Standard & Stable AMM
Last updated
Last updated
The AMM protocol powered the previous, v2 version of Beamswap, and now it powers certain v2 swaps and liquidity pools on Beamswap v3. The upgraded Beamswap v3 runs primarily on the v3 (CLMM) DEX protocol.
Automated market maker (AMM) is the underlying protocol that powers all decentralized exchanges (DEXs) by connecting users and their crypto assets with other market participants.
It bypasses intermediaries or centralized exchanges, and thus sustains a decentralized market where users can exchange assets directly with one another.
Beamswap v2 was a hybrid AMM DEX, as it ran on two AMM models:
Standard AMM
Stable AMM
The Standard AMM is an exchange model used on many DEXs, as it works well in supporting continuous liquidity. However, it does not sustain efficient capital deployment, which causes high slippage on swaps and, ultimately, more costly trades for end-users.
On the other hand, the Stable AMM reduces slippage and provides better rates for exchanged tokens, particularly for correlated assets or assets of the same value.
Correlated assets or assets of the same value are different representations of the same token holding the same value. These commonly include stablecoins or various representations of the US dollar, namely USDC, USDT, BUSD, DAI, and FRAX, but also different versions of ETH, BTC, KSM, and other cryptocurrencies.
By enabling both Standard and Stable AMM trading models of the token swap, Beamswap v2 protected users’ funds with lower slippage of correlated assets and minimal transaction fees while providing the best prices of listed tokens.
Following are guides and instructions on how to use AMM on Beamswap v2. Please note that Beamswap v3 primarily runs on CLMM.
To exchange assets or add and remove liquidity from the pools, you could go to https://app.beamswap.io/exchange/swap. Make sure your wallet is connected to the Moonbeam network.
Choose the correlated assets you would like to exchange from the drop-down list. The selection of the optimal AMM route for each trade is done automatically based on the chosen trading pair and appears at the bottom of the trading window.
Review exchange details and click “Swap”.
Add liquidity on Stable AMM To add liquidity using Stable AMM, go to https://app.beamswap.io/exchange/pool.
Open the Stable AMM tab, and under “Manage”, click “Add” to add liquidity. You can add liquidity to the following pools:
Multi 4Pool: multiUSDC + multiUSDT + multiDAI + multiBUSD
Nomad 3Pool: madUSDC + madUSDT + madDAI
Next, enter the amount of assets you would like to add to the liquidity pool and click “Approve [asset]”.
Lastly, finish the process and click the “Confirm Adding Liquidity” button.
When adding liquidity that doesn’t contribute to the balance of the pool, your position will be reduced by a price impact percentage. On the contrary, if you add liquidity that increases the pool balance, you will be rewarded with a bonus percentage on your position.
Unlike Standard AMMs, LPs on Stable AMMs can add or remove liquidity for single assets, for example, only for USDT, only for USDC, or both assets in the ratio of choice.
To remove liquidity, click the “Manage” drop-down and then “Remove”.
Enter the amount of assets to remove, choose the token of withdrawal — a single one or all — click “Approve”, and then “Confirm Withdrawal”.
Key variables of the Stable AMM Pool on Beamswap:
Virtual price: The average dollar value of the pooled tokens, e. g., stable coins pegged to the U. S. dollar have a virtual price of $1.
Amplification coefficient: Higher values extend the range of low-slippage fees, while lower values balance out the pool’s composition.
Swap fee: 0.04% fee on every trade made through Stable AMM. 50% of the fees go to LPs and 50% to the Beamswap treasury.
Beamswap Stable AMM brings multiple benefits to all stakeholders, from traders and liquidity providers to the network as a whole.
Stable AMM allows Beamswap users to enjoy much more cost-effective trading of stablecoin pairs or different variations of the same coin, thanks to lower slippage, minimal fees, the best market prices, and higher capital efficiency.
You can swap different bridged versions of the same asset without having to worry about insufficient liquidity.
Beamswap DEX is able to sustain full liquidity for one asset instead of splitting it between two correlated assets. Thanks to the Beamswap invariant algorithm, it significantly reduces the impermanent loss that occurs as the asset price changes after being deposited in the liquidity pool.
Stable AMM also mitigates liquidity fragmentation on Moonbeam caused by different variations of the same coin caused by various bridges to Moonbeam. In other words, as certain DEXs accept only certain variations of stablecoin and exclude others, the Stable AMM sustains the creation of various stable pools of correlated assets, allowing traders to swap between them and aggregate the overall stablecoin liquidity on Moonbeam.
Stable AMM ensures a more efficient emissions structure. Daily emissions in the form of Beamswap-native $GLINT token must be quantified to ensure maximum fee optimization and long-term sustainability of the DEX and mitigate the risk of oversupply and value dilution.
The Standard AMM model has sustained multiple less-efficient farms, such as the DAI-USDC, BUSD-USDC, and USDT-USDC stablecoin farms. Daily emissions in $GLINT were distributed to users staking LP tokens in each of those farms, which led to emission redundancy.
However, with a correlated-asset structure, a meta-pool consisting of USDC, DAI, BUSD, and USDT would be enough to ensure concentrated USDC liquidity against other stablecoins. Thanks to the Stable AMM, only one pool would be incentivized, optimizing the efficiency of emission management.
With the Beamswap Stable AMM, 40% of the fees from stablecoin swaps are used by the Beamswap DEX to buy back $GLINT, which reduces the circulating supply of $GLINT and benefits its holders.
The implementation of a Stable AMM on Beamswap means stronger support of multiple correlated assets and a fortified DeFi ecosystem as the platform concentrates liquidity through the native token of the Moonbeam network, $GLMR.
The Stable AMM protocol allows Beamswap to support other DeFi approaches as well, such as Liquid Staking.
