1inch launches automated market maker Mooniswap

advertisement

Decentralized exchange (DEX) aggregator 1inch.exchange has launched its own automated market maker (AMM), Mooniswap, according to a company press release shared with The Block. 

1inch started out as a product for aggregating liquidity across DEXes, gaining traction in the DeFi space by integrating many liquidity sources and tokens. The project's aggregation feature allowed users to swap between different tokens at cheaper prices and with a wide range of options. 

Major liquidity sources that 1inch has integrated with include Uniswap, Balancer, Bancor and Kyber Network. In March, the protocol integrated version 2 of Uniswap's protocol.

AMMs are "liquidity pools" that allow users to easily switch between tokens in a decentralized and non-custodial manner. Bancor was the first project to leverage the AMM model to enable cryptocurrency trades. Other projects like Uniswap and Balancer followed suit and gained popularity in the decentralized finance (DeFi) space. 

However, the implementations of the AMM mechanisms were not without flaws. According to 1inch, current designs in some AMM models result in “high slippage on large trades and impermanent losses” for traders and liquidity providers. This led to the launch of new projects like Curve and Balancer with enhanced AMM models. 1inch's Mooniswap hopes to also improve on the current AMM designs.

With Mooniswap, 1inch plans to lower impermanent losses for liquidity providers by lowering the profit-margins of arbitrageurs with the introduction of a 5-min time-delay. According to the press release, "by such a delay in price updates, the market maker would create a highly competitive environment for arbitrageurs forcing them to perform trades at less profitable prices, which in turn would add value to the liquidity providers’ side." As a result, these arbitrageurs will only capture a portion of slippage, with the remaining portion diverted into a shared pool for liquidity providers.

The aggregator said it is expecting Mooniswap to generate between 50-200% more income for liquidity providers than Uniswap V2 because of the price slippage profits it believes Mooniswap will bring.

Related Reading

Get Your Crypto
Daily Brief

Delivered daily, straight to your inbox.

TRON USDC now available

Delivering on a vision for an interoperable global standard for dollar digital currency, Circle and TRON have partnered to make USD Coin (USDC) available on the TRON blockchain, which has grown to more than 56 million accounts and nearly 2.5 billion transactions since its founding just four years ago. TRON is home to a broad ecosystem for digital assets in Asia and around the world, and the TRON community can now benefit from easy access to the world's fastest-growing, regulated dollar digital currency. 
Read Full Story
Sponsored Post
More