CarbonDefi.xyz is a decentralized trading protocol that provides users with the ability to personalize their liquidity strategies within the blockchain ecosystem.
This is achieved through two distinct methods: on-chain limit orders and range orders.
At the EthCC Paris, Dr. Mark Richardson, CEO of CarbonDefi.xyz, revealed how the project is changing the landscape of how AMMs operate in the Web3 space.
He added that the new features will pioneer a concept within the AMM sector, challenging conventional liquidity design and utilization in the decentralized finance (DeFi) space.
AMMs (Automated Market Makers) are a category of decentralized trading protocols that operate on the blockchain, specifically within the context of the Web3 ecosystem.
AMMs are algorithms that facilitate automated trading of cryptocurrencies and tokens without the need for traditional order books.
Challenging the status Quo of AMMs
Speaking at the presentation, Mark said that traditionally, AMMs have operated based on constant product formulas, dictating token pricing relative to each other. CarbonDeFi.xyz’s disruptive breakthrough lies in its introduction of “Asymmetric Liquidity.”
In contrast to previous AMMs where token prices hinged on the balance of another token, CarbonDeFi.xyz empowers tokens to be priced relative to their balance. This shift holds immense potential.
He added that by permitting token prices to be linked to their balance, CarbonDeFi.xyz addresses long-standing hurdles within the AMM sector such as the vulnerability to sandwich attacks, a tactic wherein traders exploit price imbalances for manipulation.
Another addition he mentioned is that CarbonDeFi.xyz’s model pioneers a dynamic pricing structure, enabling traders to define their price ranges for token buying and selling.
This marks a departure from the conventional model governed by AMM protocols.
Traders can establish precise price boundaries tailored to their preferences, thereby mitigating the risk of impermanent loss.
Mark’s presentation extended to the explanation of the introduction of “Connected Liquidity Orders,” similar to grid trading.
With this, users can seamlessly sell one token within a specific price range and reinvest the proceeds to buy the same token when prices dip – a mechanism referred to as “rotating liquidity orders.”
Comparison with Uniswap
In the process of the talk, the CEO showcased a comprehensive comparison between CarbonDeFi.xyz’s asymmetric liquidity and other prominent models such as Uniswap V2’s constant product formula and Uniswap V3’s concentrated liquidity.
Simulation outcomes demonstrated that CarbonDeFi.xyz’s approach delivered enhanced returns with reduced risk exposure.
Mark’s presentation highlighted that collaboration with experts, Carbon’s gas efficiency, and practical use cases like trading competitions have helped the team make the project better.
