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Basic Pools

Discover the mechanics of Basic Pools and the benefits of providing liquidity on Ociswap.

What is a Basic Pool?

Ociswap's Basic Pool (BP) uses Radix's native "Resource Pools" as a building block. In particular, it utilises the TwoResourcePool (TRP), which is a liquidity pool that contains a pair of digital assets (e.g. $XRD/$OCI). ThisTRPholds the market's liquidity for a single pool and is exclusively managed by its corresponding BP.
By making use of the TRP, the BP can provide pool units (LP-tokens) that are fully compatible with the official Radix Wallet. This ensures a great user experience, because the Radix Wallet transparently showcases the underlying tokens, while allowing users to seamlessly access and intuitively manage their funds at all times.

How do Basic Pools work?

To understand the design concepts of the BP, it's crucial to grasp which functions are provided by the TRP and how the BP is built around it:
  1. 1.
    Instantiate Pool Allowing users to create a BP with a corresponding TRP to hold its liquidity.
  2. 2.
    Add Liquidity
    Allowing users to provide liquidity to a BP, which is deposited into the TRP using its Contribute function. Liquidity is provided in token pairs, matching the pool's ratio.
  3. 3.
    Remove Liquidity Allowing users to withdraw their liquidity from the BP via the TRP's Redeem function.
  4. 4.
    Swap Allowing users to execute trades through the BP. During the swap, the BP utilises the Protected Deposit and Protected Withdraw functions of the TRP to amend its token holdings.
Users can also interact with the Redeem function of the TRP directly from the Radix Wallet, allowing them to withdraw liquidity at any time.

Basic Liquidity Pool Features

  • Swaps: The BP uses a Constant Product Automated Market Maker formula to create a market and calculate prices and trading outputs.
  • Liquidity Provider Fees: The BP imposes fees upon swap execution, with the specific trading fee rate established during the liquidity pool's creation. These fees can be configured to 0.01%, 0.05%, 0.3%, or 1%. All fees are awarded to the liquidity providers of the TRP and can be claimed by redeeming the underlying liquidity.
  • Auto-Compounding: The BP consistently reinvests the trading fees back into the liquidity pool. This boosts returns and creates a hassle-free experience for liquidity providers.

The Future of Basic Liquidity Pools

  • Basic Pools v0 are launched with the introduction of Babylon. These pools are set to transition to Basic Pools v1 once thorough code audits are completed.
  • Locking liquidity is not enabled for the v0 pools.