Mooniswap - a next generation of automated market maker with virtual balance sheets that allows liquidity providers to lock in profits.
Contents:
What is the essence of Mooniswap?
The idea of using "virtual value" in a slightly different context, which you can see in the Mooniswap design. The new AMM is able to retain most of the slippage income in the pool by maintaining virtual balances for different swap directions. How it works:
| Algorithm | When a swap occurs, the market maker does not automatically apply an invariant algorithm and does not display new prices for upcoming trades. |
| Game coins | AMM improves exchange rates for arbitrage traders slowly, over about 5 minutes. As a result, they will be able to collect only part of the tokens, while the rest will remain in a pool, shared between liquidity providers. |
High competition among arbitrageurs would not allow you to wait for the moment when the price will maximize their profit. Because of this delay in price updates, the market maker creates a highly competitive environment for users, forcing them to transact at less profitable prices, which in turn will add value to liquidity providers.
On average, the platform is going to return 50% to 200% more revenue to liquidity providers than Uniswap V2 due to profit redirection.
Platform economics
Mooniswap initially uses a swap fee of 0.3%, which company is going to reduce to 0% in the future to ensure more competitive pricing in the market. Mooniswap is introducing a referral fee to encourage integration with wallets and other services that increase trading volume and additional revenue for liquidity providers. Referral commission is charged only if the referral wallet is specified in the transaction arguments. The calculation specialties:
- referral reward is fixed at 5% of the income, received by liquidity providers from trading;
- the referrals will split the initial swap fee of 0.3% by 0,015%;
- 0.285% for liquidity providers.
The additional profit, generated by the virtual balance is also divided in the same ratio, with 5% going to referrals. The referral reward does not put additional pressure on the price and rewards external participants, who contribute to the protocol. Apart from swap fees and referral fees, Mooniswap does not charge any additional protocol fees. The project also introduces chain-weighted average price oracles. The price oracle data is stored as the cumulative sum of all trade entries and exits in both directions and is updated after each transaction. By selecting different periods, Oracle users can customize the desired level of price novelty and resistance to manipulation.
Additional information
For more information, refer to the White paper of the project. Moreover, you have the opportunity to write to technical support on Twitter of the company. There they will help you to solve your problem, and you will also find out about the upcoming updates, the terms of promotions and contests.