Polars: Trade Pool Update (Nov 2021)
Over the past few months, we’ve been working hard on ideas for scaling the Polars business model. Our task is to make sure that the number of events that affect the price of polar tokens is as large as possible. Then our users will have many more trading options. At the same time, one of the tasks is to preserve concentrated liquidity within one pair of polar tokens. As a result of lengthy calculations and testing of various models, we settled on the safest and most scalable model— Dual token Trade Pool.
Dual token model of the Trade Pool
Previously, the Trade Pool had 3 tokens: BUSD, WHITE and BLACK. Users could freely exchange these tokens among themselves. Liquidity providers also had to add 3 tokens to Trade at once in the same value proportion.
Now only 2 tokens will be present in the Trade Pool: WHITE and BLACK. Users will be able to freely exchange them among themselves. Liquidity providers will also need to add only two tokens, similar to Uniswap pools.
An arising problem or why we cannot work with the old version of Trade Pool.
In the near future, with a lot of Betting Pools, there will be an effect of cyclical constant arbitrage opportunities. Prices will constantly differ, so there will be a constant versatile benefit to equalize them. If there are 3 tokens in the Trade Pool (WHITE, BLACK and BUSD), then a third-party arbitrage user, if he has BUSD, will be able to cyclically flush BUSD from the Trade Pool. This will lead to losses of liquidity providers by at least 1/3 of the value of their assets.
That is why we had to remove BUSD from the Trade Pool and now there will be only 2 polar tokens in it: WHITE and BLACK. Now liquidity providers will need to add only 2 tokens in equal shares (previously, it was necessary to add 3 tokens in equal shares).
This brings tremendous benefits and benefits to liquidity providers. Now they will have practically no impermanent losses, since BUSD will not take on a part of the collateral. Profits can be felt very quickly and the only risk is volatility in the aggregate price of WHITE and BLACK.
It is no longer possible to buy or sell polar tokens for BUSD in the Trade Pool. If you did not manage to make a forecast and buy the required token before the start of the event, you will not have such an opportunity until the end of the current event. Now in the Trade Pool it will be possible only to exchange polar tokens among themselves. But in fact, this opens up even more opportunities for hedging and earning money, but we will talk about this in other articles.
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.