Vader Protocol
  • Welcome!
  • Vader Protocol
    • What is Vader Protocol?
      • Key Features
      • Ecosystem
      • VADER: All-in-One DeFi Protocol
    • References
      • What is an Automated Market Maker (AMM)
      • What is TerraUSD (UST) Stablecoin
      • What is THORChain’s Continuous Liquidity Pools (“CLP”)
      • What is Olympus Pro Bonds
    • VADER Tokenomics
    • Launch Phases
    • Roadmap
    • Vader Protocol Audits
  • Whitepaper
    • Abstract
      • Introduction
      • Key Features
      • Architecture
      • VADER Contract
      • VADER Token
      • Liquidity Incentives
      • Impermanent Loss Protection
      • Liquidity Pools
      • Synthetic Assets
      • Governance
      • Conclusion
  • Design
    • Vader Assets
    • Color System
  • Languages
    • Chinese
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  2. Abstract

Liquidity Pools

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Last updated 3 years ago

Liquidity Pools use USDV as the common settlement asset. This allows the system to accurately price any pool, as well as sensing purchasing power of its assets. Using USDV as a common settlement asset in Asset pools takes away any friction for requiring users to hold exposure to a particular asset. In fact, all of the VADER Liquidity Pools are stablecoin-paired pools, making Impermanent Loss easy to reason about.

The liquidity model includes a liquidity-sensitive slip-based fee. This maximises revenue for liquidity providers under high demand of liquidity, and prevents manipulation. It is also necessary to support liquidations of collateral. The algorithm is:

y=x∗X∗Y/(x+X)2y = x*X*Y/(x+X)2y=x∗X∗Y/(x+X)2

x: input; X: Input Balance;

y: output; Y: Output Balance;

Slip-based fees break path-independence and a member can theoretically achieve better price execution by making smaller trades. This characteristic is actually favourable - smaller trades slow down the rate at which a price can change, and the base-layer gas fee paid (fixed in cost) provides a lower-level threshold of tolerance.