STON.fi is undergoing a series of updates called STON.fi V2. A key component of this series is the addition of new types of liquidity pools to the exchange, which we will discuss in this article.
On September 25, the AMM DEX STON.fi announced the launch of STON.fi V2 in its Telegram channel.
STON.fi V2 is a series of updates aimed at enhancing security, stability, performance, interface, and adding new features.
STON.fi V2 has already introduced several important updates to the exchange:
Updated Smart Contracts. STON.fi has updated its smart contracts. According to the exchange: «The new STON.fi V2 smart contracts meet all the requirements of modern trading.»
Safe creation of liquidity pools. Now you can create a liquidity pool and supply liquidity to it in a single operation! This ensures that your tokens are fully protected from “sniper bot” attacks that target new pools to manipulate prices.
Referral system in the SDK. You can now flexibly configure referral commissions when integrating the STON.fi SDK.
And this is just the beginning! STON.fi V2 plans to introduce many more features, including new types of liquidity pools, which we will discuss in this article.
New Types of Liquidity Pools on STON.fi!
Before we continue, you should already know how a “regular pool” or Constant Product Pool works. If you don’t, I recommend reading my article about it first to avoid any unnecessary confusion.
It is important to note: STON.fi will be the first exchange on the TON blockchain to introduce new types of liquidity pools.
Weighted Constant Product Invariant Pool
A Weighted Constant Product Invariant Pool (weighted pool) is a type of liquidity pool that allows assets to be distributed in ratios other than the standard 50%/50%. For example, you can create a USDT/NOT pool with an 80%/20% ratio, where 80% is USDT, and 20% is NOT.
In such pools, assets are typically weighted so that a larger percentage is allocated to the less volatile token, while a smaller percentage is allocated to the more volatile one.
Advantages of WCPI Pools:
Custom Ratios: Users can set their own ratios in liquidity pools, such as 80%/20%, 60%/40%, and so on.
Multiple Assets: Pools can hold more than two assets.
Minimized Impermanent Loss Risk: Users can reduce the weight (<50%) of volatile assets, minimizing the risk of impermanent loss.
New Investment Strategies: WCPI pools open up new opportunities for implementing diverse investment strategies.
The most important aspect: this partially addresses one of DeFi’s problems — low liquidity levels.
When users can set their own asset ratios in a pool, they will be more willing to provide liquidity on STON.fi. Often, you might want to supply liquidity for a good yield but hesitate to risk 50% of your funds by purchasing a meme coin. With WCPI pools, you can reduce the weight of such an asset, for example, to 20%.
It’s important to note that the APR also changes depending on the weights you configure in the liquidity pool.
How is the Exchange Rate Calculated?
Some might wonder: “How is the exchange rate determined in WCPI pools?”
In traditional pools (50/50), it’s straightforward: you divide one asset by the other to get the ratio (Y/X), which represents the exchange rate. But how does it work here? Let’s figure it out!
Let’s take a pool containing 200 tokens of asset Y and 100 tokens of asset X.
To find the exchange rate for token X (specifically, how many Y tokens are needed to get one X token), we simply divide them:
Answer: X = 2Y
In a WCPI pool, things are slightly more complex because weights are added.
Let’s again imagine a pool containing 200 tokens of Y and 100 tokens of X. However, token X holds 80% of the weight, while token Y holds 20%.
Here, the formula starts with the familiar fraction and then multiplies it by the ratio of weights (80%/20%)
Answer: X = 8Y
As you can see, it’s straightforward. This way, you can also calculate the value of asset Y relative to X.
Calculate it and share your results in the comments!
Examples of WCPI Pool Functionality
On the DEX Beethoven X, weighted pools have been operational since launch. These pools allow you, for instance, to provide liquidity with three tokens simultaneously in one pool: USDC, WFTM, and SOL.
Alternatively, you can create your own liquidity pool here, adding up to 8 tokens and assigning custom weights to each token.
StableSwap Pool
StableSwap is a pool created and optimized specifically for trading assets of similar value. For example: USDT-USDC, osETH-rETH.
Advantages of StableSwap:
Minimal Slippage:
StableSwap pools allow for minimal slippage. For example, when you exchange 1000 USDT for USDC in a StableSwap pool, you are more likely to get around 1000 USDC rather than 995 or 990 USDC, as might happen in a regular pool.Price Optimization:
StableSwap algorithms help keep asset prices close to their target value. For USDT and USDC, it’s $1, and for osETH and rETH, it’s the current price of Ethereum.
StableSwap allows trading of assets of similar value with less slippage compared to the standard Constant Product Pool model at the same level of liquidity!
For example:
In a regular pool, when exchanging 1000 USDT for USDC, you would receive 990 USDC, while in a StableSwap pool, you would receive 999 USDC. The difference becomes even more noticeable with larger amounts.
Globally, StableSwap will also lead to increased liquidity. Thanks to lower slippage, users will more often turn to decentralized services rather than CEX. Consequently, APR in liquidity pools will increase, which in turn will stimulate the attraction of new liquidity.
How Do StableSwap Pools Work?
If we examine how StableSwap functions using stablecoins as an example, it minimizes slippage by “rounding” the rate towards 1. However, in cases of significant price deviations (e.g., if USDT loses its peg to $1 and drops to $0.8), StableSwap will stop operating as an optimized pool and will instead function like a regular pool (Constant Product Pool).
StableSwap behaves like a curve that, instead of following the standard slope of a regular pool (Constant Product Pool), remains almost flat near the ratio of similar assets. This is what ensures minimal slippage.
You can see this visually in the following chart:
Examples of StableSwap Pool Functionality:
On the DEX Curve Finance, StableSwap pools are available, such as the pool for stablecoins USDC-USDe or the osETH/rETH pool, where asset values are pegged to Ethereum.
Wstableswap Pool
WStableSwap is a pool that combines the properties of StableSwap and WCPI. This pool allows setting custom asset ratios while achieving minimal slippage through the use of the StableSwap mechanism.
For example, you can create a USDT/USDC pool where USDT makes up 80% of the pool and USDC 20%.
Advantages of WStableSwap
The advantages of WStableSwap include the benefits of both WCPI and StableSwap:
Setting custom asset ratios.
Pools can hold more than two assets.
Users can adjust weights to align with their strategy. For instance, if you trust USDT more than USDC, you can assign a weight where 80% is USDT and 20% is USDC.
Minimal slippage.
More stable exchange rates for stablecoins by maintaining a 1:1 ratio.
As with the previous types of pools, this pool will bring a new flow of liquidity to STON.fi.
Examples of WStableSwap Pool Functionality
On the DEX Balancer, WStableSwap pools are available. For instance, the pool for stablecoins USDC.e-USDT-sDAI or the wstETH-sfrxETH-rETH pool.
Conclusion:
The series of updates in STON.fi V2 will bring new opportunities to the TON blockchain ecosystem. One of the innovations includes the addition of new types of liquidity pools: Weighted, StableSwap, and WStableSwap.
These new types of liquidity pools will revolutionize the TON blockchain. Their multifunctionality will enable users to build their own investment strategies while providing liquidity, leading to an increase in overall liquidity on the TON blockchain.
As a result of this step, the TVL of the AMM DEX STON.fi and the TON blockchain will grow.
STON.fi social networks:
Twitter - @ston_fi Telegram - @stonfidex Reddit - r/STONFi
