Got liquidity? We do.
HiveFest may be over, but the excitement is just getting started! Magi is thrilled to unveil a game-changing milestone in our journey: Bitcoin mainnet integration is officially launching on November 11th (11/11)!
This momentous event will debut the highly anticipated BTC-HBD and HBD-HIVE liquidity pools on Magi Network. But wait, there’s more! On December 12th (12/12), we’re taking things to the next level with the launch of our third liquidity pool, introducing DASH into the mix and supercharging the Magi ecosystem.
What is a Liquidity Pool?
A liquidity pool is a collection of funds locked in a smart contract that is used to facilitate trading in DeFi platforms. It is a key component of automated market makers and decentralized exchanges, allowing users to trade cryptocurrencies without relying on traditional order books or centralized exchanges. Anyone can provide liquidity to the pools, and in exchange, users earn a portion of the trading fees and incentives generated by the platform.
Liquidity Pool Impacts
These pools will serve as essential bridges that connect Hive to the broader crypto ecosystem. It will facilitate seamless and direct interactions among various assets, including HIVE, HBD, BTC, DASH, and many more.
This innovation directly and visibly reduces ecosystem reliance on CEXes, which often act as intermediaries for trading cryptocurrencies. By allowing these assets to interact directly, users will benefit from increased efficiency, reduced transaction fees, and greater control over their assets.
BTC-HBD and HBD-HIVE Pools
- Liquidity Allocation: $100-200k of HBD and BTC
- Fees: No gas fees. Instead, there will be CLP slip based fees as well as 8 bps in fees generated for the protocol.
- Advantages: Better pricing, faster trades, and cross-chain access with one single non-custodial wallet.
- Incentives: We estimate the APR for providing liquidity in Magi pools to be between 0-20% APR, dependent upon volume and swap fees. See calculation formula below. These fees are auto-compounded into the depositor’s position without the need for claiming.
- CLP Fee (Constant Liquidity Product Fee):
A dynamic fee based on the size of the swap relative to the depth of the liquidity pool. This fee is not fixed, but rather calculated using a variant of the CLP formula: - CLP Fee = x²Y/(x+X) ² - Where x is the swap size, and X and Y are the current pool depths of the input and output assets. This formula ensures that larger swaps relative to pool size are penalized with higher fees, protecting liquidity providers from excessive slippage. The resulting fee is distributed based on the Pendulum mechanism, incentivizing both collateral and liquidity providers appropriately.
- To incentivize early participation and long-term alignment with the protocol, Magi network will reward early liquidity and collateral providers for their contribution at the MAGI Token launch (TGE), scheduled some time next year, 2026 (More info on that coming soon).
- CLP Fee (Constant Liquidity Product Fee):
How can I participate?
To participate in liquidity pools, all you need is a wallet and the assets you wish to provide as liquidity. You can connect your current wallet to Altera and start immediately. There's no need to stress about gas tokens or managing multiple wallets because of Native Asset Mapping. Make your deposit, and watch your position grow, so it’s truly a “set it and forget it” situation. We expect yield to be low in the beginning, and it will increase as volume across the pools grow.
Why is this a big deal for Hive?
The launch of HBD-BTC and HBD-HIVE liquidity pools in Magi marks a significant achievement for Hive. This increases the functionality of both HIVE and HBD as the backbone assets of Magi Network, links Hive to the wider cryptocurrency landscape, and enhances the liquidity of both assets. These pools facilitate decentralized trading, lessen dependence on centralized exchanges, and provide financial access to everyone, elevating Hive’s visibility and user adoption. By reinforcing HBD’s status as a stablecoin and connecting Hive to true DeFi, this integration sets the stage for future Hive to become a decentralized hub for cross-chain finance.
We can’t wait to see you in the pools! Make sure to drop a comment with any questions or feedback.
This will be a soft launch of the Magi Liquidity Pools. There may be occasional bugs, temporary downtime, or performance fluctuations while we stabilize and optimize the technology.
We appreciate your patience and participation during this early phase, every interaction helps us strengthen the infrastructure and ensure a smooth, secure experience as Magi matures.
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Why is there a need to create another token? What are the advantages of that vs simply using HIVE/HBD for rewarding liquidity providers?
It's part of our long term vision to create a token for powering DAO activities and running higher level governance on the network. However, it is worth noting this is not our primary concern right now, and likely won't be for 1+ years from now. Our primary goal now is to build good products that bring value to Hive.
Awesome.
Here is perhaps an alternative approach. The L1 tokens can be used for L2 governance. The L2 rules can specify any arbitrary rules for what an account has to do with its L1 tokens in order to participate in the L2 governance. Just like you did with HBD for gas - no need to create another gas token, simply define the rules for what to do with your HBD in order to get gas. Same concept can be applied to governance. Any arbitrary locking period, burning penalties, whatever you want. If multiple projects did this instead of making their own L2 tokens, it would create a huge use case for the L1 token, and the ecosystem and each of these projects would be in an enormously stronger position because of it. What do you think?
This is exactly what we already do with Hive staking for consensus. This feature is live and implemented part of our long term plan. Part of Magi's structure is designed to generate a strong buy pressure for Hive / HBD by generating fee revenue to incentive more Hive and HBD being locked up in collateral providers (Magi witnesses) and liquidity pools respectively. You can see the screenshot below of the active Hive staked within Magi of about 120K Hive. While it is not much right now, it'll grow significantly as rewards are paid out to witnesses and liquidity providers.
What I was referring to above was specifically in regards to DAO activities such as a development fund or other forms of incentives long term. Any kind of future token will only compliment the staking of Hive/HBD and will not directly replace or remove it.
Great, this is how I understood it and so was not sure what the purpose of a new token would be. From what you are saying, it sounds like the purpose would be for funding development. But if the Magi network already has a sustainable model due to fees and is locking up HIVE/HBD, then it would make total sense for the Hive DAO to keep funding Magi development on a long-term basis. If lots is getting locked up, then the Hive DAO gets a positive return on what it invests in Magi. A clear win-win. And finally a meaningful business model that others can follow.
Whereas by creating a new token, it dilutes the value. Instead of having 10-20 projects that use HIVE/HBD for 100% of their needs, thus greatly increasing the use case and demand, it all becomes diluted into 10-20 different tokens, and everyone wants to push investments into their token, so in the end we have a bunch of weak tokens instead of one very strong one. Fundamentally a very bad economy design.
The model we built directly incentivizes more HBD and Hive purchase. It doesnt act as value dilution. It directly incentivizes more Hive and HBD purchase on top of established APR via pools.
A lot of assumptions are being made here when we haven't even formalized the design yet of such a thing.
What are the details such as fees? who gets the fees? do the fees help to burn hive? How does this actually benefit hive instead of just giving it more of an off ramp from people earning rewards from staking and writing articles?
Fees are generated from swaps. There will be BTC-ETH swaps as well, its not just Hive swaps, theres a market fit for this. Its not just serving Hive with another pool.
The BTC-ETH swaps will generate fees that are sold for HBD and given to Lps and collateral providers. Essentially the more volume we do the more demand for HBD there is. Hive assets are used always.
The more liquidity in pools, the more HBD is locked, the more Hive collateral is needed.
Its a humongous benefit for Hive. A whole new use case that creates a clear demand driver for Hive assets on a continual basis.
Hey i am sure you explained it all on hivefest.
But what is altera and Magi token will be the Dex token? Finance on hive is a key element to make Hive cool and useful.
Would be super good to explain and link all stuff in one post for ppl that dont watch 12h Hivefest content
Altera is the DEX front end the magi devs are building. https://altera.magi.eco/
It's where you'll do most functions and interact with the pools.
nice. Pretty cool to have first dapp at launch.
another question, How many TPS can the magi network handle ( on avg?)
We have tested upwards of 1K TPS on the old testnet. We suspect somewhere around there on mainnet. Though TPS is not important until we get to the point of mass adoption. Additionally, it does not represent true performance of a chain or technology
100%, but is still a metric ppl look at. True performance is how accessible it is to people and how many barriers out + speed/performance.
Absolutely. The first biggest hurdle is user adoption. Once that sets in speed becomes a limiting factor
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Could you make a tutorial on which wallet to connect and how, like the Hive wallet? How do you do it?
You already use keychain correct? It should be as simple as connecting keychain
ok, gracias
Is there a marketing plan to raise awareness of this outside of Hive? What are the adoption goals?