For a long time, we observed the processes that take place in the Polars pools and faced the presence of an unobvious effect of washing out liquidity from the Prediction Pool. The difficulty in tracking was that the washout was delayed.
From a mathematical point of view, after we excluded the underlying asset (HUSD) from the Trade Pool, absolutely all users, including arbitrageurs and liquidity providers, in fact became forecasters, since in order to provide liquidity or arbitrage in the Trade Pool they needed to buy WHITE and BLACK tokens, thereby entering the position in advance. As a result, we managed to get rid of the effect of direct washout of the underlying asset and the profit of arbitrageurs and liquidity providers had to be formed at the expense of losing forecasters.
This would have been the case if we had not received conceptual discrepancies in behavioral factors from liquidity providers and arbitrageurs. All other things being equal, the liquidity provider always has an ineffective position in relation to the arbitrageur, since he has no opportunity to change the position during the event. It is about the position of liquidity providers that arbitrageurs open their positions. Subsequently, arbitrageurs close their positions in the Prediction Pool about the position of ineffective users.
Conclusion
With the current Trade Pool concept in place, we will constantly be dealing with a gradual washout of liquidity, which will lead to losses of liquidity providers through a gradual decline in the aggregate price of polar tokens, which will ultimately discredit this role on the Polars platform. Therefore, at the moment we are forced to remove Trade Pool from the platform in the form of a fork of AMM Balancer.
Polars
The new DeFi platform for creating secure polar tokens, the price of which depends on the results of specific external events. Within the POLARS platform, users can buy, sell and exchange polar tokens, as well as participate in the distribution of the platform’s commission income.
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