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Liquidity Pools | Symbiosis
Each crypto swap with the Symbiosis protocol proceeds through our concentrated liquidity pools. Learn more about AMM, what AMM designs do we use for cross-chain operations, and more.
Looking for SDKs and API? Please check out our documentation for software developers Symbiosis Developer Tools
The Symbiosis protocol uses a number of liquidity pools to do cross-chain operations. However, only one type of these liquidity pools belongs to the Symbiosis protocol: Nerve-like liquidity pools with {stablecoin <> sToken} pairs.
The Symbiosis protocol V1 has liquidity pools distributed across the supported blockchains. Its successor, the Symbiosis protocol V2, concentrates the liquidity pools on S-chain: the servicing blockchain.
Yes, the Symbiosis protocol V2 is coming. It retains the main effective and reliable features of the Symbiosis protocol V1 and, at the same time, thanks to its better organization, will have easy ways for its further evolution. Stay tuned.
The liquidity pools owned by Symbiosis contain stablecoin pairs with one exception: Milkomeda. The liquidity pool on Milkomeda has a stablecoin — non-stablecoin pair: {sUSDC < > MilkADA}, where sUSDC is a representation of USDC token from Ethereum.
Those liquidity pools are used to bridge blockchains. Scheme 1 shows the liquidity pools owned by Symbiosis.
Scheme 1. Nerve-like liquidity pools with {stablecoin <> sToken} pairs
The Symbiosis protocol works with a particular stablecoin on each supported blockchain. This stablecoin has its wrapped representation (sToken) on another blockchain with a ratio 1:1 to its locked original. For example, it is USDC on Ethereum, and its wrapped representation is sUSDC on BNB, Avalanche, Polygon, and Boba.
The Symbiosis protocol owns one Nerve-like liquidity pool {stablecoin <> sToken} for every blockchain’s pair that supports direct cross-chain swaps. Such a liquidity pool is located on the blockchain with the lowest gas fee (in the USD equivalent) of the pair and contains:
- The stablecoin chosen for this blockchain,
- The wrapped representation of the stablecoin of another blockchain (sToken).
Why is there just one liquidity pool with sToken for a blockchain pair?
There are three reasons:
- 1.One liquidity pool with total liquidity is better than two pools with half liquidity each,
- 2.A pool on the blockchain with lower gas fees (in the USD equivalent) reduces operating costs,
- 3.Some blockchains are more reliable and easy to operate.
If needed, the Symbiosis protocol uses third-party protocols or liquidity pools to perform on-chain swaps within its cross-chain operations.
Consider the cross-chain swap: UNI (Ethereum) for CAKE (Binance Smart Chain).
The algorithm of this cross-chain swap is shown in Scheme 2.
Scheme 2. the UNI → CAKE cross-chain swap with the Symbiosis protocol.
The Symbiosis protocol exchanges UNI for USDC (step 3) and BUSD for CAKE (step 8) with the 1inch protocol ensuring the best price for these intermediate on-chain swaps.
As soon as the last swap BUSD → CAKE (step 8) is accomplished, the CAKEs get deposited to the user's address on BNB.
If we swap USDC (Ethereum) for BUSD (Binance Smart Chain), then there are no third-party liquidity pools involved: Scheme 3.
Scheme 3. the USDC (Ethereum)→ BUSD (BNB) cross-chain swap with the Symbiosis protocol.
As soon as the last swap sUSDC -> BUSD (step 6) is accomplished, the BUSDs get deposited to the user's address on BNB.