Liquidity Book and the Future of AMMs - TOKEN2049 London 2022

so today we are talking about liquidity book and the future of amms we'll take it slowly to let you understand fully the topic so first of all Trader Joe uh is the is the number one dexon Avalanche but uh let's start from the beginning I'm David defy as introduced the general manager of the decks Trader Joe is the One Stop Solution on Avalanche what does it mean a One-Stop shop solution first of all we offer so many products that represent the 360 experience of every uh of every step in the lifetime of our own chain Trader and user of a blockchain we are very excited of being part of the D5 space D5 has shown to be strong sustainable transparent and we are happy member of the overall defect Community as a decks we offer trading of course so users can swap tokens with each other you a user on chain can swap one of their token with another token these tokens are swapped swap train thanks to liquidity pools liquidity pools are based on liquidity providers tokens liquidity providers can put their tokens or available on our decks in a form of a liquidity pool and they are used for the end users to allow the function of swapping tokens on chain furthermore on Trader Joe we have the Farms which are beloved by our fellow digital users basically a farm is a way for new projects to gain visibility and exposure to the community by offering extra rewards to liquidity provider it means that a new protocol that wants to list their token and is interested in improving their liquidity can support their liquid building their liquidity through an incentivized Farm furthermore Trader Joe of modular staking so we have S jaw which gives extra fees in Pharma stable coins based on the trading volume activity on the decks we have video which offers boosted yield and also rocket jaw which offers liquidity bootstrapping for protocols that are just looking to initiate the initial liquidity we have also launched a nft Marketplace since many months now the nft marketplace is called jobex quickly became the number one nft market place on Avalanche we are very focused on bringing key artists from any from any space into launching their collections on Avalanche through our launch pad and secondary market and we also are a banker Joe which offer decentralized landing and borrowing uh on chain so fully transparent over collateralized very easy to manage all based on one unique user experience platform which is the full Trader Joe experience people love Trader Joe not only because the community and the brand of job but also because our focus on user experience and appreciation for making D5 simple well pleasurable for end users that are it it's extremely important for us and it's also key to make the if I accessible and grow amongst any crypto user we need to make sure that user will feel comfortable safe and will have pleasure in actually using on-chain products and that has been our key Focus from the beginning in making sure that any user can enjoy you being a D5 player today we are going to talk about our next big thing liquidity book is actually going to launch next week so perfect timing for presenting this we have been working very hard in the past quarters it has been our key product Focus for the decks and we believe that this is going to unlock new capabilities for all Avalanche users and Beyond because liquidity book is uh discretized liquidity amm protocol with bin architecture let's to make it simple we are in the business of concentrated liquidity management so to let you understand uh how liquidity Works in a concentrated liquidity protocol let's look at the picture on the right side when users want want to make a swap on uh Decks that uses concentrated liquidity they are making a change of token between the active bin the active bin is the bin that represents the active market so the price is set but the bin that is the that is where where the tokens are both on the color blue and the color red so let's say we are talking about for example usdc tether it will be the active bin will probably be one dollar and the active bin will contain both usdc then tether while on the left side you will have only one token token token Epsilon and to the right side you will have token X so with the when when the active pool does not have any more tokens uh of one of the two sides the active bin moves to the direction where the liquidity is still available for a swap so the while we are in the active bin the trade happens with zero slippage this means that you are getting a 1-1 exchange as long as there are both tokens in the active bin and when you're making a swap that could cross to the other bin that's where the price is moving concentrated liquidity however in the current forms are some issues that we try through address with our architecture so we have built in a way that liquidity can start vertically but in a very customized way the picture on the left to represent for example different liquidity position from various users to the contrary of other coincidental Equity protocols when liquidity is spread across a range we allow users to individually select the bins where they want to provide their liquidity in the size that they wish and in the bins that they wish and within the same bin it's a constant sum the this allow the markets to be extremely efficient but also liquidity provider to have deep control over their liquidity and for us efficient liquidity management has been indeed the key from the beginning and now we design the protocol the liquidity positions are fungible so they are represented by uh ERC token every single bin is represented by a receipt token and you and liquidity providers can add remove or modify their position individually for each bin so if for example you are deployed across a range of 20 bins and you want to increase your size only on one bin while removing it from the other you don't have to destroy your entire position but you can just modify the bins that you want to actively manage in that single transaction while leaving all your other positions intact liquidity management will be of course simplified through our ux many portable will create active liquidity position Management Solutions but there are many ways users could deploy their liquidity in order to to optimize how they want to earn fees from each transaction so their cultures to concentrate it they could choose to distribute it all uh majorly in the active bin and then spread across bins surrounding it they could choose to be for example mostly across the same range of the active bin and a few beans close to it just go all in and being that is traded the most or even try to catch more fees by spreading liquidity further out but the position management is completely customizable so it's up to what your type of uh of strategy how you will want to deploy it but we will allow full full control over your position at the beginning and afterwards we have one other aspects of liquidity management is indeed the pricing is indeed the transaction fees that you earn out of your liquidity position so when you have your liquidity in in a bin you will learn fees based on your percentage of liquidity in that set bin but if you distribute liquidity further away from the active one you are exposing yourself in proportion to the distance to the active being to impermanent loss and this is why we have implemented be besides fixed fees uh search pricing model the search pricing model it's a very interesting aspect because when volatility increases which means when beans are crossed in in a sad period of time we accumu we have a volatility accumulator that calculates the volatility and that's that moment and will allow the liquidity provider to an extra fees based on the volatility that is currently in the market and then the volatility will steadily decrease over time the material committed with decrease over time when volatility settles this is unrelated from the active bin and is per and is based on how many beans are crossed in the process for us liquidity book is an extremely important product because it allows us to offer a new uh a new product that is very requested today the stable swap Market is increasingly necessary in this type of market conditions and we are going to deploy all stable coin markets as soon as we open liquidity book that's going to be a key factor for the Avalanche blockchain and for the job brand to make sure that Capital can stay efficient can stay on chain and allow users to enjoy to enjoy this type of transactions without having to expose themselves to any slippage but for us also it's very important as a message to let you know that we have been building extremely hardly over the past extremely hard over the past months years the job brand has been growing steadily and strongly the community always very appreciating of what we have done we are always looking also for new talents that want to join the space smart content developers ux and and any type of position that could fit we loves especially to Embark users from our community they want to take an active role with us and we are looking forward to having having you use our decks in the next months and years to come thank you very much pick it up for Davide awesome presentation mate thank you so much um we're all big friends of Trader Joe one question which loads of people have asked me is Joe actually real well the everyone needs jobs oh I love that answer that's such a great answer yeah well done really love the announcements can't wait to see what's happening I know our community at Smithsburg love trading Trader Joe I love using it so uh so thanks very much David I really appreciate you coming big hand for David again from Trader Joe thanks so much fun thank you very much