Liquidity Providers
The heart of the ecosystem
Liquidity Providers are at the heart of Antfarm's ecosystem. Antfarm's unique value proposal is to offer tailor-made remunerative portfolios to liquidity providers.
At the end of the day, LPs are the real risk takers on a DEX. Backtesting is proving that this risk is less and less appreciated by the community as revenues shrink while popularity of DEXs increase. This was not a sustainable model and Antfarm intends to make it right. Bring back the value to LPs!
Antfarm offers a wide selection of fees when creating or joining a liquidity pool: 1%, 10%, 25%, 50% and 100%. This is much higher than most DEXs, where usual pool fee is set at 0.3%.
This makes sense of course, higher fee = higher remuneration. But will there be enough volume? If no-one trades on our pools, its useless to have high fees!
Considering only the volume generated from arbitrage opportunities, our extensive backtesting proved that:
- As long as the pair is volatile enough and the strategy is ran for long enough, the higher the fee the higher the profits,
- The lower the fee the most consistant the profit.
On other Decentralized Exchanges, LPs would earn low swap fees against high trading volumes on their liquidity. In this case, you need high volumes to earn more. However, the more attractive the pool (ie the more volume on it), the more it will attract peer LPs. Lots of LPs means having to share the fee pie with more users.
Using a high fee pool, all the volume comes from arbitrage and the amount of liquidity doesn't matter as volume and liquidity are directly correlated. Even better, as arbitrage will require gas fees to be executed, which are not correlated to the tokens swapped, the more the liquidity the better.
On other Decentralized Exchanges, fees would be paid in the tokens of the pool. Antfarm chose to have fees paid in ATF to bring parallel and safe remuneration to LPs:
- even if the value of the pool crashes, LPs would have earned a separate token, which value is not correlated with the pool's value;
- ATF is self-reinforcing in turbulent markets, this is when high-fee pools become the more interesting and the need for ATF is the strongest.
Last modified 3mo ago