Pi Network product flip game rules! Testnet DEX allows pioneers to earn transaction fees.

A few weeks after Pi Network announced the launch of new features aimed at establishing DeFi reputation, the core team provided details on the operation of the DEX (Decentralized Exchange) and AMM (Automated Market Maker). These two Pi Network products have been launched for testing on the Testnet, and the team describes it as "the most ambitious update to date."

Pioneers can now access four major functions through the Pi wallet and earn a 0.3% transaction fee from the liquidity pool, marking a key step in the transition from the social mining experiment to a self-sustaining decentralized economy.

Pi Network Product Revolution: DEX and AMM Officially Launched

After months of development and community anticipation, Pi Network has finally unveiled the mystery of its Decentralized Finance (DeFi) infrastructure. The decentralized exchange (DEX) launched by the project will allow users to trade tokens directly on-chain, fundamentally eliminating the need for intermediaries. This design philosophy is similar to leading DeFi solutions like Uniswap or PancakeSwap, utilizing on-chain mechanisms like order books and liquidity pools to achieve fully transparent peer-to-peer trading.

The core team of Pi Network stated in their latest announcement that this is a key step in the continuously developing ecosystem of the project. Before the full migration to the mainnet, Pi Network will continue to build its core financial infrastructure, with DEX and AMM being the core components of this foundation. These two Pi Network products have currently begun testing on the Pi Testnet, allowing millions of pioneers worldwide to experience the charm of decentralized trading in a real environment.

The deployment strategy of the Testnet demonstrates the team's prudent attitude. Unlike directly launching on the mainnet, the testnet environment allows the team to discover and fix potential technical issues while enabling users to familiarize themselves with new features with zero risk. This gradual rollout approach not only protects user asset security but also accumulates valuable practical experience for the eventual launch of the mainnet.

The Operating Mechanism of AMM

The core of Pi DEX is the Automated Market Maker (AMM) system. For pioneers unfamiliar with Decentralized Finance, AMM may be a strange concept, but its operational principle is quite intuitive. Traditional centralized exchanges rely on order books to match buyers and sellers, while AMM uses algorithmic formulas to automatically adjust token prices based on the supply and demand relationship of each liquidity pool.

The advantage of this mechanism lies in its immediacy and convenience. AMM determines token values through mathematical formulas (usually the constant product formula x * y = k), enabling instant exchanges. This means that users do not have to wait for traditional order matching and can execute trades at any time. Whether it's three in the morning or during peak market hours, as long as there are enough tokens in the liquidity pool, transactions can be completed immediately.

Specifically, when users exchange token A for token B, the AMM will withdraw the corresponding amount of token B from the liquidity pool while adding the user's token A to the pool. This process changes the ratio of the two tokens in the pool, thereby automatically adjusting the price. If token B is bought in large quantities, its price will rise; conversely, it will fall. This price discovery mechanism is entirely driven by market supply and demand, without the need for manual intervention or centralized institutional control.

Pi Wallet Upgrade: Central Control Center for DeFi Operations

Another major change in this update is the expansion of the Pi wallet's functionality. Originally used primarily for storage and transfers, the Pi wallet will now be upgraded to serve as the central control hub for all Decentralized Finance related operations. This one-stop design significantly reduces the learning costs and operational complexity for users.

Pioneers will be able to access four basic functions directly from the Pi wallet: Swap, Convert, Liquidity Pool, and Token Management. Each function is carefully designed to provide an intuitive user experience.

The exchange function allows users to perform instant exchanges between different tokens, as simple as operating on Uniswap. Users only need to select the token pair they want to exchange, enter the amount, and the system will automatically calculate the exchange rate and the expected amount of tokens to be received. The entire process is completed in a few seconds without any intermediary approval.

The exchange function provides more refined trading options, which may include limit orders or specific trading strategies. This allows advanced users to fulfill more complex trading needs without being limited to simple market trades.

The liquidity pool feature is one of the most exciting parts of this update. Users can deposit their held tokens into the liquidity pool, providing trading depth for other traders and earning fee income from it. This passive income model will be discussed in detail in the next section.

The token management function integrates regular management operations such as viewing, sending, receiving, and history records of tokens, allowing users to have full control over their digital assets.

Liquidity Pool: New Passive Income Opportunities for Pioneers

This update integrates the liquidity provision function, opening a new revenue stream for pioneers. Users can deposit their tokens into liquidity pools to provide liquidity support for specific trading pairs (such as PI/USDT or PI/BTC). In return, users will receive a 0.3% fee from each transaction executed from these pools.

This 0.3% fee rate is consistent with the standard transaction fee rate of Uniswap V2, which is a mainstream setting in the DeFi industry. Although the transaction fee for a single transaction may seem small, as the trading volume accumulates, the earnings for liquidity providers (LPs) can be quite substantial. Especially in actively traded token pairs, the annual percentage yield (APY) can even reach double digits or higher.

Moreover, users can withdraw liquidity at any time, and the withdrawal amount will be adjusted based on the real-time token ratio in the pool. This flexibility transforms liquidity provision from a long-term locked commitment into a dynamic allocation strategy that can be entered and exited at any time. Of course, users need to be aware of the risk of "Impermanent Loss" — when the price ratio of tokens in the pool changes dramatically, the value of the withdrawn assets may be lower than the value of simply holding them.

Assuming a pioneer provides liquidity worth $1000 in the PI/USDT pool (500 USD of PI plus 500 USD of USDT). If the pool generates $10,000 in trading volume daily, the total fees will be $30 ($10,000 × 0.3%). If this user occupies 5% of the pool, they will earn $1.5 daily ($30 × 5%), which amounts to $45 for a month, with an annualized yield of about 54%. Of course, actual earnings will fluctuate with trading volume and liquidity scale.

Beyond Social Mining: The Strategic Transformation of Pi Network

The Pi Network team has clearly stated that its focus on DeFi product development has deeper intentions beyond initial education and innovation goals. By introducing these complex DeFi concepts in a controlled testnet environment, the project aims to enable its large user base to safely explore DeFi before the mainnet is open for release.

This strategy demonstrates Pi Network's ambition to transform from a "social mining experiment" into a "self-sufficient decentralized economy." Over the past few years, Pi Network has attracted tens of millions of users worldwide with its unique mobile mining model. Users only need to click once a day to earn PI tokens, and this low-threshold participation method has made Pi one of the largest cryptocurrency communities in the world.

However, a simple mining model cannot support a real economy. Tokens need to have practical uses, and users need to be able to use tokens for trading, investing, and consumption. The introduction of DEX and AMM is the first step in filling this critical gap. When pioneers can freely trade tokens, provide liquidity, and earn returns, PI is no longer just a mining reward, but an asset with actual economic functions.

The official video concludes that if everything goes as planned, the Pi DEX and AMM may become the cornerstone of the entire Pi Network financial ecosystem. They will not only position Pi as a social mining experiment but will also build it into a self-sustaining decentralized economy established and served by a global pioneer community.

Actual Impact on Pioneers

So, what do these Pi Network products mean for ordinary pioneers?

Firstly, the freedom of trading has greatly increased. In the past, the PI tokens obtained by pioneers were mainly stored in wallets, lacking widespread use cases except for a few ecological applications. Now, DEX allows pioneers to freely trade PI with other tokens, no longer restricted by the listing decisions of centralized exchanges or geographical limitations.

Secondly, income sources are diversified. In addition to daily mining, pioneers can now earn fees by providing liquidity. This passive income model makes holding PI more attractive, as the token is no longer a "dead asset," but rather a "productive resource" that can generate cash flow.

Third, the degree of decentralization is enhanced. Centralized exchanges hold user assets and trading data, which poses security risks and regulatory risks. DEX allows trading to be conducted entirely on-chain, enabling users to always control their private keys and assets, truly realizing "Your tokens, your rules."

Fourth, DeFi educational opportunities. For most Pi pioneers, this may be their first exposure to real DeFi products. By practicing on the Testnet, they can learn concepts such as AMM, liquidity pools, and impermanent loss in a zero-risk environment, preparing them for deeper participation in the DeFi world in the future.

Challenges and Future Outlook

Despite the enormous potential of these Pi Network products, they still face some challenges. The first is user education. Decentralized Finance remains a complex and unfamiliar field for most ordinary users. How to help millions of pioneers understand concepts such as liquidity pools, impermanent loss, and slippage is a continuous effort that the team needs to invest in.

Secondly, there is security. Common risks in DeFi such as smart contract vulnerabilities, hacker attacks, and flash loan attacks need to be strictly prevented. The Testnet phase is a critical period for discovering and fixing these issues.

The third is liquidity depth. The trading experience of a DEX largely depends on the size of the liquidity pool. If there is insufficient capital in the pool, large transactions can cause severe price slippage. How to incentivize enough pioneers to become liquidity providers is a key factor in determining the success of a DEX.

Looking to the future, if the Testnet phase goes smoothly, Pi DEX and AMM will become the core infrastructure after the mainnet launch. The team may launch more Decentralized Finance products based on this foundation, such as lending protocols, derivatives trading, asset management tools, and gradually build a complete decentralized financial ecosystem.