1/ In less than 3 mos., @WombatExchange firmly sits at #3 in the list of DEXes on #BNBChain, with an ATH TVL of US$220m.
A $10m swap only incurs $4.7k slippage vs $2.5m on #Pancakeswap.
How is this possible?
🧵A thread on how Wombat is re-engineering the stableswap experience
2/ What is @WombatExchange?
Wombat is a low slippage, hyper efficient stableswap built on #BNBChain. Its TVL currently sits at US$178m, comprised of stablecoins and $BNB liquid staking derivatives.
3/ What’s special about @WombatExchange?
Two words: Coverage Ratio.
4/ Wombat uses the #TradFi concept of Coverage Ratios to structure its liquidity. Each #stablecoin is a business unit with its own assets and liabilities.
5/ When a user deposits tokens, both assets and liabilities increase. Wombat has tokens to enable swaps, but those tokens must also be paid back to the depositor with interest.
6/ When a swap is conducted, the assets of two liquidity pools increase / decrease based on the direction of the swap.
7/ This fundamental change in @WombatExchange’s liquidity pool design creates 3 unique advantages:
(i) Single sided LP
(ii) High capital utilization, low slippage, no more silos
(iii) Unlimited scalability
8/ Single Sided LP
Instead of the typical liquidity pairs (e.g. $USDC <> $USDT), users only need to deposit one type of token to yield farm on @WombatExchange.
Single sided LP tokens are also more ideal for lending protocols and other derivative tokens.
9/ High Capital Utilization
A common inefficiency of current DEXes are liquidity silos. Liquidity is pool specific.
$USDC <> $USDT and $USDC <> $DAI pool both hold $USDC, but $USDC used for swapping with $USDT must come from the $USDC <> $USDT pool
10/ Wombat breaks down these silos and uses more of its liquidity more efficiently.
The most tangible benefit of this high capital utilization is the ultra low slippage offered by @WombatExchange.
Here’s Wombat vs Ellipsis FYR ⬇️
11/ Unlimited Scalability
With @WombatExchange’s liquidity structure, new #stablecoins are not constrained by their lower liquidity levels vs $USDT or $USDC.
On the flipside, liquidity for predominant stablecoins can scale endlessly and support larger transactions.
12/ @WombatExchange offers a superior product for token swaps. And it’s easy to see why it garnered investments from some of the top VCs in crypto:
Series A was led by @animocabrands and @HailstoneVC. Additional investors included @BinanceLabs, @TPSCapital, & @GSR_io etc.
13/ A subsequent Strategic Round saw the likes of @shimacapital, @jump_, and @wormholecrypto contribute to the growth and development of @WombatExchange
14/ In the next thread, I will go in-depth into @WombatExchange’s product mechanisms and the #WOMWars phenomena.
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16/ I regularly write in-depth protocol analyses and publish detailed research reports for FREE.
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