Community Liquidity Pools (Market Making Approach)

Hello,

First of all congratulations to Nash on the $1 million milestone.

I would like to suggest that Nash create an option for the community to participate in market making. As I understand, the current practice is to hire market makers to create liquidity and generate volume.

The alternate approach I would like to suggest is similar to Uniswap where members of the community can add liquidity for trading pairs and the market making is automated, this will generate tight spreads, deeper liquidity, and grant the community an opportunity for a new income stream through Nash.

The current direction for DEXs like Loopring, Uniswap, and Bancor is automated pooled liquidity as they are much more efficient than CEX structure orderbooks with hired market makers.

Thank you

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pucenalasdos

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I think it’s a great idea, I’d be happy to contribute what I have to support better liquidity while I wait for Nash’s non-custodial lending to come online.

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This is indeed a really great idea. Wonder what the Nash team thinks about it. Are we expecting a response from Fabio @canesin on this?

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I’m afraid this is currently not true. Maybe at some point in the future, but currently they are not efficient at all.

Market making isn’t automated in the traditional sense (i.e. bots and algorithms). With Uniswap you trade against a smart contract that uses a bonding curve which is a pre-determined model that relates price and supply. This is a good use case for low liquidity token pairs, but the lack of order books makes price discovery less transparent and can result in high slippage for particularly large orders.

Additionally, providing liquidity for the premium is not without risk - as a liquidity provider you risk losing a portion of your funds to the arbitrage process due to something known as impermanent loss. Bancor aims to solve the issue of ‘impermanent loss’ with oracles, however as the oracle problem remains unsolved this addition adds additional complexity and therefore risk, reducing the robustness of the system against failure and attacks.

I agree it would be nice to throw some funds into a liquidity pool for completely risk free profit but unfortunately this is not currently possible.

4 Likes

When Nash Oracles?

What’s this? And how could we use it? :smiley:

These are pools for wrapped btc, are they not?

Yes, I’m wondering if Nash will be able to achieve something similar that is unwrapped. Gifts are best when they’re unwrapped.

1 Like