How it works

For new pools

  • The project deposits ABC tokens into the Coliquidity smart contract.
  • The investors deposit WETH tokens into the Coliquidity smart contract.
  • When there is enough WETH liquidity, the project triggers the creation of a new pool though Coliquidity contract.
  • The Coliquidity contract deploys a new ABC-WETH pool using combined liquidity from the project & the investors.

For existing stablecoin pools

  • Alice & Bob decide to put their stablecoins into the DAI-USDT pool to earn LP fees.
  • Alice deposits DAI tokens into the Coliquidity smart contract.
  • Bob deposits USDT tokens into the Coliquidity smart contract.
  • The Coliquidity contract combines DAI + USDT and puts them into the DAI-USDT pool.
  • When either Alice or Bob requests a withdrawal, Alice gets her DAI deposit + DAI fees, Bob gets his USDT deposit + USDT fees.
  • If DAI-USDT price doesn't change: both Alice & Bob earn the fees.
  • If DAI-USDT price does change: this scenario is equivalent to “For existing non-stablecoin pools

See also:

For existing non-stablecoin pools

  • Alice deposits ABC tokens into the Coliquidity smart contract.
  • Bob deposits WETH tokens into the Coliquidity smart contract.
  • The Coliquidity contract combines ABC + WETH and puts them into the ABC-WETH pool.
  • When either Alice or Bob requests a withdrawal, Alice gets her ABC deposit + ABC fees, Bob gets his WETH deposit + WETH fees.
  • If ABC-WETH price doesn't change: both Alice & Bob earn the fees.
  • If ABC-WETH price goes up: there will be less ABC and more WETH in the pool, so Alice will get less ABC + ABC fees, Bob will get more WETH + WETH fees. It works like a long position for Bob.
  • If ABC-WETH price goes down: there will be more ABC and less WETH in the pool, so Alice will get more ABC + ABC fees, Bob will get less WETH + WETH fees. It works like a short position for Alice (e.g. she believed ABC would crash short-term but recover long-term, so she put her ABC in the pool to make more ABC short-term).