The DeFi ecosystem has long been plagued by issues such as impermanent loss, low APY for liquidity providers, and high slippage and price impact for traders. SOLA-X addresses these problems with a unique approach:
- 1.New pool architecture: SOLA-X introduces a different pool architecture that supports single-sided liquidity providing, multiple assets per pool, and flexible asset weightings. This structure is less prone to impermanent loss, as demonstrated by the Curve and Balancer models.
- 2.Smart liquidity routing (SLR): SOLA-X's SLR feature collects liquidity in SLR pools and directs it towards multiple pools where it can be used most efficiently. This simplifies the user experience for liquidity providers, as they only need to deposit a single token to provide liquidity to multiple pools. This approach reduces impermanent loss risks and boosts APY through intelligent liquidity management and auto-rebalancing.
- 3.Smart liquidity front-running: SOLA-X's SLR strategy bot monitors all pools and triggered trades. When it detects a large trade that would result in a price impact and slippage above 0.2%, it directs liquidity via front-running mechanisms to that pool before the trade is executed. This process helps maintain minimal price impacts or slippage, ensuring that liquidity is used as efficiently as possible.
- 4.Margin liquidity: SOLA-X utilizes margin liquidity by leveraging money markets, which is a scientifically proven, more capital-efficient method compared to traditional AMMs like Uniswap V3. This approach provides an additional APY boost for liquidity providers.
In summary, SOLA-X has developed the first DeFi ecosystem that enables frictionless experiences for both traders and liquidity providers by employing protocol-managed liquidity. This innovative approach addresses the key issues faced by users of traditional DEXs and paves the way for a more efficient and user-friendly DeFi experience.