Bay Area, New York – (Newsfile Corp. – Nov. 21, 2021) – AMM and cash mining hinted at DeFi’s explosive growth last summer. The combination of the two has given DeFi, where liquidity is fundamental, a base to provide services including DEX trading, lending, derivative counterparties, etc.

In the beginning, DeFi used AMM and cash extraction mechanisms to attract users and earn cash to lay the foundation for service delivery. During this process, LP providers received project tokens as a reward. But such simple liquidity extraction is problematic. The problem of opportunistic dumping not only harms investor benefits, but also weighs on the future of the project.

Being hot money, liquidity is doomed to tip towards higher profits, but the extraction of value from liquidity should not stop.

Arc Finance is a DEX based on an AUM algorithm and deployed on Binance. It achieves the Trade to Ear ecological value for all platform users through the Liquidity Premium Pool (LPP).

Leverage DEX liquidity

The initial generation of DeFi protocols used a liquidity extraction mechanism to gain liquidity. To be more specific, they tricked users into providing cash with token rewards.

Users provide liquidity and can receive a set of incentives including market making fees, transaction fees, as well as the result of liquidity extraction, while the liquidity is stuck in a pool.

This model poses the problem of opportunistic dumping, even if it could help the project to raise a lot of liquidity in the short term. It is therefore detrimental to the long-term development of the project, if it is not managed properly.

Likewise, CRV has adopted the DAO governance approach to lock in part of mining production in order to slow down prices. Under this new scheme, although many investors have opted for a lock-in period of 3 years and have very sufficient confidence in the project, the price of the token has still fallen.

The DeFi exploration that followed in this aspect did not progress beyond locking out the mining output or using other models similar to DeFi 2.0’s Fei and PCV (protocol check value). None of them have proven their effectiveness so far.

How does LAAS work in Arc Finance?

Arc Finance has deepened its exploration of the value of liquidity extraction through the combination of AUM and LPP (Liquidity Premium Mining Pool Service).

AUM is not a market making mechanism, but a mining algorithm, called Automatic Unlocking Mining. This is an algorithm that automatically adjusts the mine output unlock speed, so users can get higher APY returns at the same cost.

To participate in Arc Finance liquidity extraction, users must first lock a certain number of tokens and obtain the corresponding r-Token locking vouchers. r-Token is locked, and to unlock it, users have the following 2 choices.

  1. Exploration of transactions:
    Exchange tokens in pairs (coupons from your trading volume) to unlock your winnings. Frequent trades allow for a rapid increase in trading volume, thereby accelerating the ability to release profits.
    The calculation formula is as follows.
    Unlock speed = α * (total swap volume) / current price of rToken
    α = 0.0000029. (the number of r-Tokens unlocked per block time)

  1. Staking (single token or double token):
    Get double income by staking single / double tokens (staking vouchers) i.e. receiving double income including the proceeds of rToken release and transaction fee tax reduction . The unlock speed is calculated as follows:
    Unlocking speed = k * (ARC locking volume)
    k = 0.00000029 rJeton / Block. (The number of r-Token unlocked for each block)

The AUM algorithm adjusts the unlock speed. The frequency of transactions and the amount of the stake affect the speed at which your r-Token is unlocked. With the incentive of AUM, complemented by liquidity extraction, users are sufficiently motivated to trade and bet, which will maximize the value of liquidity.

Arc Finance also has several mechanisms to entice users to participate in the extraction of the liquidity premium and to exploit the value of the liquidity, including discounts on transactions and redemption and combustion. It also uses a cycling mining pool (part of the transaction fees collected by the platform is used to buy Arc back and inject it into the pool) to keep the incentive long-term and sustainable.

In this mechanism, users can get multiple incentives, such as liquidity extraction, active trade liquidity bonus, trade discounts, etc., making Arc Finance revenue even higher than liquidity extraction from Sushiswap and other leading DEXs.

LP mining

Market making income

transaction discounts

LAAS

Transaction rewards

Arc Finance

Cycling swimming pool

Yes

Yes

For investors and project leaders

Yes

Uniswap

On break

Yes

No

For investors

No

With these various incentives, users will take initiatives to negotiate, which will bring coveted liquidity to projects with asset pools on Arc Finance. At the same time, Arc Finance’s LAAS will help projects manage their basic market value and projects can thus focus on their ecological development.

Conventionally, the cash collected by Uniswap and others provides only limited services to merchants and gives them a better trading experience. But from now on, projects will also get AUM and LPP liquidity on Arc Finance.

Media contact:

Arc Finance Manager
Web: https://arcdex.io
Twitter: https://twitter.com/Arc__Finance
Discord: https://discord.gg/SZex7JYkqe
Telegram chat: https://t.me/ArcFinance_global
Support: https://medium.com/@arc_finance
Telegram announcement: https://t.me/ArcFinance_announce
Email: [email protected]

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