On-chain data indicates that market-wide inefficiencies on decentralized exchanges (DEXs) can deplete up to 27% of a protocol’s Total Value Locked (TVL). This depletion largely manifests as impermanent loss (IL), diminishing the value and potential earnings of liquidity providers. Why is this significant?
Consider this: If you’re aiming to create liquidity pools for two assets across multiple DEXs to reach a broader audience and grow your token holder community, setting up these pools can certainly boost your market presence. Great for exposure, however, each DEX operates in its own bubble. It introduces complexities related to price stability and liquidity management.
When asset prices in a pool diverge significantly from their initial values, LPs experience IL. Basically, they could have earned more by just holding the assets instead of providing liquidity. This discourages participation and weakens your project’s overall liquidity.
So, what’s the solution?
One word: stabble.
stabble offers a one-stop shop for managing liquidity across different DEXes. Here’s how it works:
- Create a Market on stabble: Create a main pool on stabble for robust liquidity management.
- Expand to Raydium and Orca: Add pools for these popular Solana DEXes to reach a wider audience.
- Smart Liquidity Arbitrage: Set up a special pool on stabble that automatically connects to your Raydium and Orca pools. This pool acts like a smart trader, constantly balancing prices across all three.
By doing so, stabble’s protocol facilitates cross-exchange market making and liquidity management, creating liquid on-chain markets with consistently fair prices while generating profits.
The benefits of this approach are significant. By ensuring prices across all pools match, stabble eliminates price discrepancies, fostering a healthier and more stable market for traders. This uniform pricing maintains market integrity and prevents the exploitation of arbitrage opportunities that could otherwise lead to traders’ losses.
Furthermore, with reduced price discrepancies, the likelihood of IL significantly decreases. Additionally, the extra fees generated through stabble’d arbitrage pools and cross-exchange trades provide liquidity providers with a new source of yield. This dual benefit protects against IL while enhancing profitability simultaneously.
