Trader Joe on Avalanche Developed Liquidity Books
Avalanche blockchain has several popular De-Fi projects such as YetiSwap, Trader Joe, and Pangolin. Holding $2.03B TVL on the chain, the Avalanche ecosystem is constantly growing with new projects and advanced De-Fi features.
The news of Liquidity Books by Trader Joe went viral on CryptoTwitter as the second version of Trader Joe claims to fix impermanent losses and high slippage issues for whales and trade bots. The way the project developed Joe v2 is pretty interesting.
Technical Details if you are interested 😉
Concentrated Liquidity -> Liquidity Books
Trader Joe team highlights the "bins" of liquidity units that they developed to build the whole liquidity sets for the pools. According to the team, they designed the way to utilize every single token on the LPs on concentrated bins rather than scattering them ineffectively.
“Instead of having one pool with unbound price ranges, Liquidity Book has multiple separate bins with different prices that can be used as building blocks for a liquidity position.” - Thedefiant
These concentrated liquidity ranges will be set by the liquidity providers. So, basically, the higher range of price actions you choose, the higher fees can be generated for your liquidity bins as the swaps will be on your liquidity for operations.
Simply, "Segregated Liquidity" Seg-Liq 😅
The system will be based on blocks of liquidity bins that are separate units that co-operate in swaps. When a bin reaches its limits, the next bin levels are activated. (This may affect the fees, though).
Impermanent Loss and Automated Liquidity Positions
The impermanent loss is always a phenomenon if you provide liquidity on 2 different assets. The solution that Trader Joe puts forward sounds reasonable for traditional De-Fi platforms but it bears its own risks.
When you stuck your liquidity in certain price levels, either you will get a lower amount of money in a dump according to your minimum levels and the liquidity may not bring swap fees if the price is out of the range.
Assuming that newbies are eager to provide liquidity, there will be an automated system that will support their De-Fi experience. Low-risk De-Fi services may accelerate mass adoption deeply!
Is Concentrated Liquidity the future?
I think concentrated liquidity ranges will be the future of De-Fi because the current De-Fi mechanisms scatter your liquidity to equal levels and provide swap options as the market price goes up or down.
Though the liquidity block mechanism has worked fine so far, the liquidity books by Joe v2 or concentrated liquidity by Uniswap v3 are devastating. You will be able to lower the risk of impermanent loss to a certain range
As Cointelegraph highlighted, as well, the concentration bins may cover a certain price limit which, in return, costs less to those who swap two assets.
Trader Joe’s LB will also offer zero to low slippage trades, which will serve to offer traders better buying rates.
Sounds purely amazing 😎
I believe PolyCUB, CUB Finance and De-Fi platforms on Hive can easily adopt this newly growing De-Fi trend and attract millions of investors easily 😉
What do you think about Concentrated Liquidity on De-Fi?
Posted Using LeoFinance Beta
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Just saw it. IDK if the claims are real as we know that there was a partnership for ILO. We will see 😅
I used the concentrated liquidity feature on Uniswap3. The LP has converted all my Eth to WRLD, which lost %95 of its value. So it didn't work fine for me. Trader Joe is one of my favorite DEFI apps, though.
Posted Using LeoFinance Beta
I used to provide liquidity on Pangolin but Trader Joe outperformed it in many aspects. The Liquidity Book may work better compared to Uniswap v3 as the team also claim that they regarded the problems in Uni v3 and strengthened their system accordingly :)
Posted Using LeoFinance Beta