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  3. Liquidity Seeding

Key Point #1

Last updated 11 months ago

Key Point #1: Pairing against volatile assets in an external non FXPool (the "arbitrage pool")

The most effective way to generate volume on a new (usually small liquidity) FXPool is to;

  1. Create an FXPool with your target liquidity (let's say 100k USD TVL in this example)

  2. Create a non FXPool and pair against a volatile asset (let's say 50k USD TVL in this example), usually the native gas token of that network (such as ETH for Ethereum Mainnet and AVAX for Avalanche)

One prime example of this working is StraitsX's Polygon XSGD:USDC FXPool where the following liquidity pools exist ;

Actual TVL may differ from time of writing as stablecoin issuers do move liquidity around or create new pools

  1. FXPool

    • XSGD:USDC FXPool on Xave (this FXPool has been migrated from the old version using bridged USDC here)

  2. External Pool (that serves as external rebalancing liquidity for arbitrage)

    • XSGD:USDC:ETH (this has been migrated to native USDC from the old bridged USDC pool found here)

Another example is VNX's Avalanche FXPools for VEUR and VCHF where the following liquidity pools exist;

Actual TVL may differ from time of writing as stablecoin issuers do move liquidity around or create new pools

  1. FXPools

    1. VCHF:USDC FXPool (click to see FXPool on Xave UI)

    2. VEUR:USDC FXPool (click to see FXPool on Xave UI)

  2. External Pool (that serves as external rebalancing liquidity for arbitrage)

    1. sAVAX:VCHF:VEUR (click to see weighted pool on Balancer)

These FXPools achieved ~$1.5M in volume during their first month live on less than $200k TVL each due to the external pool that helped kick off volumes.

See Dune page of VCHF:USDC FXPool: https://dune.com/xavefinance/vchf-usdc-pool-avalanche

See Dune page of VEUR:USDC FXPool: https://dune.com/xavefinance/veur-usdc-pool-avalanche