Recently, we collaborated with @bootfinance to do up a series of articles to highlight their protocol. Today, we talk about their interesting custom swap curve. What's that?
But let's not talk about that first. Let's talk about one of our favourite RPGs of all time - Witcher!
But let's not talk about that first. Let's talk about one of our favourite RPGs of all time - Witcher!
@bootfinance Steel or Silver?
🔹 We're great fans of the @witchergame series by Andrzej Sapkowski
🔹 The series traces the story of a monster hunter, or a witcher, named Geralt of Rivia
🔹 Ever wondered why Geralt straps two swords ⚔️ behind his back?
🔹 We're great fans of the @witchergame series by Andrzej Sapkowski
🔹 The series traces the story of a monster hunter, or a witcher, named Geralt of Rivia
🔹 Ever wondered why Geralt straps two swords ⚔️ behind his back?
@bootfinance @witchergame 🔹 One is made of silver - to slay monsters born of magic
🔹 The other is made of steel - to slay everything else
🔹 Geralt chooses his sword depending on the situation
"It's said, spitefully, the silver one is for monsters and the iron for humans. A lie, of course." - Geralt
🔹 The other is made of steel - to slay everything else
🔹 Geralt chooses his sword depending on the situation
"It's said, spitefully, the silver one is for monsters and the iron for humans. A lie, of course." - Geralt
@bootfinance @witchergame 🔹 In crypto, constant product AMMs like Uniswap dominate the DEX market
🔹 The success of Uniswap makes people think that this is the default swap curve to go to
🔹 Why fix something that is not broken?
🔹 The success of Uniswap makes people think that this is the default swap curve to go to
🔹 Why fix something that is not broken?
@bootfinance @witchergame 🔹 But this is like Geralt fighting with one sword only
🔹 Does it work?
Certainly.
🔹 Is it the most effective?
Maybe not.
🔹 Does it work?
Certainly.
🔹 Is it the most effective?
Maybe not.
@bootfinance @witchergame 🔹 The article by @SabretoothSG shows how changes in the swap curve can affect the volatility of the same asset pairs
🔹 The medium is part of the message - "medium" = "swap curve"
"We shape our tools, and then our tools shape us" - Marshall McLuhan
sabretoothsg.medium.com/uniswap-is-the…
🔹 The medium is part of the message - "medium" = "swap curve"
"We shape our tools, and then our tools shape us" - Marshall McLuhan
sabretoothsg.medium.com/uniswap-is-the…
@bootfinance @witchergame @SabretoothSG 2 common swap curves used
Constant product swap curve e.g. Uniswap
🔹 Allows prices to move faster than a stable swap curve
🔹 Allows token to go 📈 or 📉 easily
Stable swap curve e.g. Curve
🔹 Dampens price movement
🔹 Good to prevent deviation away from a price peg
Constant product swap curve e.g. Uniswap
🔹 Allows prices to move faster than a stable swap curve
🔹 Allows token to go 📈 or 📉 easily
Stable swap curve e.g. Curve
🔹 Dampens price movement
🔹 Good to prevent deviation away from a price peg
@bootfinance @witchergame @SabretoothSG Feels like this when you dampen the price movement using a stable swap curve 🐌
@bootfinance @witchergame @SabretoothSG Custom Swap curve by Boot Finance
🔹 Boot Finance allows customizable swap curve in liquidity pools
🔹 Allows two or more swap curves to be used, instead of just one like most AMMs
🔹 The pools can be customized to use a specific swap curve at a particular price range
🔹 Boot Finance allows customizable swap curve in liquidity pools
🔹 Allows two or more swap curves to be used, instead of just one like most AMMs
🔹 The pools can be customized to use a specific swap curve at a particular price range
@bootfinance @witchergame @SabretoothSG 🔹 It can even be adjusted on the fly without adverse effects on existing LPs in the pool
🔹 Encourages the pool to behave differently according to the price objectives set by the project
🔹 At the end of the day, the price is still dependent on market forces
🔹 Encourages the pool to behave differently according to the price objectives set by the project
🔹 At the end of the day, the price is still dependent on market forces
@bootfinance @witchergame @SabretoothSG Example
🔹 A fictitious $CIRI token ICO at $1
🔹 Price objective is to go up only
🔹 Liquidity pool is set up like this:
Above $1 - constant product swap curve
Below $1 - stable swap curve
🔹 Encourages price to go up while providing a price floor if there is a huge selling
🔹 A fictitious $CIRI token ICO at $1
🔹 Price objective is to go up only
🔹 Liquidity pool is set up like this:
Above $1 - constant product swap curve
Below $1 - stable swap curve
🔹 Encourages price to go up while providing a price floor if there is a huge selling
@bootfinance @witchergame @SabretoothSG 🔹 Geralt seldom uses his silver sword because while effective, it can break easily
🔹 There is a cost to the benefit
🔹 In the event of severe selldown, the price of $CIRI will experience a fall steeper than if a constant product swap curve is used instead
🔹 There is a cost to the benefit
🔹 In the event of severe selldown, the price of $CIRI will experience a fall steeper than if a constant product swap curve is used instead
@bootfinance @witchergame @SabretoothSG 🔹 Still worth it because the market rarely crashes with that level of intensity e.g. May 2021
🔹 We don't build a bridge that can withstand all types of load scenarios at all times
🔹 We build one that can withstand the most likely load scenario and live with the risk
🔹 We don't build a bridge that can withstand all types of load scenarios at all times
🔹 We build one that can withstand the most likely load scenario and live with the risk
@bootfinance @witchergame @SabretoothSG The content here is based on a series of podcasts by the Boot Finance team and research done by us.
The long-form article is in our substack here:
thereadingape.substack.com/p/customswap-b…
The long-form article is in our substack here:
thereadingape.substack.com/p/customswap-b…
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