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Single Side Liquidity

Benefit of providing liquidity on OT:

  1. 1.
    Earn fees from spot swap
  2. 2.
    Earn fees from perpetual trading
  3. 3.
    Earn interest from borrowers
  4. 4.
    Earn reward in vOT/OT thorugh staking.

Benefit of single sided AMM(Including but not limited to the following):

  1. 1.
    Single token liquidity pools are much more capital efficient which means they save 50% capital for projects to list tokens or liquidity providers.
  2. 2.
    Single token design also results in lower trading fees.
  3. 3.
    Less capital needed to be a liquidity provider, less capital siloed in multiple pools, more capital being unlocked and free to use within the greater DeFi ecosystem, earning higher yield, etc.

x * y = k Algorithm & Pricing Curve

AMMs like Uniswap and Sushiswap use the constant product algorithm xy=k. Where x is amount of Token A and y is amount of Token B in the pool, k is the product.
OT uses the same xy=k formula. The value of k is set when users provide initial liquidity into the pool by assigning a price to the token. Liquidity providers will only need to input one token into the pool instead of pairing it with another token in order to provide liquidity
Price of token A appreciates in value if it's bought and depreciates when it's sold. Value of k is increased or decreased by LPs through adding/removing liquidity of token A.
OT utilizes same curve and combined with single token liquidity to increase capital efficiency for liquidity providers

Adding Liquidity

Single Token Liquidity pools function by grouping the deposited token into a virtual pair with OSD, instead of having the liquidity provider deposit two assets of a pair, they only have to deposit one. In essence, liquidity providers only need to deposit “Token A” to the pool reserve and each token is paired with the OSD stablecoin.
Adding liquidity to a pool increases asset liquidity(doesn't change price). In exchange for providing liquidity, LPs receives their share of the liquidity reserve in the form of LP token. Liquidity providers earn fees(75% * fee rate) on all trades, LP share of fees go directly back to respective pools, fees are claimed proportional to your pool share by withdrawing your liquidity from respective pools.

Amount of LP token to receive = Circulating supply of LP token * ($ value of asset to add/ $ value of pool)

Remove your liquidity

Removing Liquidity is the reverse of providing liquidity, LPs have to burn their LP token to get back their liquidity. Removing liquidity decreases the asset liquidity without changing asset price.

Select Pools & Ordinary Pools

OSD rebalancing:

  • Select Pools: OT automatically rebalances the pool whenever a sell action will decrease OSD balance below 0. LP token acquired during rebalancing belongs to protocol treasury. Assuming USDT pool has a balance of 10,000 USDT and 0 OSD, Alice sells 10,000 USDT for 10,000 OSD, since the pool has 0 OSD balance, the action will decrease OSD balance below 0, protocol will mint 10,000 OSD in exchange for 10,000 in form of USDT LP token, this process is called rebalance. In simple terms.
  • USD(S) swap price are fed from oracle.
  • Select pools are: USDT, USDC, DAI, ETH pools.
  • Ordinary Pools: There is no auto rebalancing to ordinary pools.

OT as a lending protocol

Another key difference that makes OT stand out from other DEX is that liquidity providers are also lenders, liquidity provision brings LPs extra passive income, interest incurred from borrowing activities are sent back to the pool, which means LPs have a new way of earning other than swap fees = higher yield for LPs.