GYD Trading Pools
Concentrating liquidity within price bounds defined by the DSM
Overview
In Gyroscope, the GYD Trading Pools concentrate the liquidity within a band that follows the minting and redemption quotes set by the DSM.
With healthy reserves, GYD Trading Pools liquidity is concentrated within a narrow band. If there is a shock to the reserve and the DSM sets new redemption prices (as described here) this price band will widen. Notably, the GYD Trading Pool liquidity provision is very resilient, as:
GYD Trading Pools are redundant (i.e., provide different paths in/out of GYD) and
GYD Trading Pools are independent from each other (e.g. if the paired asset fails, remaining SAMM pools can still function, unlike one common Curve pool).
Stylized GYD Trading Pool redemption curve
The stylized GYD Trading Pool redemption curve is shown below against the example of a 50-50 Uniswap pool.
GYD Trading Pool designs incorporate optimized bonding curve shapes and virtual reserve mechanisms. These are fully specified, formally characterized, and optimized in several papers available on Github.
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