StellaSwap, the leading decentralized exchange (DEX) on Polkadot, has announced the launch of its correlated-asset automated market maker (AMM) to facilitate low-slippage trading for stablecoins and multiple variations of the same assets. This groundbreaking innovation will set the framework for a hybrid AMM model where users can efficiently trade across multiple AMMs from a unified user interface
Why it’s important
StellaSwap’s correlated-asset AMM implements Curve’s stableswap invariant model, which results in extremely low slippage for same-valued assets such as stablecoins. The standard AMM, which is used by the majority of DEXs, utilizes Uniswap’s constant product invariant, which is great for bootstrapping liquidity but is not ideal for correlated assets due to its higher slippage. Additionally, a correlated-asset AMM solves the following issues present on Polkadot and Moonbeam, the parachain that StellaSwap is built on:
- Liquidity fragmentation resulting from different variations of the same coin due to the presence of multiple bridges
- Unproductive farms leading to wasteful emissions.
With a stable AMM, liquidity fragmentation is mitigated by creating pools of assets that include various types of the same coin. For example, consider USD Coin (USDC). Having anyUSDC), madUSDC and celerUSDC — similar to a three-pool or four-pool of the same asset — in the same stablepool allows users to trade between the USDC variations and aggregate the overall liquidity. Having more than two assets in the same pool also reduces inefficiency in farm emissions while concentrating liquidity into core pools.
Atticus, co-founder of StellaSwap, said, “Our correlated-asset AMM serves to provide the best user experience for users under a hybrid DEX model. Not only will this lead to lower slippages and minimal fees, but it also fundamentally solves for liquidity fragmentation across the Polkadot ecosystem while maximizing tokenholder value, as emission distributions are optimized. The support we have received from our partners has been tremendous.”
Strong support from ecosystem partners and layer-1 networks
StellaSwap’s correlated-asset AMM will be supported by various partners with prominent bridges such as Nomad, Multichain, and Axelar Network. Ecosystem partners such as Moonbeam, Terra and Frax will support the launch of stablepools.
Timeline of correlated-asset AMM launch
The launch of the correlated-asset AMM will follow a sequential release of pools that combines the efforts of StellaSwap and its partners. The timeline is:
- First phase, early next week: the launch of an Ether (ETH) risk-free farm in an anyETH-madETH pair with Multichain and Nomad
- Second phase, within three weeks: the launch of the four-pool base pool of leading stablecoins to be incentivized by major protocols
- The third phase, within six weeks: the subsequent meta-pools of Polkadot assets and other layer-1 (L1) assets.
StellaSwap is the first and leading Moonbeam DEX that offers an integrated gateway to the decentralized finance world. Users can swap, earn, yield farm, bridge assets, explore new projects and engage in nonfungible token trading — all from a single unified platform.
StellaSwap’s products are structured to facilitate the decentralized governance of STELLA tokenholders.