• Found pricing feature to eliminate fickle losses
• New price feature to generate volatile profits is available
• Liquidity providers can enjoy a rising asset without interest and governance token rewards
Professor Hyoung Joong Kim at Korea University
A Solution to remove fickle loss (IL) and reduce slippage was recently introduced.
So far it has been overlooked that IL is caused by the nominal price.
Automated market makers (AMMs) have used two types of trade prices: real trade price and nominal price.
Professor Hyoung Joong Kim of Korea University, who recently filed the patent, announced, “I found a price function to eliminate IL and control impermanent profit (IG).”
IL was called the ‘silent killer‘ in the decentralized finance industry.
Engineers using Liquidity Pools (LPs) based AMMs have attempted to remove IL and have failed. Liquidity providers wanted LPs with no IL. On the other hand, traders preferred LPs with low slippage.
Recently, Professor Kim filed a patent and circulated a paper for a method that could solve this problem at once.
He explained: “I found a solution to remove IL and reduce slippage simply by using a single price where the real trading price and the notional price are equal” and “I proved mathematically that the new price never IL caused.”
In addition, he showed that LPs can be created with IG by combining the real trading price and the nominal price.
Bancor issued and retracted them faulty IL protection scheme in 2022.
In other words, the biggest problem in the industry has been the elimination of IL.
In 2022, Professor Kim published a paper that there are LPs in which IL and IG regions coexist.
Of course, liquidity providers and traders will migrate to LPs without IL.
Existing liquidity providers have suffered asset losses even while receiving interest rate and governance token rewards due to IL. However, the new pricing feature allows liquidity providers to grow in asset value even without rewards from IG.
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