Our ETH-LINK pool is currently matching Sushiswap and Coinbase Pro in depth by mirroring Sushiswap’s pool size * 1.25 = $250m, with our small ~$5mil pool.
Trading has launched on ETH-LINK! You’re probably curious, what’s the big deal here?
One of our @Heroes, @SmplR, has experience as main community manager of the Russian national team for Warcraft 3, which, despite it being a popular video game, still needs a commentator so the gameplay can truly be appreciated by the audience. I, Veche, am our launch commentator, and allow me to comment on why this ETH-LINK trading launch is something you don’t want to miss.
The world’s best DEX & CEX liquidity of ETH-LINK is currently on Sushiswap and Coinbase Pro (Sushiswap, with its $200m pool, currently beats Coinbase Pro 3:1 in depth).
Our ETH-LINK pool is currently matching both of them in depth by mirroring Sushiswap’s pool size * 1.25 = $250m, with our small ~$5mil pool.
You see how this is getting interesting? If we can sustainably do this with $5m, we could do a lot more with our $700m TVL. This is “Concentrated Liquidity”, and because we manage this for you, let’s call this the “Managed Concentrated Liquidity”.
Sustainability, is the other difficult part. Our LP pool is a lot like a Chinese Hot Pot where you have two soup flavors (here, I attached a picture), one soup flavor is called LINK, the other called ETH. Because this is a magical pot, LINK soup can be converted to ETH soup and vice versa. And as long as the conversion rate (price) is fair, the overall pot is still full of good soup. This is what happens when we deal with most traders: a few come in for some LINK soup and take out some ETH soup; and the next few do the opposite. Yes, of course, sometimes you have more LINK soup and sometimes more ETH soup, but these are all fair conversions. This is called “Cyclical Imbalance”. Oh don’t forget, you get to charge a fee for providing this conversion service.
The problem here is with toxic traders: they steal soup from you, period. And as more and more of them come through, you have less and less soup. They do that by “front-running”. The key pillar of “front-running” is that they know what you don’t 100 milliseconds ahead of time. It’s almost entirely about a time advantage. So our counter-move also has to do with time: anyone who wants to buy soup, place your order now, but you must WAIT 5 minutes before you get your soup. They lose their time advantage, they lose their edge, and our soup pot is safe again. This is why we have a “Trade Delay”.
This is our 1st entry in the Grandmaster league. Or as Coindesk’s Will Foxley puts it, our 1st “continuous vampire attack” on world liquidity.
Before we have validated all of our hypotheses carefully with the empirical data provided by the ETH-LINK pool, we won’t be focusing on the Trading Volume KPI. We will be focusing on getting the system well tuned first before ramping up trading volume.
(But we have made good progress towards that end. We are in touch with leading aggregators, and we have the option to turn on our organic trade mining program. As a result, we do have a few option to ramp up volume fairly quickly.)
Grab some popcorn,
And wish us luck as we fire up for liftoff.
P.S. In all seriousness, we spent all of this past year preparing for this moment. Our economic theory, AMM math, SC engineering, beta testing, market and trading simulations all point to success. And we are safe to commence a series of very controlled and responsible sequence of experiments.
But there are inevitably unknown unknowns, and if and when they happen, please stay calm, we will just solve them like we have solved all those other problems along our way to get here.
– The “You Save” number is a good estimate of the trading costs you will save compared to the most liquid trading venues in the rest of the world. This number takes into account all 3 components: fees, price impact, gas costs. While this number is not perfect, it showcases our AMM’s potential even with a very small pool size.
– We cap trade size by $100k right now for safety. This will increase in the future. – Because of high gas costs, currently only trades larger than $30k will see significant savings
– we will address smaller trades with our future L2 rollout.
– $5 mil pool is a good size. It gives us enough liquidity for full functionality, and It gives you a large risk premium for being the 1st trading pool.
– You will likely experience some cyclical imbalance. This means that your pool will be buying and selling LINK and ETH at fair prices. So the pool ratio will change for this extra reason (in addition to natural pool ratio oscillations due to price change).
– Single-sided deposit is open as well. Because this is a slightly more advanced feature, please read this before attempting.