Stable Swap 2.0
Swapscanner aggregates CFMM (Constant Function Market Makers)-based stable swap DEX with all AMM-based DEXs and proposes more advanced stable swap 2.0 by applying our own engine Navigator.
The existing Klaytn ecosystem’s stable swap DEX provides only a single route. In contrast, Swapscanner uses all stablecoin-related liquidity to provide more efficient stablecoin prices. and also provide a route that cannot be provided by a single stable swap through routing logic that aggregates all LPs.
As the volatility of the DeFi market grew, the demand for stable asset values was also created in the virtual currency market, which became the driving force for the growth of the stablecoin (USDT, USDC, etc.) market. As a result, the trading volume between stablecoins has increased dramatically. However, DEXs, such as Uniswap, which dominate the market, follow the CPMM (Constant Product Market Maker) method. According to this trading method, each token is priced according to the relative amount between tokens in the liquidity pool, so it is not suitable for trading between stablecoins with fixed values. For example, a stablecoin like USDT should always have a value of $1, but when you trade a pair of stablecoins using the CPMM method, you are in a contradictory situation where volatility occurs without maintaining a fixed value. Instead of the existing CPMM method, there is a need for a method that is optimized for transactions between stablecoins.
CFMM is designed to exchange almost 1:1 ratio when each asset in a liquidity pair maintains a certain ratio in trading between low-volatility assets, significantly reducing slippage that occurs during trading.
The graph above is a comparison of the Uniswap method, the existing AMM method, and the CFMM method proposed by Curve Finance.
Existing AMM applies the concept of x*y=k (k= is a constant), whereas the CFMM method proposed by Curve Finance applies the concept of x+y=k. When placed on the same graph, the two methods can be compared as above. The graph shown as a constant price is a section where slippage and non-permanent loss do not occur, but the Uniswap invariant graph can confirm that there is a large gap with this graph of constant price. On the other hand, Stableswap invariant, that is, the CFMM method of curve finance, shows a graph that is closely related to the constant price.
In the graph above, you can see the stablecoin's ability to maintain the value of x. Stableswap's graph maintains the value of $1 even if dx increases to a certain size.
In other words, it can be confirmed that sleepy is significantly reduced and there is almost no non-permanent loss compared to uniswap in transactions between stablecoins.