Customizable spread curves
The Spread Inflator Curve is an innovative bonding curve implementation designed to give users full control over the bid-ask spread, allowing liquidity providers to capture more value from buy and sell transactions. This is particularly useful for NFT projects with deep liquidity provision, as it enables a more attractive return on investment. By default, the spread inflator is percent-based, and a round trip trade will yield a 2% return on the trade price.
The Spread Inflator Curve allows for the capturing of a positive bid-ask spread by ensuring that the t0-ask minus the t-1 bid (without any fees) is always greater than zero. It enables the capturing of the bid-ask spread through either a percentage inflator or a flat amount inflator, giving pool creators more control over the bid-ask spread and its effect on liquidity provision.
The flat amount inflator is likely to be more intuitive for most users. For example, with a flat amount of X, every buy-sell trade pair will increase the collateral by X.
The Spread Inflator Curve is particularly useful for pools with low APRs and deep liquidity provision range. By utilizing the spread inflator, pool creators can achieve APRs that are multiples of the base value.
Benefits of the Spread Inflator Curve
Customizable bid-ask spread: The spread inflator curve allows you to set an additional spread between the buying and selling price for each pool, enabling liquidity providers to control the compensation they get from the trade through the spread they get from each trade.
Flexible spread settings: You can customize the spread inflator using either a flat amount or a percentage, giving you full control over the spread
Increased returns: With the spread inflator curve, liquidity providers can potentially achieve higher returns, making it more appealing for NFT projects looking to incentivize their community to provide liquidity.
Adaptable for various NFT projects: The spread inflator curve can be customized to each NFT project, allowing project creators to maximize their returns and provide more value to their communities.
How the Spread Inflator Curve works
The Spread Inflator Curve uses two additional parameters, a boolean bidAskInflatorIsFlatAmount and a uint248 inflator. These parameters can be set during pool creation or edited later, giving you full control over the spread inflation.
The bidAskInflatorIsFlatAmount parameter is a boolean that determines whether the inflator is flat amount or percent-based. The inflator parameter is a uint248 that specifies the amount or percentage of the spread inflation.
The spread captured is separate from the fees and will be contributed back to the pool's collateral. This allows the spread captured during the trade to be auto-compounded into the pool. This is opposed to fees which are accounted for separately and is not auto-compounded back into the pool.
The linear and exponential spread inflator curves have been deployed at the following addresses:
LinearCurveWithSpreadInflator: 0x44e5c01baff15059254bf4b797fcfaed70d84942
ExponentialCurveWithSpreadInflator: 0x82f518ef627a992a7b38678b1358cd94cec35bb0
Last updated
