Dystopia Swap
Last updated
Last updated
Dystopia is a decentralized exchange that is designed to provide minimal slippage and trading fees for swapping stable coins and volatile assets alike.
Swap fees are just 0.05%, some of the lowest available in DeFi. If both tokens of a liquidity pool's pair are whitelisted by veDYST to be staked in gauges and receive DYST emissions rewards, the liquidity providers of that pair will not receive swap fees. The profits expected by the liquidity providers staking on gauges are solely derived from DYST emissions.
In contrast veDYST Lockers who voted to incentivize a particular gauge with emissions will receive all the swap fees from the liquidity pair that they voted. This creates the incentives for veDYST lockers to vote for the gauges that produce the highest volume in swap fees.
Through this mechanism, the system provides veDYST lockers with the power to incentivize swap fees instead of total liquidity. The destination of DYST emissions is in the hands of the lockers.
If a liquidity pool is not whitelisted to be staked in the gauge, it will receive all the swap fees it generates but have no DYST emissions. Likewise, liquidity providers that do not stake the LP in gauges will receive the swap fees, but no DYST emissions.
Dystopia liquidity pools can utilize one of two different price invariant formulas to accommodate either stable or volatile liquidity pairs. The Volatile Pools use a Uniswap v2 style constant-product curve which is the industry standard for non-correlated pairs, such as WMATIC and USDC. The Stable Pools use a hybrid price invariant curve based on Curve Finance's Stable Swap, which is best suited towards highly correlated assets like stablecoins.
The chart above compares both the Curve and Uniswap style price invariant curves. It shows how much price impact you can expect in a liquidity pool between the assets X & Y depending on their prices.
The green "Curve-like Stable AMM" curve will enable low price impact trades since the price curve is linear until pushed into its outer bounds by being unbalanced; the x/y ratio have little change while in the linear area.
The brown "Uniswap-like AMM" curve is much more susceptible to price impact because it does not have any linearity on the curve where the liquidity concentrates; every trade will be changing the ratio of X and Y.
In Dystopia all swap fees generated by gauges are automatically attached to the next epoch of gauges as bribes. During the start of the next epoch the bribes begin to be distributed for a period of seven days. This process is repeated in all epochs.
Any user on Dystopia can attach a bribe to the gauges. Bribes can be an alternative for protocols to incentivize the liquidity of native tokens at a lower cost of supply or even add an attractive amount of tokens in bribes to some gauge to create an extravagant marketing campaign.
