What's so special about antfarm's pools ?
Through its Band Rebalancing strategy, Antfarm's goal is to offer better profits to Liquidity Providers, as well as a tailor-made approach of their portfolio. Antfarm offers a wide selection of fees when creating or joining a liquidity pool: 1%, 10%, 25%, 50% and 100%.
Swaps will happen when the market price deviates enough from the pool's price, creating an arbitrage opportunity.
Eg. Antfarm's WETH/USDC 10% fee pool has a price of 1000 USDC per WETH. If the price goes over 1,100 USDC in other markets it creates an arbitrage opportunity: buying on antfarm's pool at 1,000 x 1.1 = 1,100 USDC and selling for a higher amount on a public market. It also works in the other direction if price goes below 1,000 / 1.1 = 909 USDC.
Antfarm's unique remuneration offering allows for more gain while mitigating the risks. This appears to be too good to be true, how does it work?
Same performance, no matter the pool's TVL
Other Decentralized Exchanges rely on low swap fees coupled with high volumes to compensate their Liquidity Providers. The profits made by the LPs is based on the ratio volume/liquidity.
The main issue with this model is that any profitable pool will attract more liquidity providers, increase the liquidity, thus lowering the returns until the average returns only covers the risks taken.
Using a high fee pool, all the volume comes from arbitrage and the amount of liquidity doesn't matter. Even better, as arbitrage will require gas fees to be executed, which are not correlated to amount swapped, the more the liquidity the better.
Higher profits, with less risk
When providing liquidity in liquidity pools, arbitragers swap against liquidity for a fee. Traders do it because they can profit from any slight market movement. Increasing the fee reduce the amount of swaps they can perform and keeps the profit from volatility mainly to the real risk takers, the Liquidity Providers.
The theory of Antfarm is strong, but nothing against some (or a ton!) of backtesting! We applied our model to many historic pairs as well as projections. As swaps in high fee pools (10%+) are mainly from arbitragers (cold-blood machines and professionals), you can anticipate the pool's behaviour in any market conditions. We can predict reserves and collected fees and apply different strategies.
Here's an example of a backtest using the ETH/USDC pool throughout the previous market cycle:
Main takeaways from our backtests:
- 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.
With Antfarm, Liquidity Providers can create their own strategy using one or multiple pools. Either increasing the profits or the regularity, they could benefit from both with multiple pools and pairs.
Antfarm brings multiple strategies for a single pair of tokens. On others DEXs, you are stuck with a single classic strategy.
All the fees paid to Liquidity Providers will be paid in the Antfarm's ecosystem utility token: ATF.
Advantages of using ATF to pay fees and not the tokens of the pool:
- ATF can be cashed at any time without any consequences on the portfolio volume or value.
- They can be traded, reinvested or kept in order to benefit from its deflationary property as a potential secondary source of revenue.
It is deflationary! To make sure collected fees keep their value over time (or even better, increase in value) we opted for a deflationary token. For any swap in an Antfarm pool 85% of the collected fees will be distributed among Liquidity Providers and 15% will be burned.
Although this does not guarantee any short-term value increase, we believe that over a long enough term this will help to keep its value. At least while there is enough liquidity on Antfarm protocol.