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
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).
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.
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.
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.
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