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Alfprotocol Utilizes Arbitrary Curves on Solana Blockchain

Mon, 11/22/2021 - 08:45
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Arman Shirinyan
Alfprotocol modernizes liquidity provision by making it more stable for risk-off investors
Alfprotocol Utilizes Arbitrary Curves on Solana Blockchain
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The Solana protocol is designed for providing liquidity and yield farming to Alfprotocol, including a modernized version of the automated market maker protocol and a separate funds market for the short-term funding of exchange activities.

The protocol provides AlfMM and AAlf to its Solana users, decentralized finance services including overcollateralized borrowing and traditional decentralized exchange services. Alfprotocol allows the provision of leveraged liquidity, which is being managed by one of the protocol's modules that works with Solaris, Jet and other protocols.

Arbitrary Curves technology

The Arbitrary Curves technology is designed to manage conversions between various digital assets on a decentralized exchange or decentralized finance platform.

Decentralized exchange protocols on the Solana blockchain contain liquidity pools that expose two or more assets in mathematical relationships with each other while they are functioning.

Such a relationship between various assets has the potential to drain the liquidity pool. The increased volatility can result in liquidity loss for various assets. All those factors decrease the total value of the liquidity pool.

The concept of dynamic curves introduced by the Alfprotcol is part of the Altprotocol market-making protocol that changes the mathematical link between various assets that use information from one price oracle. The different calculation technique allows stabilization of the pool price, which remains identical to the market price.

The Alfprotocol will implement arbitrary curves on the Solana blockchain to efficiently manage the pool's price. The new pool managing method allocates more liquidity toward the market price rather than price maximums and minimums.

The increase in market liquidity is achieved by the connection of low-risk investors that provide liquidity to loaning protocols that are being heavily utilized by more risk-on investors focused on more leveraged positions.

Alfprotocol still remains in development, and the further widening of its functionality is yet to be released. More information about the future of the protocol and wider functionality are presented in the whitepaper on the project's website.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.