Key details
| Chains | Arbitrum (more to come) |
|---|---|
| Oracle Price Pool address | 0x04e2a8c9465f46f8ebb71fab035bcf79beef4253 |
| Arbiscan | https://arbiscan.io/address/0x04e2a8c9465f46f8ebb71fab035bcf79beef4253 |
| Stablecoin treasury monitoring endpoint | http://retail.fluid.ch/gw/open/v1/treasury/DUSD |
Fluid Finance and Chainlink have brought an optimized liquidity model to DeFi.
Highlights
- Designed for trading assets with known prices.
- Allows buyers and sellers to trade in DeFi without the price impact of a typical AMM curve.
- Improves capital efficiency for liquidity providers.
- Creates a new class of low-risk crypto LP staking rewards.
The problem
Fluid wanted to offer its users a stable price to purchase ETH. However, the ETH – DUSD price in the pools that the company created on SushiSwap varied depending on the liquidity in the pool and the size of the trades. Fluid wanted stable pricing for users while also keeping a pool in the crypto world, to facilitate on and off ramping from traditional finance.
The solution
The Fluid team has a long relationship with Chainlink and knew that they could provide a price feed for ETH in US dollars. Since Fluid itself guarantees that its DUSD stablecoin on the crypto side can always be redeemed for the exact same amount of US dollars in a bank account with Fluid on the traditional side, the company was in a unique position to offer ETH – USD trades.
The result was to integrate a Chainlink oracle into a pool with Fluid, at the intersection of traditional finance and crypto. Essentially, Chainlink replaced a price curve with their price feed. As Fluid’s pools are used for on and off ramping, and not for price discovery, this presented a solution that was the best of both worlds.
Instant liquidity would be available for normal on and off ramp amounts from funds provided by:
- Fluid
- LP providers from crypto.
Welcome to Oracle Price Liquidity!
- For individuals and companies.
- Instantly.
- Globally.
It’s more than an evolution for crypto.
It’s a revolution.
- The original
- Rider A
x * y = k
Liquidity provided all along the curve.
Cuts out banks and market makers and allows individuals to provide capital and earn returns.
- Oracle Price Liquidity
- Rider A
- Optimal for already priced assets (ie where price discovery isn't necessary).
- Concentrated Liquidity
- Rider A
- Better efficiency for low variance assets (e.g. stablecoins in Curve, adopted by Uniswap v2).
It gets better
Oracle Price Liquidity Pools offer advantages to crypto LP stakers that don’t currently exist.
LP providers in crypto can provide liquidity (e.g. ETH – DUSD, ETH – DEUR) in an extremely safe environment with known prices through the Chainlink feed. For this liquidity provision, they earn 0.25%. This feature is being implemented.
Fluid wanted to offer users the best on- and off-ramp in crypto while eliminating price impact. The incorporation of a Chainlink price feed solved this problem.
Here is how Oracle Price Pools work
Oracle Price Pools have two main functions:
- They allow users the fastest and easiest way to on and off ramp from crypto.
- They allow users to swap between tokens with known prices.
The main advantage over other DeFi pools: no price impact.
Watch a video about how Oracle Price Liquidity Pools work
What it means for DeFi
By bringing Oracle Price Pools to DeFi, Fluid and Chainlink provide trading options that don’t exist elsewhere, particularly for assets whose price is well-known. For example, the ETH – USD price is established in many markets and is provided on-chain by Chainlink’s price oracles. Since Fluid’s DUSD is 1:1 backed by USD in a bank account Fluid and Chainlink intend to provide a stable price environment for transparent, backed stablecoins quoted against crypto assets.
In addition, as a stable price environment and trust are required for mass adoption, Fluid and Chainlink hope that the development of their Oracle Price Pools will encourage more users to try crypto products.
What is coming
Fluid and Chainlink have started with the largest trading pair in crypto: USD and ETH. However, this is just the beginning. Fluid has the ability to create bank accounts in up to 32 currencies.
Fluid and Chainlink plan to roll out these additional currencies over the course of the year, offering users globally a seamless integration of a bank account with access to crypto in a huge range of currencies, not just the US dollar.
At the moment, Fluid and Chainlink started with Oracle Price Pools on Arbitrum, a layer 2 scaling solution for Ethereum. The digital dollar, DUSD, has also been tested on Polygon and Ethereum mainnet. Fluid and Chainlink also intend to offer Oracle Price Pools on other chains.
