I have recently got a request on clarifying The Rock Liquidity paragraph from my Rock Liquidity Pool Pinkpaper. I admit it is a bit too short for its importance in understanding the need for such a mechanics. Unfortunately, the full explanation would be a post of its own. Wait, now it is a post of its own!
What if we crowdfunded 20M Hive for the bridge? Seed the bridge with 10M at each side at watch people run at the currently preferred side. After spending 50k SWAP.HIVE (taking out roughly 50k HIVE), our Liquidity Pool is at 9.95M vs 10.05M which sets the price at 0.99. The run cools down and people start using the default gateway instead as our price is no longer competitive.
This paragraph painted a fictional world where someone enters the market with a traditional Liquidity Pool and realises what an overkill it was (in terms of money needed to operate). Theorists enjoyed. Practically oriented people probably prefer to see Rock Liquidity Pool in action instead - so let's do that:
Rock Liquidity Pool Enters Competition
Here we deal with a boring situation where personal preferences between having HIVE and having SWAP.HIVE are well balanced over the population resulting in a fair frice of SWAP.HIVE of 1 HIVE. We entered the market with our dynamically priced Rock Liquidity Pool and set our fee to 0.3%. So people who want to swap have three options now:
- HEG - Standard Hive-Engine Gateway (paying 1.010 HIVE to get 1 SWAP.HIVE)
- DB - Discounted Bridges (paying 1.002 HIVE to get 1 SWAP.HIVE)
- RLP - Rock Liquidity Pool (paying 1.003 HIVE to get 1 SWAP.HIVE)
Fineprint: Hive-Engine fee has gone down to 0.75% since the original article was published but the old numbers are kept for simplicity. In the same spirit, different discounted bridges have different fees so they are not going one-sided all at the same time (the ones that offer the lowest fees will be emptied first). HiveUpMe from the WINE token team is the newest addition.
Discounted Bridges Own Market
Everyone is going for the DBs and we earn nothing because we are too expensive. Then an event happens. Say dCity releases a new earning opportunity and personal preferences between having HIVE and SWAP.HIVE change.
- Some people want SWAP.HIVE to take part.
- Many do not care but will be happy to sell their SWAP.HIVE at a premium.
Thank you for authorizing this post. It's really helpful to understand the RLP. I think I got the idea of what RLP can do.
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