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Liquidity pools
Important note: Please be aware that our platform is currently only accessible on devnet and contents and technical specifications of this chapter may be subject to change.
Our liquidity pools are designed to provide strong incentives for liquidity providers to contribute their funds. With our pools, liquidity providers can earn generous rewards of 86% of the fees generated by each pool, no matter which type of pool they choose. These rewards are distributed instantly to liquidity providers, making it easy for them to see the fruits of their contributions.
In order to revolutionize the pool characteristics within the Solana ecosystem, our pools have the following features:
When a liquidity pool is created, the token balances can be chosen flexibly and do not stick to the typical 50/50 weighting. Instead, our pools also work with a weighting of e.g. 95/5.
Additionally, the swap fee of each pool can be adjusted dynamically by the pool creator, based on the total liquidity and trading volume of the pool. This means that creators can increase fees during the launch of a new pool when liquidity and trading volume are low, in order to attract more liquidity providers. As trading volume increases and the pool becomes more established, the fees can be gradually reduced. The fees can range between 0.10% and 2.00% per swap, which offers a variety of options for projects to bootstrap liquidity.
Our pools support multiple assets, and users or our protocol can deposit or withdraw single assets to our pools. This allows for single-sided liquidity mining, where a user can contribute only one asset to a pool that contains multiple assets. For example, if a pool contains 80% $SOL and 20% $SAX measured in the respective USD value, a user can contribute only $SAX tokens to that pool. The rewards that the user earns for staking $SAX will be higher compared to staking $SOL, as there is less $SAX staked and therefore a higher portion of the liquidity provider fee is allocated to $SAX stakers. This liquidity pool design reduces the risks of impermanent loss for the user and contributes to more stable liquidity pool weightings due to economic incentives, resulting in higher fees.
Our platform offers two types of pools - weighted pools and stable pools. Weighted pools are ideal for assets such as $USDC, $SAX, or $RAY and stable pools, on the other hand, are designed for stable assets such as $USDC/$USDT or $renBTC/$xBTC to provide a reliable and predictable trading experience.
- They allow up to 5 assets per pool
- Users can add only one asset to a pool
- Balanced or unbalanced LP token withdrawals are possible from a pool
- They allow flexible asset weightings of e.g. 90/10%
- The swap fees are between 0.1% and 2.0%
- The swap fees are adjustable over time by the pool initiator
By utilizing money markets, liquidity providers can greatly enhance their capital efficiency and increase the potential returns on their investment. With margin liquidity, liquidity can be lent to generate a leveraged allocation that maximizes the yield of the capital. According to a recent research paper (https://arxiv.org/pdf/2212.10035.pdf), margin liquidity is up to 8000 times more efficient than the concentrated liquidity model introduced by Uniswap V3. Additionally, margin liquidity helps to reduce slippage and minimize price impact, which ultimately benefits the traders.
Our smart liquidity routing feature is built on top of our single-sided liquidity providing capability. With single-sided liquidity providing, we can create yield optimization pools (SLR Pools) with commonly used assets such as $SOL, $SAX, $USDC, $USDT, and more, where users can stake their assets. The staked assets are then distributed to the liquidity pools where they are needed the most to provide single-sided liquidity, generating the highest fees. These fees are then redistributed to the staking pools and individual stakers. This feature provides users with an easy way to interact with liquidity pools as the pool selection is automated by our protocol and guarantees the highest and most efficient APYs while reducing risks. Users can deposit a single asset to provide liquidity to multiple pools in a risk-diversified and yield-optimized manner. Our smart liquidity routing pools use front-running to provide the needed liquidity before trade execution. Thus, smart liquidity routing reduces slippage and price impact even for very large trades.
Liquidity flows
- 1.Users deposit $USDC or $SOL to one of our smart liquidity routing pools, the pools collect the liquidity.
- 2.The smart liquidity routing pools send the liquidity to multiple pools within the SOLA-X Dapp.
- 3.The generated $USDC or $SOL fees are sent back to the smart liquidity routing pools and distributed to all stakers.
Liquidity management & rebalancing
- The protocol rebalances the smart liquidity routing liquidity by itself, depending on all the pool stats like trading volume, existing liquidity, and asset balances.
- Example 1: The $USDC smart liquidity routing pool adds liquidity to pool a as it has a low $USDC balance and a higher APY potential and on the other hand it withdraws liquidity from pool b as it has a high $USDC balance.
- Example 2: The $SOL smart liquidity routing pool adds liquidity to pool b as it has a low $SOL balance and a higher APY potential and on the other hand it withdraws liquidity from pool c as it has a high $SOL balance.
Our whole smart liquidity routing program will be governed by our token holders. Within that program it is important that certain decisions are carried out by human beings. The following decisions are part of it:
- Creation and termination of smart liquidity routing pools, e.g. $USDC or $SOL
- Inclusion and exclusion of normal liquidity pools into the smart liquidity program, e.g. $RAY/$USDT
By using governance functions to control the smart liquidity routing program, we avoid the influence of our team on important decisions that directly impact the economical chances and risks of our protocol. On top of that, we want to prevent bad actors from draining out liquidity from our smart liquidity routing pools by creating faulty pools with tokens with no value, e.g. 99/1 $SCAM/$USDC.
Last modified 1mo ago