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:
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.