stabble's innovations
Smart liquidity routing
Smart liquidity routing (SLR) aims to support liquidity providers in automating, diversifying, and easing their liquidity provision. Users can provide single asset deposits that will be distributed along multiple pools to diversify the liquidity position; the smart liquidity routing function compares the expected pool returns and navigates the fund into the most lucrative pools based on its APY while controlling for a diversified liquidity position. It allows users to automate long-term liquidity deposits, as it continuously reallocates funds into profit-maximizing pools. Through diversification, SLR reduces the divergence risk up to 80 % and leads to an improved risk-return trade-off for liquidity providers.
Margin liquidity
Despite the extra compensation through arbitrage trading, providing liquidity can still be risky in times of high market volatility. It can be argued that it demands to be a risk-seeking/risk-neutral individual to become a liquidity provider. stabble aims to include risk-averse liquidity providers in the DeFi ecosystem. Therefore, stabble develops margin liquidity to support the wider adoption of liquidity provision. Margin liquidity is 8,000 times more capital efficient than concentrated liquidity.
DeFi Researchers explain the benefits of virtual and margin liquidity in increasing capital efficiency at a DEX. Whereas traditional liquidity provision requires a liquidity provider, margin liquidity requires a lender and a margin liquidity position. Margin liquidity providers demand capital from lenders and provide it to the pool. To compensate the lender, the margin liquidity provider pays the fee to compensate the lender where the marginal liquidity provider places a collateral amount. Similar to concentrated liquidity in Uniswap V3, the liquidity provision only holds for a given price range, so that the loss in the leveraged position of the margin liquidity provider cannot exceed the provided collateral. With the help of margin liquidity stabble extends the flexibility for users and increases capital efficiency. Risk-averse liquidity providers can lend liquidity and are not exposed to divergence loss. Risk-seeking liquidity providers can take marginal liquidity positions that allow high profits at the cost of possible liquidations.
Margin liquidity provision is fairly new to the defi-ecosystem and requires it to be well-tested before being launched. Therefore, it will not be included in stabble’s first launch, for more see the roadmap.
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