Keep CALM and carry on: sustainable DeFi on Radix
October 18, 2023, by Jazzer9F
Impermanent Loss is the scourge of liquidity providers in decentralized finance. Impermanent loss must be dealt with to make decentralized finance a sustainable solution. This white paper presents the Concentration-Asymmetric Liquidity Model (CALM) specifically designed to make providing liquidity sustainably profitable. The main innovation is that CALM treats trades that increase impermanent loss differently from those that reduce it, thereby reducing the negative impact of impermanent loss. The result is an algorithm that is efficient to implement, has fungible liquidity tokens, allows liquidity concentration, allows true single-sided liquidity add, uses an internal price oracle, creates a bid-ask spread in times of high volatility, and (most importantly) vastly outperforms traditional methods in terms of bottom-line performance for liquidity providers.
StablePlaza: An efficient constant product AMM for stable tokens based on anchored liquidity
July 12, 2022, by Jazzer9F
This paper introduces StablePlaza, an efficient distributed exchange for stable tokens. The main innovation used in StablePlaza is the concept of anchored liquidity, a specific case of concentrated liquidity utilizing an amount of virtual liquidity tailored specifically for stablecoins. The maximum price difference between tokens is based on historical data for stable token relative prices. Anchored liquidity is generalized to multi-token AMMs, and the first deployment of StablePlaza will list the 4 largest USD stable tokens on Ethereum. The result is a stable token exchange which is highly efficient from both the capital deployment and gas consumption perspectives.