Pools

NETHER-ETH:

Nether provides its own liquidity pool to take advantage of a stable swap ratio similar to Curve Finance's stable swap liquidity pools.

nShare-ETH:

The pool needs a classic xy=k model for its utilization, Nether prefers to use a third-party AMM for this part of the platform’s revenue model.

What is a stable swap, exactly?

Let us assume we are already familiar with Uniswap AMM model: x * y = k. This model is simple and effective, allowing the prices of the assets in the pool to track supply and demand. However, if we were to attempt a swap that was large relative to the liquidity contained in the pool, we would get diluted by slippage. Stable swaps are a mathematical improvement that optimize the model for assets that are intended to have prices that remain stable relative to one another. For this reason, stable swap pools can also contain more than two assets, unlike a traditional Uniswap AMM pool. Instead of the simple x * y = k model, a special function F(a, b, c, ...) is used to relate the prices of the assets contained in a stable swap to one another. This function is more complex, and can also have more than two parameters (as shown by a, b, c, etc.) but the exact formula is not necessary in order to discuss how this model affects the protocol's fee structure.