StarSeeds Protocol has begun the process of migrating the majority of its Protocol Owned V2/V3.5 Quickswap Liquidity linto DodoX Private, Single Sided, Camelot V3.5, and Antfarm Arbitrage LPs on Arbitrum.
Rigorous testing, experimentation and data analysis has revealed that Dodox Private Liquidity Pool technology offers a well-rounded blend of advantages alongside a notable lack of disadvantages that typically come with V2/V3/V3.5 LPs.
For reference V2 LPs were the first majorly used LP type, made by Uniswap.
V2 LPs have the advantage of an infinite swap range, meaning token A and token B in the pool can each increase or decrease in value by any amount and the V2 LP will continue to function with an even 50/50 balance of both tokens.
The disadvantage of V2 LPs are an extremely low amount of arbitrage based trade volume alongside an unadjustable 0.3% fee rate which mean V2 LPs typically produce less then 10% APR, which is a small fraction of what other LP types can produce.
V3 LPs were the first LP type to allow for an unprecedented amount of revenue generation potential for volatile tokens. This LP type enables Liquidity Providers to set a range that Token A and Token B trade within. This function multiples automated arbitrage trade volume perportionate to the concentration depth. When increased trade volume is combined with V3 LPs capacity to have up to a 1% swap rate, V3 LP profitability can be 10-100+ times higher compared to V2.
The disadvantage of V3 is that the more concentrated a V3 LP is, the higher the possibility that the LP will get “ranged out”: which occurs if the two tokens in the pool reach the limit in swap value that is initially set by the liquidity provider. When this happens, liquidity providers in the pool are left with only one type of token in the pool, whichever token is less valueable.
As a result V3 LPs naturally put a cap on the upside of each token while also as much as doubling losses from either token decreasing in value.
V3.5 LPs by ALGEBRA (Who recently rug pulled their token ALGB, shame on them), are an adaptation of V3 LPs that feature a dynamic swap fee rate that adjusts automatically in real time depending on trade volume. While this novel concept promises to increase LP returns, in practice V3.5 LPs often underperform V3 LPs with a 1% swap fee rate.
DodoX Private pools allow for an unprecedented amount of customization and control in exactly how the LP swap rate is structured. This includes:
1. Dynamic control (can be adjusted in real time by pool owner) over how much of each token is in the pool, and thus how much price exposure each asset has to each other. When this feature is used with one part Protocol owned token, it allows for total control over how much price exposure the Protocol token has to each paired asset
This allows Protocol Tokens to benefit from the upside of it's LP paired tokens while reducing or eliminating downside from those same tokens.
By using this feature Protocol's can also dictate which tokens accumulate in LPs as the Protocol tokens value increase
2. Dynamic control over the LP concentration depth and spread. This feature allows for the automatic placement and adjustment of numerous concentration ranges and depths. Which gives Private Pools almost the same range as V2 pools, while also concentrating liquidity at certain ranges like V3 concentrated liquidity.
It's this feature in particular that typically makes Private Pool performance more capital efficient then V2 or V3 LPs under most conditions and circumstance
3. Dynamic control over the fee range, from 0.01% to 10%. The capacity to manually adjust LP fee rate in real time combined with the flexibility to adjust to as high as a 10% swap fee rate gives Private Pools an unprecedented capacity to automatically generate revenue from volatility.
Especially when combined with appropriate concentration depths, these features can allow for 40-100+ times the profitability of V2 while also being free of the disadvantages of V3 (being ranged out of position).
4. The primary disadvantages of Private Pools are that only the owner can use the pool, and funds held in Private Pools can not be easily detected by portfolio trackers. These disadvantages are very mild and easily mitigated compared to the disadvantages of other V2/V3/V3.5 LPs
DodoX Single Sided Pools have unique advantages that are specificly beneficial for Protocol with a large Protocol token supply and Protocol owned liquidity.
Single sided LPs start with 100% of token A, with a growing exchange rate of Token A as more of token B is swapped into the pool. This LP type allows for an infinite amount of value growth of token A, while also putting a hardset limit on how low the swap rate of Token A can go compared to Token B.
In addition, Single Sided Pools allow for between 0.01% and a 10% fee rate as well as varing concentration depths and ranges, which are configurable once when the pool is generated. Initial pool concentration rate can be set to as much as 5X concentration while retaining a nearly infinite upwards swap range for token A.
Due to these qualities, Single Sided Pools can be extfemely useful for Protocols with a large supply of their Protocol owned token. Protocols using Single Sided LPs can deploy massive amounts of liquidity at virtually no cost while also controlling the value and exchange rate of their token to other tokens. Furthermore this pool type
For example, a Protocol can deploy $1M in their Protocol token in a single sided pool as token A, and USDC as token B. The pool starts with a value of 0.1 USDC per token A. Then $10K of token A is bought with USDC and its value increases to 0.11 USDC per token A. Now, at this point, the Single Sided pool can produce more then 10 times higher fees compared to a a V2 Pool with $500K in Protocol tokens and $500K USDC.
These qualities give Protocol Owned Single Sided Pools the potential for over 100 times the capital efficiency and swap fee based returns compared to standard V2 pools.
Protocols can also use one Sided LPs to give their Protocol token upside benefits while eliminating downside. This is done by setting a token with high expected upside as Token A, and the Protocol token as Token B.
This LP configuration will automatically buy and store Protocol tokens in relation to Token A's value growth. Additionally this type of configuration protects the Protocol's token from potential downside of token A.
The primary disadvantage of Single Sided Pools compared to Private pools are that Single Sided LPs can not be optimized after deployment. Instead, new configurations require a new LP to be made and liquidity to be migrated. Furthermore, price exposure of each asset cannot be manually configured in real time.
Benefits of Single Sided Pools Verse Private Pools are that anyone can deposit into Single Sided Pools and Single Sided Pool value/tokens held are automatically tracked by portfolio/token tracking systems.
Antfarm LPs are an uncommonly used LP type that are custom designed for maximum revenue generation from token volatility based arbitrage trade volume.
Antfarm LPs use a deviation of V2 LPs with two primary differences.
1. Swap fees are paid in ATF, a deflationary token with a 15% burn when used to pay Antfarm LP swap fees. This novel feature helps protect Liquidity Providers from tokens collapsing in value.
Since LP swap profits are normally compounded or stored in the tokens used in the LP, if a token used in LP drops in value substantially, the LP returns from LPs with that token are perportionately reduced. Using Antfarms model, LP swap profits are instead stored in a token that has a relativley stable and sometimes growing value, which retains LP swap fees regardless of what LP Tokens are used.
2. AntFarm LPs offer 1%/10%/22%/50%/100% swap rates. These incredibly high rates can make an equally high return for LPs with corresponding or higher divergences in token value.
The higher fee rates available are particularly useful for more volatile tokens like meme coins and low cap gems with high anticipated upside.
For Protocols, Antfarm LPs have the added advantage of providing swap fee revenues in ATF Tokens, which can be sold without negatively impacting the value of the Protocol's token. This provides a growing source of Protocol Revenue that can be used for expenses or to increase the value of Protocol tokens/expand Protocol owned liquidity reserves.
The primary disadvantages of Antfarm LPs are a lack of capacity to concentrate liquidity. As a result, Antfarm LPs work best when used with extremely volatile tokens that have a high chance of extreme price movements that would range out even mildly concentrated V3 positions.
As part of the V4.1 LP Network upgrade, STARV4 now has multichain capacity via Portalbridge (wormhole).
STARV4 must first be swapped to STARV4-B in order to be bridged. Once bridging is complete, STARV4-B can then be swapped 1 to 1 (with small fluctuations) with STARV4 on the end chain.
Integration of STARV4-B for multichain bridging rather then using STARV4 directly provides the following benefits.
1. Enables independent configuration of STARV4’s adaptive tax/burn on transfer rates on each chain, allowing for market optimization of STARV4 on a chain by chain market basis.
2. Enables StarSeeds Protocol to algorithmically claim the majority of cross-chain STARV4 arbitrage profits by controlling the swap fee rates of the STARV4/STARV4-B pools on each chain.
Chains with higher rates of STARV4 price volatility can be be configured in real time to have a higher STARV4/STARV4-B swap rate in order to capture the majority of cross-chain fees into appreciating the value of STARV4 on every chain.
STARV4-B (Polygon): 0x428b9cf70f85Abe0695dED105b881D37C3281202
STARV4 (Polygon): 0x61fFE097137d543f019F5257E1a1Ff7A6C5F0b68
STARV4 (Arbitrum): 0xBa00E97551Dd9b8DD3bab3eE9e13A87cA3952467
STARV4-B (Arbitrum): 0xc7d1F2C332790bbd071b9A293b3846585874a91e
Swap STARV4 at the best rates using most swap aggregators, such as DodoX, 1inch, Odin, or Paraswap.