Unlock the full potential of your liquidity. Farming in deep space without oxygen nor sunlight may be tricky, but our Asteroid Farms ensure it is well rewarded.
The economic foundations underlying decentralized liquidity pools generally provide for a sustainable equilibrium at which the amount of capital necessary to facilitate frictionless trading matches the remuneration accrued by liquidity providers — i.e. users — via trading fees.
There are nonetheless several reasons and circumstances under which the liquidity provision for specific token pairs might benefit from additional monetary incentivization, e.g. supporting the early growth stages of a new liquidity pool or protocol.
TangleSwap offers an optional extra layer of incentivization through rewards in any combination of tokens and other assets provided by the issuing project. Users who provide liquidity for specific incentivized pools are able to unlock these unique additional rewards via their dedicated Asteroid Farms.
This framework not only allows third-party projects to capitalize on TangleSwap's existing liquidity infrastructure, but also facilitates the development of unique token economies tailored to specific ecosystems and communities.
Furthermore, these advantages become magnified by the unique architecture of the Asteroid Farms, which plays with possibilities offered by TangleSwap's Concentrated Liquidity Market Maker (CLMM) algorithm and its characteristic technological innovation.
While traditional Farms allow protocols to gather additional liquidity where and when it is most needed, TangleSwap’s Asteroid Farms take the concept to the next level by providing market actors with tailor-made solutions to match their liquidity needs, while ensuring rewards are paid out with maximal economic efficiency and positive impact.
The ability for all market participants to leverage these unique advantages provide TangleSwap liquidity pools with an additional competitive edge that distinguish them from those in other DEXs, as explained below.
Drawing from lessons learned from previous generations of incentive mechanisms, the crew devised a system that combines adaptability and optimal capital efficiency. By implementing the Asteroid Farms mechanism, decentralized protocols can now:
• Allocate resources significantly more effectively, directly contributing to protocol growth, enhanced treasury management, and improved token price dynamics.
• Customize their reward distribution strategies, with protocols effectively acting as their own market makers for more targeted and impactful outcomes.
• Price-Range Farms
Farm rewards are distributed to liquidity providers based on their liquidity contribution to the specified price ranges for each pool, as illustrated below.
The Price Range option enables protocols to incentivize liquidity to flow towards a custom range, which optionally may not necessarily be linked to the current price. This makes it an excellent tool for token issuers to coordinate productive market-making strategies, or positioning liquidity in strategic zones.
It is also well-suited for pegged assets, such as stablecoin pairs.
• Smart Farms
Our protocol's rewards can also leverage TangleSwap’s decentralized reputation system, enabling the trustless identification and rewarding of reputable liquidity providers.
In the near future, farm rewards will also be able to leverage TangleSwap’s unique decentralized reputation system. The inherent ability to trustlessly identify and consequently reward reputable liquidity providers — i.e. those whose actions best align with the protocol and token holders — is a major milestone in tackling one of the biggest challenges of the present DeFi industry: mercenary capital.
By further incentivizing long-term synergistic relationships, we find that users, protocol & liquidity providers see their respective best interests aligned and cooperating in harmony with each other.
The exclusive Asteroid Farm features detailed above open the door to a plethora of market-making strategies and respective user opportunities, by assuming control of how the liquidity is best allocated for any given token pair. Below we illustrate three examples of how different types of reward distributions incentivize certain behaviours in the markets by creating their own range-based flow of liquidity.