This section details the future plans and enhancements for Centaur Swap, beyond the onboarding of additional asset pools and protocols.
The intervention of arbitrageurs whenever AMM prices deviate from external prices ensures that AMM prices remain rangebound when compared to external prices. Liquidity Maximization also enhances this effect by increasing slippage whenever the Internal Price varies largely from the External Price. As a result, a portion of the liquidity in the pool is often underutilised as traders would not trade on such a high slippage and would more likely wait for a correction of the Internal Price.
This underutilised liquidity can then be repurposed into other DeFi solutions in the industry such as lending platforms. Through efficient allocation of the liquidity, Centaur Swap greatly enhances the yield generated for liquidity providers.
Effective price discovery and mitigation of impermanent loss depends heavily on the timely intervention of arbitrageurs. To accomplish this, Centaur Swap will be working with DEX aggregators and will also be launching its Arbitrageur-of-Last-Resort, the Centaur Rebalancer. Project teams can choose to deposit team tokens with the Centaur Rebalancer and the deposits will be used to arbitrage and offset any deficits or impermanent loss in those pools.
Pools that are protected by team deposits will be designated with the Rebalancer logo. In effect, the Rebalancer shifts the risk of impermanent loss to the team.
As part of Centaur’s broader push to achieve interoperability across different blockchain protocols, we will also be deploying liquidity pools on blockchains with smart contract capability. The Centaur platform will function as a backward-compatible settlement layer between different blockchains. Users will be able to stake, for example, TRX on the Tron and swap for an equivalent number of ETH on Ethereum.
Yield-Generating Index Funds
In traditional finance, index funds are a trillion-dollar industry. By allowing single-side staking, Centaur Swap allows passive investors to buy into a diversified portfolio of cryptocurrencies according to their market capitalisation, through the liquidity pools. This would not have been possible under the old pair-based model of liquidity provision.
As an added sweetener for investors, all index funds will received a portion of the trading fees generated from the liquidity pools as a reward for providing liquidity.