1inch Network launches earn pool for liquidity providers and will leverage a small price interval with enhanced earnings so let’s read further in today’s latest cryptocurrency news.
The 1inch network launches a new earn pool for liquidity providers in hopes of incentivizing liquidity providers and the protocol asserted in a press release it said that the new feature will provide more efficient use of the capital compared to the AMM pools. The new set of liquidity pools optimized for stablecoins, 1inch Earn’s operating model is quite similar to the Uniswap V3 range orders and according to the press release we can read that:
“Earnings come from fees on swap trades in the pool.”
The individual users, the trade bots, and arbitrage traders will perform the swaps and 1inch earn provides deeper liquidity at any point because of its integration into the Pathfinder algorithm. The Defi protocol said that the earnings from the new tool will be in the range of 5-10% APY at the time of the launch but later the profitability will depend on how the market behaves. The concept of 1icnh Earn was in practice in the Treasury since September 2021 and it was called Trading Strategies. The popular aggregator of the decentralized protocols thinks that 1inch Earn will improve the decentralized and governance across the network but it will also provide to be an attractive earning tool for the users as the project said in the PR. The PR from 1Inch Network:
“The launch of 1inch Earn is set to be a major step towards improving the sustainability of the entire network and stepping up its decentralization and community-led governance, while also working as a lucrative earning tool for users.”
1inch Earn uses capital in the AMM pools as the pool said:
“In a standard pool, all liquidity is distributed equally along with the entire price range between zero and infinity. As a result, most of the liquidity is never used.”
To overcome this anomaly, 1inch Earn allows liqudity providers to leverage smaller price intervals and for example, it could be in a range between 0.99 and 1.01 so in that case, the traders get deeper and mid-price liquidity with the providers earning more fees. The scenario looks more appropriate for the stable coin pairs where the liqudity outisde the typical price range is not really used. The PR reads:
“Once a transaction has been confirmed, a user immediately begins earning yield in the form of both tokens deposited to the pool. Regularly updated stats are viewable on the 1inch Earn dashboard.”
