VVS ‘Flawless Liquidity’ Update Lands On Cronos, Enhancing Capital Efficiency
Hong Kong, Hong Kong, October 26th, 2023, Chainwire
VVS Finance, the top DeFi protocol on the Cronos blockchain with a total trading volume of US$ 9 billion, incubated by Cronos Labs, announced a major protocol upgrade). VVS Flawless Liquidity (V3) is a significant milestone in the evolution of the DEX, empowering liquidity providers to fully utilize their capital in the most efficient way and earn additional swap fees when providing funds to the platform. Cronos is the leading Cosmos EVM chain for DeFi, NFTs and the metaverse.
The new functionality and refinements in the VVS Flawless Liquidity (V3) upgrade are based on valuable feedback provided by VVS’s vibrant community, with one of the key advances being the introduction of a multi-tier fee for swap and traders. Users can now choose from four different trading fee tiers – 0.01%, 0.05%, 0.3% and 1%, instead of the flat rate of 0.3% found in V2. The purpose of introducing fee tiers is to find a middle ground between traders and liquidity providers, so the former can benefit from the lowest fees (up to 30% lower), while LPs are motivated to provide greater liquidity.
While every token pair can potentially introduce a liquidity pool for each fee tier, VVS expects that each one will lean towards a specific tier that better matches the incentives of both liquidity providers and traders.
Another key difference is that LPs now have the option to select a custom price range when adding funds to a liquidity pool, enabling them to concentrate their capital within the intervals where the bulk of trading activity occurs. Previously, with V2, liquidity was distributed evenly along the price curve, which was less efficient for LPs as the majority of assets typically trade within specific price ranges. As such, the vast majority of liquidity went unused. VVS V3 improves capital efficiency by enabling LPs to provide the same liquidity depth within specified price ranges, only with a lower amount of capital. With the upgrade, the capital saved can be held externally, invested in different assets or staked elsewhere in DeFi. Alternatively, LPs can use it to increase their exposure within a specified price range and earn higher fees.
VVS also introduces the concept of “active liquidity”, where an LP’s liquidity is effectively removed from any pool that falls outside of the price range they set, meaning it will stop earning fees. Instead, the LP’s liquidity will be shifted to one of the two assets within the trading pair, and from there the LP can either adjust their specified price range or wait until the asset price returns to their chosen range.
With the introduction of range limit orders, LPs can benefit from a situation where, when the market price enters a specified range, one asset will be sold for another along a smooth curve while still earning asset fees throughout this process. The net effect is that LPs can achieve a similar goal as they would when using a standard limit order that’s set at a specific price.
Finally, LPs can now take advantage of a concept known as “non-fungible liquidity”, where their liquidity position is represented by an NFT and can be freely traded. In VVS V3, LP tokens are tracked by non-fungible ERC721 tokens. This allows LPs to design their very own price curve utilizing the above features, ensuring their liquidity position is no longer fungible. Any fees LPs earn will be held within the NFT that represents their position, enabling these to be sold on third-party marketplaces.
The VVS upgrade further enhances the user experience with an evolution of the user interface, which now has improved aesthetics and a layout that eases navigation.
“With this upgrade, VVS ensures that the experience of LPs and traders is more seamless, intuitive and visually appealing. V3 is designed to empower users with better capital efficiency, more flexibility, higher rewards and a better overall staking experience,” said Caleb William, Product Lead at VVS.
VVS is planning many exciting upgrades to come, with the prospect of V3 Farms to launch in Q4, alongside the debut of a new V3 analytics page, user interface optimizations and much more.
About VVS Finance
VVS Finance is the leading decentralized automated market-maker (AMM) on the Cronos blockchain. It is designed to be the simplest venue to swap and earn yields at the best available rate.
Built on the low-fee, high-speed Cronos protocol, VVS Finance is a proven, audited protocol which stands out thanks to its comprehensive reward program. VVS Finance users can receive VVS, the governance token, and/or partner rewards by providing liquidity to the protocol or staking in Glitter mines.
VVS Finance is incubated by Cronos Labs – the Web3 startup accelerator that helps builders to create user-friendly applications on the Cronos blockchain and to drive mainstream adoption of Web3.
About Cronos
Cronos (cronos.org) is the leading Ethereum-compatible layer 1 blockchain network built on the Cosmos SDK, supported by Crypto.com and more than 500 app developers and partners. Today, the #CROfam ecosystem represents an addressable user base of more than 80 million people worldwide. Our mission is to make it easy and safe for the next billion crypto users to adopt Web3, with a focus on decentralized applications in the DeFi, NFTs and GameFi verticals.
Shortly after launch in November 2021, Cronos achieved a top 10 position amongst all chains by TVL. It is home to more than 1 million users and 500+ dApps.
Transaction fees are paid in Cronos ($CRO), a blue chip cryptocurrency.
The Cronos ecosystem is supported by Cronos Labs, the start-up accelerator of Cronos chain.
