🤽Dynamic Pool

Wombat is an avant-garde stableswap. It never stops innovating. It continuously brings more invention to the DeFi space.

Researching Wombat's Invariant discovered a dynamic pool that supports swaps between assets with different values as supplied by external oracles.

$$\sum{L_x p_x (r_x - \frac{A}{r_x})} = D$$

$L_x$ = Liability of token x (in token amount)

$p_x$ = relative price of token x

$r_x$ = coverage ratio of token x

$A$ = amplification factor

Liquid Staking Pool

Liquid staking pool is the first dynamic pool on Wombat Exchange. Users can swap their tokenized LSD for respective underlying tokens without waiting for the unstaking period.

Oracle

The liquid staking pool contract reads the exchange rate of the tokenized LSD from the respective staking contracts.

Risk of Impermanent Loss

Impermanent loss in Wombat's context is when the global equilibrium coverage ratio $r^*$ decreases.

A pool is similar to an index that holds a basket of assets. If the price of its underlying assets changes, it is possible that $r^*$ deviates from 1. However, it's unlikely that the $r^*$ of LSD pools will decrease. We expect the coverage ratio of liquid staking LSD to be higher than 100%, while that of underlying tokens to be lower than 100% as natural sell pressure on tokenized LSD. In such a case, $r^*$ monotonically increases.

However, by any chance $r^*$ drops, the gap can be filled, and the coverage ratio can be pushed back to 1 with haircut fees accumulated.

The smart contract implementation, $r^*$ is assumed to be 1 in deposit and withdrawal to simplify the calculation.

Rebasing Asset

At this time, Wombat does not support rebasing assets.

For USD+ assets, any extra tokens resulting from rebasing are skimmed and used to incentivize its own pool.

More details can be found on the side pool and dynamic pool whitepaper.