Decentralized finance platform, Impossible Finance has unveiled its v2 swap design in an upgrade widely expected to make the AMM protocol much more attractive for cryptocurrency users and liquidity providers.
The automated market maker is rolling the new version out in the middle of a crypto bear run with the promise of featuring the lowest price slippage and maximized capital utilization. Through an optimized mathematical model, liquidity providers of Impossible Finance’s swap may enjoy several extra benefits.
Impossible Finance touts the new upgrade as offering lower swapping fees and better passive portfolio management thanks to the protocol's ability to precisely manage risk/reward based on market conditions.
According to a medium blogspot, Impossible Finance uses a novel bonding curve that they term “xybk invariant,” whereas b = boost, a tunable value during protocol operation. Essentially, what this invariant achieves is artificial inflation of Total Value Locked (TVL) in pools by a multiplier of boost times.
The chief innovation in this new version is what the company is calling ‘asymmetrical tuning.’ This deals with one of the key hypotheses of building a stablecoins-customized AMM — the ability to provide different capital efficiencies for each side of the invariant curve.
The asymmetrical tuning is built for providing an ideal quotation between stablecoins swap under AMM mechanism. It’s useful for stablecoins with strong economics on 1 side of the peg as there should always be very little price difference in between.
To make liquidity provisioning more attractive, the asymmetrical tuning tailors the most optimal balance between reward and impermanent loss for LPs.
For example, stablecoins with 24/7 trustless redemption for $1 of assets shouldn’t trade far under $1. For this stablecoin, Impossible Finance might choose to provide 1000x capital efficiency when the peg breaks downwards and 50x capital efficiency when peg breaks upwards.
This feature is provided by using two piecewise continuous xybk invariant curves joined at the midpoint, token0Balance = token1Balance = sqrtK:
Impossible Finance raises fresh capital
“It’s difficult to make precise capital efficiency comparisons with v3 uniswap as LPs choose their own capital efficiencies by choosing the LP over some price range. However, setting boost=4000 for xybk pools will allow our pools to match the capital efficiency of any uni v3 pool,” the company explains.
Impossible Finance says this enhancement is also a clever solution to the problem of gas fees, the price of doing business on blockchain. Ethererum transaction fees are still at record levels and even a much touted approaching network upgrade is unlikely to alleviate the problem soon.
Impossible Finance said the swap implementation of the xybk invariant will lure more people in the DeFi space since it provides swaps as efficient as “curve.finance based swaps + cheaper than uniswap v3 based swaps.”
The recent milestones come on the heels of Impossible Finance’s fresh capital injection led by a bevy of high-profile institutional and angel investors. Earlier in June, the company raised $7 million via a seed funding round with participation from over 125 notable investors including True Ventures, CMS Holdings, Alameda Research and Hashed.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.