Stabull AMM

Stabull is a 4th generation AMM designed for Stablecoin and Commodity Swaps. We aim to do one thing, and do it well!

A first generation (Gen 1) “Stableswap” generally refers to the invariant created by Curve (v1) for a pool of assets with a stable exchange rate (constant, 1:1); not necessarily a pool of stable coins (e.g. BTC/wBTC). The invariant (visualized as a curve), is a combination of the constant product function (popularized by Uniswap) and the constant sum function (constant price), forming a “flattened” curve. As a result it shares the benefits of unlimited liquidity (constant product), while still maintaining low slippage close to the equilibrium (constant sum).

Gen 2: Does not properly represent pure stableswaps

Second generation (Gen 2) AMMs, Curve v2, shell and DFX, for example, do not represent genuine stableswaps in their purest form either because they were created for non-pegged or volatile assets that lack a stable exchange rate, such as different currency pairs (NZDS/USDC, although less volatile than ETH/USDC, is not stable). They do use a similar invariant to “stableswap”, however, but instead of maintaining the “stable” exchange rate (the gradient of the flat section) constant, “repegging” to a dynamic price (from an internal or external oracle) periodically occurs.

Gen 3: The embrace of modified bonding curves and extra features

The rise of third generation (Gen 3) AMMs marked a significant shift towards decentralization and interoperability in response to the evolving needs of the crypto industry by offering a more flexible and inclusive trading environment using features that mirrored that of their centralized counterparts.

The first Gen 3 DEX, Uniswap V3, offered a radical new concept known as “concentrated liquidity” where liquidity providers selected a range at which liquidity could be made available, thus enabling greater capital efficiency and profitability.

By contrast, Gen 1 and 2 DEXs spread liquidity across the entire possible price range, resulting in liquidity being wasted in lightly traded areas. Scalability however was enhanced due to multiple fee tiers and improved architecture, particularly given the mass adoption of layer 2 architecture already underway, such as Arbitrum, Optimism and Polygon roll ups on notable exchanges.

Gen 3 DEXs also introduced the concept of cross-chain interoperability to solve increasing issues of fragmented liquidity associated with the many L2 operated DEXs. Recognizing that interconnected ecosystems progress the future of blockchain away from isolated networks, cross-chain interoperability marked a significant step forward by removing barriers that previously restricted users to trading within their respective blockchain ecosystems.

Moreover, Gen 3 exchanges were characterized by the innovative use of smart contracts to automate trading operations, and by using the Uniswap V3 model as a base, further enhanced features like dynamic liquidity, dynamic fee tiers, single-sided liquidity pools, RFQ models, low-slippage and CEX-DEX hybrids trying to capitalize on the best of both worlds.

Gen 3 exchanges established the foundation for the next generation of exchanges and set the stage for the introduction of more advanced features and sophisticated trading mechanisms. Recent advances in ZK technology, for example, has led to liquidity migration toward ZK-based chains. Given the extra efficiency and privacy-enabling capabilities of these chains, wide-spread adoption is further anticipated by the general public. These advancements as well as the lack of an industry-led exchange have opened the door to the development of Gen 4 exchanges, such as Stabull.Finance, which is laser-focused on improving "capital efficiency" for a non-USD-based stable coin AMM that enables stableswaps in an accessible, cost-effective manner. There needs to be a key source of liquidity for non-USD stable coins that allows them to flourish and grow.

...Despite headwinds [with existing options] non-USD stables need some place decentralized to trade otherwise the value of interoperability decreases significantly. Kremsky, 2023

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