Overview

Simple Pools on CaviarNine offer an innovative way to provide liquidity and execute trades using a weighted pools with flexible fee structures. Unlike traditional liquidity pools, Simple Pools allow for customizable token weight distributions, enabling more efficient pricing mechanisms.

Key Features

• Weighted Liquidity Distribution: Each token in the pool can have a predefined weight between 10% and 90%, affecting the price impact of swaps.

• Flexible Fees: Pools have customizable swap fees ranging from 0.01% to 2%, with configurable protocol and treasury fee shares.

• Liquidity Provider Tokens (LP Tokens): Users receive LP tokens representing their share of the pool, which can be redeemed at any time.

• LP Tokens are Radix Native: User LP tokens are natively supported by the Radix Wallet for simple breakdown of there valuation

• Efficient Swaps: The pool uses a simple swap function to ensure optimal price execution based on liquidity weights.

• On-Ledger Transactions: All transactions are executed fully on-ledger, ensuring transparency and security.

How It Works

1. Pool Creation

   • A user can create a new Simple Pool by selecting two assets and defining their respective weights and the pool fees

   • Starting a pool is free (ignore the tiny gas).

2. Adding Liquidity

   • Liquidity providers contribute tokens in proportion to the pool's weight distribution.

   • They receive LP tokens that track their share in the pool.

   • Liquidity is spread over the entire spot range, so you don’t have to worry about it ever being unused or concentrated in a way that limits trading activity. This ensures continuous availability of liquidity for all market participants.

3. Swapping Assets

   • Users can swap one asset for another within the pool.

   • The output amount is calculated based on the token reserves, liquidity weights, and swap fee deductions.

   • The CaviarNine Aggregator will automatically pick up any new pool and instantly route to it.

4. Withdrawing Liquidity

   • LP token holders can redeem their tokens for underlying assets at the pool’s current reserves.

   • The redemption value is calculated dynamically based on pool reserves.