Source: Lightning HSL
I think the concept of capital pool has always been underestimated. Clearly defining the concept of accurate capital pool is very important for the currency mixing circle. LearningDeFi, the capital pool may be the most useful key. Any new user who wants to enter this field should understand the capital pool at the first stop. In a centralized exchange like Binance, a trading pair is in the form of an order book, such as ETH-USD, which is the place where both parties to the transaction place orders, and the seller and the buyer are each other's counterparties. This is the trading form we are familiar with.
In the decentralized exchange dex
, the counterparty of the buyer and the seller is a thing called a capital pool. The capital pool is to throw two mutually traded tokens into a "pool" together. The specific amounts of the two tokens in this pool will change when they meet specific price curve requirements. This is the AMMalgorithm. This is the core of the liquidity pool in d
exex. Let us define specifically what a liquidity pool is, or what are the core elements that make up or define a specific liquidity pool. To thoroughly understand the pool, you can ask three questions:
1.
Who puts the money into the pool? 2.How does the agreement handle this money?
3.How are the benefits and risks allocated in the capital pool?
For the vast majority of Defi projects, if you can answer these three questions clearly, you can basically be considered an expert in this project.
However, in order to be able to truly incorporate a DeFiproject into your financial management or use, we still need to define the capital pool in more detail.
For a capital pool, it can be divided into five elements:
1.
Fund composition. For example, in the fund pool of uniswap, one group contains two
erc20tokens, thus forming a trading pair (pair ). For example, Curve will have three-currency pools. Similarly, for lending defiprojects, we can actually look at it from the perspective of funding pools. For example, aave can be split into a supply pool and a liability pool, and you can also see what components are in the pool. 2. The roles that interact with the funding pool can be used to define the supply and demand roles of the funding pool. For example, the funding pool of uniswapcan define trading users and funding pool provider users. This element can help find out where the real profit of this
defiproduct comes from. If you participate in a defi project but you don’t understand this factor, then you are definitely a leek. 3. The algorithm that changes or constrains the changes in the composition of the fund pool. The classic one isUniswap'sAMMcurve. In fact, all kinds of DEXare modifying the algorithm for changing the composition of the capital pool. All kinds of MMcurves are essentially slight changes to this algorithm. Parameters such as the interest calculation, collateral ratio and liquidation conditions of the lending agreement also belong to the algorithm for constraining changes in the composition of the capital pool.
4.Allocation of benefits and costs of the protocol.
The allocation of benefits and costs is part of the algorithm in 3
above. But this is very important and deserves further refinement. For exampleuniswap'sAMMThe algorithm is the handling fee contributed by trading users100%to the fund pool provider, and most dex will give a part to the project party.
The interest distribution of the lending agreement is also one of the most important parameters.
5.Finally, there is another part that we may not care much about, which is governance.
The main thing is how the protocol parameters should be adjusted. Now the governance of various DAoare all project parties issuing proposals, and then the coin holders vote and so on.
EFIprotocols can all be analyzed from these five elements.
Like uniswap v4versionhook
, I have seen a lot of people online write articles on popular science and it is still difficult to understand. In fact, you can understand it from the perspective of the pool. Uniswap V2's pool components are two ERC-20 tokens, and as long as the tokens are the same, they are the same pool. This means that for each token pair (such as ETH/USDC), Uniswap V2 has only one pool, all transactions are carried out in this pool, and the fee is fixed at 0.3%.
Uniswap V3 introduces more flexibility. In addition to the fee division, V3 adds four fee options: 0.01%, 0.05%, 0.3% and 1%. This means that for the same pair of tokens, users can choose different fees and form different pools. V2 only has a 0.3% fee, while V3 allows the fee rate to be adjusted according to different trading needs.
In addition, V3 also introduced centralized liquidity, allowing LPs to choose the price range for providing liquidity, further optimizing the efficiency of the capital pool. This is an algorithmic adjustment to the composition of the capital pool, but these algorithms are officially defined by Uniswap, and LPs can only provide liquidity within these preset ranges.
Compared to V3, the most significant change in Uniswap V4 is the customization of handling fees. V4 allows users to set almost unlimited handling fee options for the same pair of tokens, breaking the limit of four fixed rates in V3. This means that two identical token pairs can create multiple different capital pools in V4, depending on different settings for handling fees.
In addition, V4 also introduced the Hook mechanism, which makes the composition and algorithm of the capital pool more flexible. V4 allows users to add a custom algorithm, i.e. Hook, after the original x * y = k constraint to further change the behavior of the fund pool. Each fund pool can only have one Hook, so even with the same token pair and the same fee setting, different Hooks will create different fund pools.
V4The data of the fund pool may be infinite.
solone of the largest projects on the blockchainpump.fu
n, the interpretation from the perspective of the capital pool is also clear at a glance. Pump.fun
The biggest innovation is the algorithm that combines the issuance of coins and the casting of the initial capital pool. During the coin issuance process, the principal paid by users mintcoins will be cast into a capital pool after the coin issuance is completed, so as to make up for the lack of liquidity of most coins, so that when a new coin is successfully issued, there will be sufficient capital pool for everyone to gamble. In fact, carefully studying these numerous defiprotocols and finding the design details of their funding pools is a good way to find arbitrage strategies.
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