What are the advantages of a Stable Pool?
A Stable pool in Bunicorn is a special type of AMM pool that only works for stablecoins. There are several advantages of a Stable pool:
- Amplified pools with extremely high capital efficiency
Bunicorn protocol will facilitate liquidity providers with the ability to adjust the pricing curves of any stablecoins pair using a special amplification factor also known as ‘AMP.’ Whenever there is a change in token numbers in the pool, AMP will dynamically adjust and amplify the balance to match appropriately. This means that given the same liquidity pool and trade size, Bunicorn protocol can provide much better liquidity and slippage compared to other AMMs.
- Lower trade slippage due to high capital efficiency.
- Dynamic fees to optimize returns for liquidity providers.
Fees are adjusted based on market condition to maximize returns for liquidity providers and reduce the impact of impermanent loss.
During high market volatility, fees will increase to capture more profit for liquidity providers. Traders who trade in such volatile markets will receive fewer tokens than average, as the profit is kept in the pool to reduce potential impermanent loss for liquidity providers. During low market volatility, fees decrease to encourage more trading and volume.