In the realm of DeFi, the twin challenges of liquidity and volatility have long plagued staking and reward systems. Savvy is deploying a proven liquidity generator through Balancer’s TriCrypto Weighted Pools (Curve TriCrypto pool is responsible for 83% of Arbitrum ETH volumes! on its USDT pair). The TriCrypto (svBTC-svETH-svUSD) Pool was created to help incentivize liquidity and trading among svTokens. The new pool will enable:
- more liquid svTokens (svBTC, svETH, svUSD)
- swap svTokens with other svTokens
- present new opportunities for arbitrage
Idle Assets, Traditional Pools, and Their Constraints
In most decentralized exchanges, conventional liquidity pools adhere to a rigid 50/50 rule, where liquidity providers exchange and withdraw two tokens of equal value. While this simplicity has its advantages, it falls short in terms of flexibility. Furthermore, this rigid structure may leave users with idle assets, as they may not fully grasp concepts like impermanent loss, resulting in missed yield opportunities.
Savvy’s Latest Liquidity Pool Composition
Savvy’s Tricrypto pool offers a fresh perspective on interacting with Savvy’s svTokens, expanding the avenues for liquidity provisioning within our ecosystem. It consists of three tokens, each carrying a distinct weight that harmonizes the pool’s composition. These tokens are as follows:
- svUSD — 33.34%
- svETH — 33.33%
- svBTC — 33.33%
This unique composition lays the foundation for a well-balanced liquidity pool, addressing some of the shortcomings frequently associated with traditional staking and liquidity systems.
Resolving the Liquidity and Volatility Challenge
Tokens featuring staking and reward systems often grapple with low market liquidity and substantial price swings due to the one-sided liquidity in traditional pools, leading to slippage issues. This situation poses a significant level of uncertainty and risk for both token holders and traders.
Savvy’s new TriCrypto liquidity pool offers a solution to this challenge. By creating a balanced mix of tokens, Savvy ensures stable liquidity and significantly reduces impermanent losses. The equitable allocation of svUSD, svETH, and svBTC establishes the necessary equilibrium to uphold liquidity while mitigating volatility.
Furthermore, since Balancer is based on Balancer’s Weighted Math Automated Market Maker model, it allows for better arbitrage opportunities combined with concentrated liquidity pools. Because concentrated liquidity pools (like Uniswap v3 and Trader Joe) generally stay within a specified price band, arbitragers can capitalize on the dynamic price of the TriCrypto Pool. Increased arbitrage activity will boost the price correlation of svTokens to base assets.
Savvy’s new Tripool also provides Savvy traders with another source of liquidity. For instance, if there is no USDC in the svUSD-USDC pool on Trader Joe, traders can use the TriCrypto pool to swap their svUSDC for either svBTC or svETH and utilize the liquidity available in any number of other svToken pools.
How to LP into Aura/Balancer
Check out this walkthrough to LP into Savvy’s new TriCrypto Pool https://silopedia.silo.finance/silo-eth-liquidity-mining/providing-liquidity-on-aura-balancer
Holders of svTokens can now provide single-sided liquidity and be eligible for SVY incentives. Savvy is setting up vote gauges on Balancer and Aura as well as providing SVY incentives for the Aura Marketplace via Hidden Hand.
Idle and illiquid svTokens can now be actively deployed. Weighted pools provide an enticing opportunity, allowing you to make efficient use of your assets, rather than merely holding onto them. These pools leverage the Weighted Math Automated Market Maker (AMM) mechanism, which automatically finetunes the asset allocation within the pool with every trade.
By embracing the potential of weighted pools, Savvy is adopting a model that encourages customization, stability, and reduced risk. We anticipate a more liquid Savvy DeFi landscape on the horizon.
Snapshot Vote for Gauges
Savvy’s proposal for enabling pool gauges is up on Balancer’s Snapshot page. Don’t forget to vote!