- Automated Market Maker (AMM) liquidity pool feature was included after Hoo App’s update. Some former users took part in its grayscale test.
- AMM is not a new concept, as this process is accepted by decentralized exchanges like SushiSwap and UniSwap.
- Hoo has just about shifted its underlying function mode of Uniswap from its chain to site, without shifting its process.
After upgrading the Hoo App, AMM liquidity pool feature was included, while some former clients were available for its grayscale testing. As per test clients, users of platform can offer liquidity for major trading pairs like BTC/USDT on site. When investors conduct transactions, handling fees can be shared by liquidity providers proportionately.
As per page, offered by test clients, Hoo’s every liquidity pool records quantitative info like overall liquidity, 24 hour transaction fee, 1 day and 7 day annual return rate for clients’ reference. In contrast with liquidity offered by decentralized exchanges on chains like Uniswap, clients can work in Hoo without consumption of gas fees, functioning speed is swifter, and is secure.
Fee Sharing by Hoo AMM liquidity Pool
DAOs and Web3.0 are trending topics currently in encryption sector. Both shares a common trait, which is to shift monopoly of massive organizations on Web via decentralization, and to disperse value generated by users impartially to every individual.
For DeFi players, AMM (Automated Market Maker Mechanism) has long since ceased to be an out-of-the-way concept, and this mechanism is more commonly used by DEXs such as Uniswap and SushiSwap. It is characterized by supporting all market users to provide liquidity for asset trading pairs, which eventually constitute a liquidity-rich liquidity pool where the asset price varies according to the ratio of two assets in the liquidity pool, and accordingly, the liquidity provider can split the transaction fees generated by the pair.
AMM pool released by Hoo Exchange is equal to centralized exchange evolved form of Uniswap AMM method. According to the introduction, Hoo AMM pool is considered an iteration on top of HooSwap, except that the liquidity in the pool will be provided to multiple mainstream trading pairs in Hoo’s coin trading area.
Some users who participated in the gray test said that the entrance of the liquidity pool can be found in the Hoo APP and official website. There is a “liquidity pool” button in the top right corner of the Hoo Spot trading page, after clicking into it you can inject the corresponding two assets for BTC/USDT and other trading pairs, and then the pool will automatically make a market and issue daily rewards according to the ratio of liquidity funds provided by the user to the total pool.
As per regulations, clients’ rewards for offering liquidity are provided on a regular basis. Since constant outflow and inflow of liquidity may lead currency’s value to diverge from market value in a short time span, to avoid fluctuations in price, and better handle dispersion and calculation of rewards.
Some conditions are there for AMM liquidity pool’s redemption mechanism. As of now clients in liquidity pool can redeem funds after an hour of offering liquidity, and users can redeem complete rewards in single go, that too once in a day.
Reducing AMM Cost Under Safe Premise
Hoo has practically converted the core operating mode of Uniswap from the chain to the site, and with the same methodology, the ease, price, and security of centralized exchange services, from the standpoint of users supplying liquidity and splitting up the processing charge.
After using the Hoo AMM pool, the aforementioned test customers awarded it a “silky” rating. To enable liquidity in DEXs like Uniswap, assets must first be placed on the chain, and then smart contracts must be authorized to move funds. At same time, you must pay gas fees on the network while increasing and releasing liquidity. It will cost hundreds of dollars in processing fees, and each stage of the process will require verification from the chain, which is inconvenient and expensive.
According to the appropriate individual in charge of Hoo, the risk of security events when adding liquidity to Hoo is nearly none. This is due to the addition of the Hoo AMM liquidity pool to the spot module. In principle, user commodities are fully safe as there are no issues with the spot trading list, which is secure than Decentralized Exchange on the chain.
Users should be aware that whether they provide liquidity in DEXs like Uniswap or make marketplaces for trading pairs in Hoo, they will suffer the “common issue” of the AMM process, which is impermanent losses.
Hoo has established a liquidity pool for USDT trading pairings that includes BTC, ETH, SOL, DOGE, HOO, and other assets. As per rumors, the site will subsequently add more trading pairs in response to market demand, allowing more people to engage.
Some in the sector feel Hoo’s establishment of the AMM liquidity pool is a continuation of CeFi’s investigation, and the advantages to users are also in accordance with Web3’s spiritual core. “With this capability, users may invest their idle commodities in the fund pool to generate revenue, while the platform gains additional liquidity, resulting in a win-win situation.”
Hoo’s AMM liquidity pool feature is scheduled to be fully operational shortly, allowing more users to experience what it’s like to be a “shareholder” of the exchange. Industry experts expect that as Web3.0 develops, this strategy of exposing the platform for users to create an entry and rebate to consumers will become fashionable, and it will emerge more frequently in centralized exchanges.