Orbs, a Layer-3 infrastructure network designed for decentralized applications, has just introduced Liquidity Hub. This innovative platform aims to provide aggregated liquidity to any decentralized exchange automated market maker (DEX-AMM).
The first launch of Liquidity Hub has been carried out in collaboration with QuickSwap, as per latest information shared with Finbold on September 18. The method has been specifically developed to tackle the escalating issue of liquidity dispersion within the realm of decentralized finance (DeFi), leading to elevated pricing for traders using decentralized exchanges (DEX).
The primary objective of Liquidity Hub is to enhance liquidity and maximize the benefits of its savings for traders. The system utilizes a combination of on-chain smart contracts and off-chain logic, which is facilitated by Orb’s decentralized L3 nodes.
This feature allows DEXs to conduct deals without relying on automated market makers (AMMs) and so avoid the typical pricing effect. Additionally, it ensures that swaps are consistently completed at a superior price compared to the one provided by the DEX’s own smart contract.
In the event that Liquidity Hub encounters an inability to execute the transaction at a more favorable price, the deal will revert to the smart contract of the AMM and proceed with regular execution.
Consequently, Liquidity Hub endeavors to optimize the trader’s experience by facilitating safe transaction executions. The whole of the funds are stored on the blockchain in a way that does not involve any third-party custodial services.
The execution of orders takes place on the blockchain through the smart contract of the Liquidity Hub. This process ensures that the swap satisfies the needs of all parties involved, while also achieving a more favorable execution price compared to the AMM. Upon confirmation of the swap, the transfer of funds takes place on the blockchain between the two involved parties.
Protection for liquidity providers
Liquidity Hub distinguishes itself with a unique Maximal Extractable Value (MEV) protection solution for liquidity providers, assuring no influence on their incentives. The Liquidity Hub is a completely composable DeFi protocol building piece that can connect to many solvers out of the box, allowing anybody to engage in swap bidding.
Meanwhile, Orbs’ decentralized architecture prevents trade manipulation, with transactions enabled by a secure network of permissionless validators known as Guardians who use a proof-of-stake consensus method.
Ran Hammer, Orbs VP BizDev, stated:
״Liquidity fragmentation is one of the biggest issues currently preventing DeFi DEXs from being able to compete with centralized off-chain venues and on-chain volumes to aggregators. Using Liquidity Hub, existing DEX-AMMs can stay competitive by tapping into additional liquidity sources, without jeopardizing the incentives for liquidity providers.”
All in all, Liquidity Hub brings the advantages of pooled liquidity to any DEX-AMM, resulting in improved execution costs for traders and assured MEV protection for liquidity providers. It allows any DEX platform to benefit from greater liquidity to support larger trading volumes while generating extra revenue from trading fees.