Concentrated Liquidity: The Future of Decentralized Finance and Liquidity Provision
As a professional journalist and blockchain expert, I have been following the development of the DeFi space closely, and one of the most intriguing trends I have noticed is the increase in concentrated liquidity.
First implemented by Uniswap V3, concentrated liquidity is an innovative method for providing liquidity on decentralised exchanges (Buterin, V., & Adams, 2021). In contrast to the standard paradigm, where assets are dispersed throughout the full price spectrum, this technique enables liquidity providers (LPs) to distribute their assets within individualised pricing bands. This new approach may help LPs save money in the long run by increasing capital efficiency and decreasing temporary losses.
To better understand the potential impact of concentrated liquidity on the DeFi landscape, let's look at Uniswap V3,which was launched in May 2021, and was the first major decentralized exchange (DEX) to implement concentrated liquidity. According to data from Uniswap Analytics, Uniswap V3 had already processed over $1.5 trillion in trading volume. The platform's capital efficiency ratio (trading volume divided by total value locked) was 2.5 times higher than that of its predecessor, Uniswap V2, which employed a traditional liquidity model.
Turbos Finance Debuts Permanent Testnet Deployment: A Glimpse into the Future of Concentrated Liquidity Trading
Turbos Finance, a non-custodial DEX with an emphasis on spot and derivatives trading, has released its Permanent Testnet deployment on the Sui Network public testnet. This comes as the decentralised finance (DeFi) ecosystem continues to develop and innovate. This major event occurs in the lead-up to the May 3, 2023, formal launch of the Sui Network. With the help of Mysten Labs and Jump Crypto, Turbos Finance plans to be one of the first protocols to launch a fully-functional focused liquidity platform on the network.
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If you're interested in learning more about Turbos Finance and the Sui Network, the Permanent Testnet is a great place to start. Before releasing on the Sui mainnet, the Turbos Finance team is collecting user comments in order to improve the programme. The benefits of Turbos Finance's concentrated liquidity market maker (CLMM) model are demonstrated by a publicly available testnet decentralised application (dApp), demonstrating how users can concentrate liquidity around a desired price range and collect a larger share of the fees with less capital.
When compared to standard platforms based on the xy=k invariant, the liquidity provided by this novel approach is vastly superior. Tokens for SUI, BTC, ETH, and USDC are all accessible on the testnet and will be on the mainnet as well. Users may visit the testnet at app.turbos.finance to experiment with trading and liquidity provision.
Turbos Finance has prepared a thorough guide to the testnet experience, including instructions on how to link a wallet, purchase testnet tokens, and utilise the dApp. Anyone interested in participating in the testnet-feedback channel of the Turbos Finance Discord server is encouraged to do so.
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Image credits: AI