Market-making democratized: Vertex unveils Fusion Pools powered by Elixir
Market-making has long been the domain of a select few sophisticated firms. These firms have the expertise and capital necessary to maintain tight bid-ask spreads and provide deep liquidity on order books. However, this has also led to a concentration of power in the hands of a few and has made it difficult for new projects to obtain superior market-making services for their exchange pairs.
With the advent of Vertex’s Fusion Pools, powered by the groundbreaking Elixir protocol, anyone can now become a market-maker with just a few clicks. Elixir is a decentralized protocol that revolutionizes market-making by bringing open participation, transparency, and trust-minimized systems to the table. Gone are the days when market-making was controlled by a small group of centralized players. With Elixir, the power of market-making is in the hands of the many.
Elixir works by deploying the collective capital of retail users in a delta-neutral model. This means that LPs are not exposed to directional risk, and their returns are solely based on the trading volume of the market pair they are providing liquidity for. In other words, LPs earn fees from the trades that are executed on the orderbook, regardless of whether the price of the asset goes up or down.
To participate in Fusion Pools, users simply deposit USDC into a pool for each perp pair on the Vertex liquidity management page. The deposited USDC is then used to create and maintain a tight bid-ask spread on the orderbook. This is done by using a sophisticated algorithm that automatically adjusts the bids and asks based on the current market conditions.
In return for providing liquidity, LPs earn yields from the Elixir algorithm generating market-making returns. These yields are distributed pro-rata to LPs based on their contribution to the pool. The more LP capital that is deposited into Fusion Pools, the tighter the spreads and deeper the liquidity will be for the supported markets on Vertex. This will ultimately lead to reduced slippage and minimized volatility for all Vertex users.
In addition to earning yields, LPs who contribute over 0.25% of maker volume within a specific epoch will also qualify for the Vertex Maker Program. This program offers a number of benefits, including fee rebates and exclusive access to VRTX tokens.
The launch of Fusion Pools marks a major step forward in Vertex’s mission to democratize market-making. By making market-making accessible to everyone, Vertex is helping to create a more fair and efficient trading environment for all.
The implications of Fusion Pools are far-reaching. For projects, Fusion Pools provide a new and cost-effective way to obtain superior market-making services for their exchange pairs. This can help to improve the liquidity and trading experience for their users, and can also help to attract new users to their platform.
For traders, Fusion Pools can help to reduce slippage and minimize volatility. This can lead to better trade execution prices and lower trading costs.
For the broader cryptocurrency market, Fusion Pools can help to increase overall liquidity and efficiency. This can make the market more attractive to investors and can help to drive further adoption of cryptocurrency.
In short, Fusion Pools are a major step forward for the cryptocurrency market. By making market-making more accessible and efficient, Fusion Pools are helping to create a more fair and prosperous market for all.
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