The launch of the mainnet by Zircon Finance will lessen Moonriver’s temporary loss:- Zircon Finance deploys its mainnet to lessen Moonriver’s temporary loss:
In order to alleviate investors’ concerns of impermanent loss in decentralized finance (Defi),
Zircon Finance, an automated market maker (AMM) and decentralized exchange on Moonbeam, announced the establishment of a mainnet network.
Impermanent loss is a state in which investors lose assets they had previously committed to supplying liquidity to a liquidity pool for the purpose of realizing returns and profits.
Through single-sided liquidity over the Moonriver network, which tranches or distributes risks between a volatile cryptocurrency and a stablecoin, the mainnet network, known as Zircon Gamma, seeks to mitigate such losses.
For instance, in the case of an ETH/USDC pool, Zircon enables full exposure for Ether (ETH) while providing security via the USD Coin (USDC) stablecoin.
The mainnet also enables exchange costs to be made by both parties.
Zircon explains that lost liquidity pools, such as ETH, increase their benefits over normal collections but still run the danger of temporary loss.
The internal Async LPing mechanism of the AMM, however, at least 90% lowers the danger.
The method does this by providing incentives for liquidity pools to replenish lost ETH supported by fees.
Andrey Shevchenko, co-founder of Zircon, said to Cointelegraph that his motivation for developing such a system came from the traders’ requirement for an adaptable and permissionless solution, saying:
“Teams made amazing but false claims about eradicating or making up for the temporary loss, and too many individuals got hurt as a result.
The technique (including dynamic fees) they provide occasionally merely has no effect.
Shevchenko admitted the clear failure scenarios in which a token plummets to zero dollars, but he countered that
“Zircon decreases it sufficiently to make temporary losses a non-issue. Additionally, we may weaponize it to generate options.
Shevchenko emphasized the many fail-safe measures that assist in rebalancing the liquidity pools in contrast to the many current players who offer insurance against temporary loss.
He cautioned consumers to conduct study before choosing their trade partners, but said,
“It’s an incentive-based economic system that you can expect to work 99% of the time.”
Zircon’s distinctive feature includes reduced exchange costs in addition to immediately supplying liquidity for stablecoins and safeguarding customers against transient losses.
“Overall, we’re going to be the cheaper and more liquid option for swapping anything outside of really popular pairs on Uni V3,” Shevchenko said.
Stablecoins are used by the liquidity protocol to guarantee there will be no temporary loss.
Avalanche-based Defi protocol, which was recently described in a whitepaper by Trader Joe, also claimed to have found a solution to the impermanent loss problem.
The fact that temporary loss frequently outweighs switch fees is one of the most important problems with Uniswap V3.
According to a research conducted by the @Bancor team, 50% of Uniswap V3 LPs are in the red.
This issue is resolved by Liquidity Book by implementing variable swap costs.
– The Defi Investor, August 23, 2022 (@TheDeFinvestor).
The Liquidity Book (LB), which offers variable swap costs, was described in the white paper as a tool to “provide traders with zero or low slippage trades.”
