

Shadow currently possesses a very high “Bribe Efficiency,” meaning for example, if a project party invests 1 dollar in Shadow, they can receive about 1.5 dollars in return. More importantly, 100% of all bribes we receive will be distributed to users. We believe that adhering to a user-centric approach is the truly effective and sustainable way to grow and strengthen Shadow.

Since its launch, SHADOW's unique MEV bot has achieved value capture and anti-capture across multiple dimensions. For example, our Anti-JIT system monitors in real-time, intercepting invalid and malicious wallets, automatically transferring their profits into $x33. Outside the normal redemption price range of $x33 and ( (50%-100%), the bot will also automatically capture spread profits, which will similarly be injected into $x33.

Deep Tide TechFlow: Could you share the key data that Shadow Exchange has achieved in terms of stronger “ecological value capture + feedback” capabilities?

Dr. Koala:

I can start with the MEV module of Shadow Exchange and specifically introduce the achievements we have implemented so far.

The DeFi protocol Shadow Exchange in the Sonic ecosystem has recently launched )AMO and anti-JIT protection features, which are core components of the MEV module, aimed at further enhancing trading efficiency and fairness.

The AMO system will maximize participant value through system arbitrage when the redemption bottom line is triggered at $x33 , bringing additional benefits to voters and holders of $SHADOW , while strengthening LP protection, reducing external bot interference, and preventing value leakage. Currently, this feature has captured over $151,236.52 in value and has returned 100% to users.

The Anti JIT protection feature can actively monitor Just-In-Time (JIT) liquidity operations, and the rewards for related positions will be automatically transferred to $x33. Wallets involved in JIT behavior will also be banned by the system. Since the launch of this feature, the Anti-JIT mechanism has contributed over $151,000 in earnings for holders of $x33 . If we combine all returns obtained from Shadow on the Sonic chain, including the two Gems event rewards and all FeeM feedback, the current comprehensive annualized return rate (APR) of $x33 has reached 134%.

Deep Tide TechFlow: Recently, the $x33 AMO and anti-JIT protection features launched by Shadow Exchange have attracted significant attention. The upcoming features such as buyback arbitrage and delayed rewards are widely discussed. As the core of the MEV module, how can this series of features further achieve LP protection and capture fees to a greater extent, thereby protecting and enhancing user rights?

Dr. Koala:

Everyone should still remember the drastic fluctuations in the crypto market in October, when Shadow's performance fully demonstrated its ability to protect liquidity providers (LPs).

During the market crash, Shadow swiftly activated its protective mechanisms to fully ensure the safety of user funds. While other DEXs maintained their transaction fees, Shadow's dynamic fee mechanism for liquidity pools was immediately adjusted upwards, successfully preventing harmful trades and generating $172,243 in fee revenue during the volatility.

The dynamic fee rate algorithm of Shadow can respond to market changes in real-time, effectively protecting LPs from severe impermanent loss while maximizing fee revenue. Once the system identifies potential harmful liquidity, it actively raises the fee rates to protect the funds. During the same period, no other exchanges in the Sonic ecosystem have made a similar response.

At the same time, thanks to the effective maintenance of liquidity for $x33 / $x33 by the Shadow algorithm, lending protocols such as Silo Finance and Aave have also successfully completed the liquidation process.

Despite the sharp contraction of overall liquidity for Sonic due to the market crash, Shadow still ensured smooth execution of cross-platform trading thanks to its ample liquidity reserves. This robust performance can be attributed to the strategic liquidity support and real-time risk control algorithms that the Shadow team had deployed in advance.

At the same time, Shadow maintains a high level of synchronization with Binance during extreme market fluctuations, demonstrating strong market responsiveness.

Additionally, our upcoming MEV bot will further capture value returns in various trading pools on centralized and decentralized exchanges, and all profits will be returned to Shadow token holders.

Deep Tide TechFlow: What is the most efficient way for current users to participate in Shadow Exchange?

Dr. Koala:

My suggestion is to participate in LP, consider buying $x33, to achieve automatic compounding growth of your assets.

Shadow is still one of the best-performing projects on the Sonic chain in terms of actual yield, even though the overall market has been sluggish recently. Just holding $x33 alone has yielded over 30% APR every week for the past six weeks.

Next Phase Core: MEV Module

Deep Tide TechFlow: Shadow Exchange is deeply integrated with the Sonic ecosystem. Some users believe that this deep integration will bring about strong synergies for mutual development, while others think that the current decline in attention towards the Sonic ecosystem may impose certain developmental limitations on Shadow Exchange's deep integration with Sonic. What is your view on this divergence?

Dr. Koala:

The activity level of the Sonic ecosystem has declined, and Shadow's earnings have also correspondingly decreased; this is an unavoidable reality.

It is worth noting that Andre Cronje, widely praised as the father of DeFi, is still the core designer of the Sonic Chain, and his new project Flying Tulip continues to receive significant attention from the market. Any activities that occur on the chain will have a positive impact on Shadow.

In addition, the Shadow team is constantly advancing product development and technological innovation. For example, the latest launch cctp.to integrates CCTP developed by Circle, the issuer of $x33 , providing users with completely free cross-chain services that not only support operations within the Sonic chain but also are compatible with asset transfers across other blockchains.

Deep Tide TechFlow: Previously, Shadow Exchange joined the Circle Alliance Directory and integrated versions v1 and v2 of CCTP to provide users with a seamless cross-chain experience. Does Shadow Exchange have more other plans for multi-chain development in the future?

Dr. Koala:

The Shadow team has always closely monitored the project's developments and the trends in the public chain ecosystem. We have noticed recent personnel changes in the Sonic chain, as well as the launch of the new project Flying Tulip (FT), and the Sonic Foundation continues to provide support for new projects. In light of these developments, Shadow maintains an optimistic outlook on future growth.

Deep Tide TechFlow: What do you think is the core reason behind the increasingly fierce competition among DEX this year? And which key dimensions do you think the competition of DEX will ultimately focus on in the next stage?

Dr. Koala:

Each DEX has its unique philosophy and positioning, and healthy market competition often drives progress and innovation across the industry. This competition not only motivates projects to continuously optimize but also brings users better quality services and features.

Shadow itself is a great example. In August of this year, Shadow launched Limit Order and Time-Weighted Average Price (TWAP) features, further enriching trading strategies and enhancing user experience. These new features have allowed Shadow to gradually evolve into a more comprehensive and convenient one-stop DeFi trading platform.

Deep Tide TechFlow: What key measures will Shadow Exchange take in the future to better respond to the next phase of DEX competition?

Dr. Koala:

The team is focusing its resources on developing new MEV solutions, committed to providing Shadow users with a richer platform value and a better user experience. We believe that these enhancements in underlying capabilities will bring users longer-term and sustainable returns, and help Shadow solidify its foundation to better embrace future market opportunities and challenges.