ORBS on Uniswap - and what's next?
Introduction to Automated Market Makers and Liquidity Pools on Uniswap.
Liquidity on traditional exchanges such as NASDAQ, NYSE is usually provided by Market Makers and without them markets would be much less liquid. Market Makers are typically large banks and financial institutions that transact on both sides of the market. They make money through taking a commission in the form of bid/ask spread.
While there are Market Makers that work with cryptocurrencies, it is costly to arrange and usually is reserved for the ICO phase of a project.
Q: Is there something like this in Decentralized Finance (DeFi)?
A: Yes, Automated Market Makers (AMMs).
AMM is a smart contract, typically, on Ethereum blockchain which contract acts as a Market Maker, by offering a price for managed assets to buyers and sellers for a commission.
Uniswap is one of the protocols which allows the creation of such AMMs . Any individual can provide funds for the AMM to manage. In return one would get a portion of generated commissions.
Funds for each trading pair are locked in Liquidity Pools - addresses managed by a smart contract. Uniswap AMMs adjust their offering price according to the "constant product rule" - product of the two underlying assets of a given pair is kept constant. This means, that offered price will increase in response to higher demand.
ORBS on Uniswap
Interestingly, ORBS is already listed on Uniswap, and anyone can provide liquidity to the LP and start sharing revenue from commissions!
To become a liquidity provider one needs to deposit equal dollar value of both assets into the LP. In exchange, liquidity provider receives pool tokens, which act as a claim to withdraw provided funds and your share of generated commissions.
Commission of 0.3% is collected from all trades and is distributed to liquidity providers in proportion to the funds that they contributed to the pool. For example, if total amount of liquidity in a pool is 1000$ out of which you provided 500$, then you can expect to receive half of all generated commissions.
You can provide liquidity for ORBS/ETH liquidity pool here.
For now, there is relatively little liquidity available for ORBS/ETH pair on Uniswap, so it's easier to get a high share of the commissions, before there is more liquidity available in the pool!
Other articles from the series:
How to add liquidity on Uniswap?
Step-by-step guide on how to provide liquidity for ORBS on Uniswap.
ORBS/USDC liquidity pool now on Balancer
Launching stable 90-USDC/10-ORBS open pool on Balancer.
How to add liquidity to Balancer?
This article will walk you through the steps of adding liquidity to the ORBS/USDC pool on Balancer.
This series of articles is written within the framework of an educational project of Orbs DeFi Portal by Paradigm Ecosystem.
Paradigm is an ecosystem comprised of a venture fund, research agency and accelerator focused on crypto, DLT, neuroscience, space technologies, robotics, and biometrics — technologies that combined together will alter how we perceive the reality.
Orbs is a blockchain infrastructure-as-a-service built for large scale consumer applications to meet their business and technological requirements. It is the first public permissionless network with hybrid architecture suitable for real businesses.
If you have any questions on how to add liquidity to Orbs or the upcoming Orbs De-Fi portal, you are more than welcome to get in touch! We are always available in the Orbs Telegram chat.
This is not an investment advice.