Pi DEX and AMM liquidity pools undergo major updates, with the team fighting back against scam tokens

The Pi Network testnet’s DEX and AMM liquidity pool features have received significant updates aimed at improving usability and combating scam tokens. The core changes include introducing a domain verification mechanism that allows users to see whether a token is indeed issued by the same entity controlling the domain, and adopting a liquidity-based token ranking system to replace traditional market cap rankings, preventing developers from manipulating rankings by reserving 99% of the supply and artificially inflating prices.

Domain Verification Mechanism: The First Line of Defense Against Fake Tokens

(Source: Pi Network YouTube)

The introduction of domain verification aims to provide an additional indicator to help pioneer users assess token credibility. Token issuers can now associate their tokens with verified domains, enabling pioneers to check whether a token is truly issued by the same entity controlling the domain. Previously, tokens were only linked to specific blockchain addresses, making it difficult for most pioneers to interpret or evaluate.

Now, each token in the DEX and AMM interfaces must be associated with a verified domain, which can also be linked back to the token. This makes it easier for pioneers to verify whether the issuer claiming to represent a company, project, or service is actually related to the owner of the corresponding domain. For example, if a token claims to be the official token of “Pi Mall,” users can now verify whether the token is truly associated with pimall.com and whether that domain verifies the token in reverse.

Please note, this does not guarantee the credibility or security of the token; it simply displays more information on the interface to help pioneers evaluate on their own. The ultimate decision of which tokens to trust remains with the pioneers, while the platform focuses on providing clearer, more understandable signals to help identify potential false claims or scams.

This mechanism is not unique to the crypto industry, but it is especially important in the context of Pi Network. Since Pi is still in the testnet phase and has not yet been listed on mainstream exchanges, the token market within the ecosystem is relatively closed and lacks external review. This environment is prone to scam tokens, where scammers can easily create fake tokens representing well-known projects and deceive unaware users. Domain verification offers a simple yet effective layer of defense.

The Revolutionary Logic of Replacing Market Cap Rankings with Liquidity Rankings

Pi Network is testing a token ranking system in the DEX interface based on liquidity rather than market cap. In the current ecosystem environment, liquidity is a more meaningful indicator and ranking system. Market cap-based rankings are easily manipulated through supply and pricing strategies.

Three Major Manipulation Techniques of Market Cap Rankings

Supply Manipulation: Developers reserve 99% of the total token supply, releasing only 1% into circulation, artificially creating scarcity to drive up prices.

Wash Trading: Buying and selling among oneself to inflate transaction prices, with market cap = price × circulating supply, leading to artificially high market cap.

Full Dilution Market Cap Misleading: FDV = price × maximum supply, which can show staggering FDV figures even if 99% of tokens are locked.

Liquidity-based rankings address this issue by reflecting the actual liquidity invested in the token pool (measured here in Test-Pi). This approach emphasizes real capital input: tokens can only be boosted in ranking by attracting more liquidity, not by manipulating prices. While liquidity manipulation is still possible, it requires significant Test-Pi investment, greatly increasing difficulty and cost. The rankings will also automatically update as liquidity changes.

This design philosophy embodies Pi Network’s commitment to “practicality over speculation.” Market cap rankings encourage price speculation, while liquidity rankings promote providing actual trading depth. For projects aiming for long-term development, offering sufficient liquidity for smooth trading is more important than simply inflating prices. The system is currently in testing, and with more feedback and data, it may be continuously improved.

Pi-Centered Liquidity Reorganization

The liquidity in the Pi testnet DEX is currently organized around Pi-based trading pairs, with Pi serving as the common base currency for all DEX trades. As a Pi-centered DEX, choosing Pi as the base currency with the strongest liquidity aligns with best practices in other ecosystems. By consolidating liquidity around Pi as a shared base, existing liquidity is integrated into fewer, more active pools rather than dispersed across many smaller pools.

This approach does not create new liquidity but makes existing liquidity more efficiently used for trading. For example, if Token A and Token B each have Pi-based trading pairs, then their prices can be determined based on Pi’s price. As the number of tokens increases, this method becomes simpler, clearer, and more user-friendly.

In practice, organizing liquidity around high-signal trading pairs can offer potential benefits: lower price volatility for DEX tokens, reduced slippage, more predictable trading outcomes, increased difficulty and cost for market manipulation, and more reliable price discovery, especially as trading activity increases.

These modifications are based on observations of how pioneers interact with liquidity pools on the testnet and are currently deployed as experimental features. Like other testnet features, they may be further adjusted and iterated based on ongoing usage evaluation.

Holiday Shopping Season and Ecosystem Business Promotion

During this holiday season, Pi Network is promoting ecosystem businesses through a community shopping program. This initiative allows Pi merchants to promote their businesses via Pi Network and encourages Pi users to shop online and offline using Pi. The event will focus on promoting mainnet business applications and local Pi merchants, inviting them to run holiday-themed promotions on the Pi platform, while providing Pi users with a convenient way to discover, shop, and share their shopping experiences within the ecosystem.

Pi fosters transparency and coordination, creating a festive event that supports genuine businesses, small enterprises, and active participation across the Pi ecosystem. This strategy of combining technical updates with practical business applications demonstrates Pi Network’s shift from purely technical experimentation toward building a practical ecosystem.

These updates improve the DEX and AMM experience to better guide and educate DeFi pioneers. By enhancing the user interface, introducing domain verification, adopting liquidity rankings, and reorganizing trading pairs, Pi Network is creating a safer, more transparent, and more user-friendly decentralized finance environment for its testnet users.