Are we really introducing a new pool focused on stable coins in this turbulent stable token market?
Yes! There is a lot of stable token volume going on and we believe we can take a cut of that.
And let’s start with that elephant in the room. In the past few months, several major stable tokens have depegged, creating massive turbulence in the market. The biggest shockwave was of course caused by UST. But other stables have depegged as well but were luckily able to get back to their peg of 1 USD.
That’s why we didn’t select the four stable tokens with the largest daily volume, but we selected the four stablest stable tokens available.
For the four stable tokens in our pool, we looked at fully collateralized stable tokens and stayed away from any form of algorithmic stables. The four-token pool will consist of USDC, USDT, DAI, and BUSD.
We explain more about why we selected these four in The 4 stable tokens in the StablePlaza pool.
The upcoming StablePlaza pool
When we launch the StablePlaza pool, DefiPlaza will have two multi-token pools.
One is focused on blue-chip tokens, the other on stable tokens. And for each trade, we automatically select the pool that would result in the lowest trade fee for the end-user.
As you might know, DefiPlaza is special thanks to its single-contract, multi-token, highly optimized DEX, designed to offer the lowest possible trade cost to the end-user. Gas costs per trade are the lowest in the industry, and thanks to the multi-token set up very capital efficient, while Impermanent Loss is minimized.
The (current) DefiPlaza pool is a 16-token pool of blue-chip tokens and is 15 times more capital efficient than traditional pair-based DEXs, offering up to 15 times more fees per unit of liquidity at the same trading volume. Plus, all fees coming from the 120 trading pairs are collected in one pool.
The StablePlaza pool will take the same highly optimized approach as the DefiPlaza pool to provide cheaper trades, with an even lower transaction fee of 0.03% of the value traded.
While the DefiPlaza pool is up to 65% cheaper than Uniswap, the StablePlaza pool will be up to 25% cheaper than Curve, which isn’t as expensive as some of the pair-based DEXs to start with.
It’s enough to say we are really proud of this!
When we acquire enough liquidity and get integrated with 1inch, we can create significant volume with minimal, or no, impermanent loss since all four tokens in the pool are stables.
To make even better use of the provided liquidity, we created our own type of concentrated liquidity.
Concentrated liquidity refers to the ability for liquidity providers (LPs) to select a particular range along the price curve to provide liquidity.
CoinMarketCap
Instead of providing liquidity for a price going from 0 to infinity, concentrated liquidity makes it possible for liquidity providers to select a range which they want to provide liquidity for. For example from 500 to 1500 dollars for Ethereum. (At the moment of writing, the price of Ethereum is 1208 dollars). This way, the liquidity is used in a much more effective way, offering more fees per unit of liquidity provided.
Since stable tokens tend to be stable, you could create a more extreme form of concentrated liquidity, anchored around 1 USD, plus and minus a margin. This is what we did for the StablePlaza pool, to make the pool highly capital efficient and create even more fees per unit of liquidity.
But providing liquidity is not the only way to earn fees. DFP2 holders will be able to stake their DFP2 in the StablePlaza pool to earn 1/3rd of the generated fees. Two-thirds of the fees will go to the liquidity providers and one-third is divided between all staked DFP2 on the StablePlaza pool. If the holder decides to lock their DFP2 for up to 180 days, that stake will even receive up to two times their share of the fees.
This new staking mechanism will give DFP2 a real first use case and the voluntary lockup period should reduce price volatility.
We’re readying the launch of the StablePlaza pool and are dotting the i’s and crossing the t’s. In the next few days, we will release several more blog posts and then the StablePlaza white paper.
So stay tuned!