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Introducing Stable AMM for more affordable and efficient stablecoin trading

Standard AMMs are the backbone of DEXs, but they come with certain drawbacks and high fees. To reduce the costs of trading stablecoins, we’re adding Stable AMM to the Beamswap DEX.

What is Stable AMM?

Or rather, what is AMM, to begin with? In general terms, an automated market maker (AMM) is the underlying protocol that powers all decentralized exchanges (DEXs) by connecting users and their crypto assets. It bypasses intermediaries or centralized exchanges, and thus sustains a decentralized market where users can exchange assets directly with one another.

But not all AMMs were created equal. The Standard AMM, for example, is an exchange model used on many DEXes, including Beamswap. Standard AMM is great for supporting continuous liquidity. However, it does not sustain efficient capital deployment, which causes high slippage on swaps and, ultimately, more costly trades for end-users.

On the other hand, the Stable AMM reduces slippage and provides better rates for exchanged assets.

Why does this matter?

A category of crypto-assets exchanged very frequently on DEXs are correlated assets or assets of the same value. True to their name, these are different representations of the same asset with the same value. Most commonly, these include stablecoins or various representations of the US dollar, namely USDC, USDT, BUSD, DAI, FRAX, but also different versions of ETH, BTC, KSM, and other cryptocurrencies.

So when users trade — or rather, swap — same-valued assets on DEXs, they should have gotten a near-1:1 value of exchanged tokens. But instead, Standard AMMs can only sustain the ratio of around 1:0.978 for same-valued tokens. The protocol’s high slippage and fees end up cutting the user’s portfolio short.

To mitigate the high slippage of correlated assets and protect our users’ funds, we’re introducing the Stable AMM protocol to the Beamswap DEX. The new addition will upgrade Beamswap to become a Hybrid AMM DEX, combining the stablecoin or Stable AMM and the Standard AMM trading models.

Who benefits from Stable AMM?

Beamswap Stable AMM brings multiple benefits to all parts of the equation, from traders and liquidity providers to the network at large.

📈 Benefits for traders

With Stable AMM, Beamswap users can enjoy much more cost-effective trading of stablecoin pairs or different variations of the same coin, thanks to lower slippage, minimal fees, the best market prices, and higher capital efficiency.

They can swap different bridged versions of the same asset without having to worry about insufficient liquidity, which further improves their trading experience.

🌊 Benefits for liquidity providers (LPs)

The Stable AMM on Beamswap will be able to sustain full liquidity for one asset, instead of splitting it between two correlated assets. Thanks to the Beamswap invariant algorithm, it will greatly reduce the impermanent loss that occurs as the asset price changes after being deposited in the liquidity pool.

Also, Stable AMM mitigates liquidity fragmentation on Moonbeam caused by various bridges to Moonbeam that have led to different variations of the same coin. In other words, as certain DEXs accept only certain variations of stablecoin and exclude others, the Stable AMM sustains the creation of various stable pools of correlated assets which allows traders to swap between them and aggregate the overall stablecoin liquidity on Moonbeam.

🌐 Benefits for the network

Stable AMM also ensures a more efficient emissions structure. Daily emissions in the form of native DEX tokens (on Beamswap, $GLINT) must be quantified to ensure maximum optimization and long-term sustainability of a DEX, else the protocol runs the risk of oversupply and value dilution.

The Standard AMM model has sustained multiple less-efficient farms like DAI-USDC, BUSD-USDC, and USDT-USDC, all stablecoin farms. Daily emissions in $GLINT have been distributed to LP stakers in each of those farms, which led to emission redundancy.

However, with a correlated-asset structure, a meta-pool consisting of USDC, DAI, BUSD, and USDT would be enough to ensure concentrated USDC liquidity against other stablecoins. Thanks to the Stable AMM, only one pool would be incentivized, optimizing the efficiency of managing emissions.

💰 Benefits for $GLINT holders

With the Beamswap Stable AMM, 40% of the fees from stablecoin swaps will be used by the DEX to buy back $GLINT and the reduction of circulating $GLINT supply will benefit its holders.

📊 Benefits for the Beamswap DeFi hub

The implementation of a Stable AMM on Beamswap means stronger support of multiple correlated assets and a fortified DeFi ecosystem as we concentrate liquidity through the native token of the Moonbeam network ($GLMR).

The Stable AMM protocol further provides Beamswap with the option to support other DeFi approaches as well, such as Liquid Staking.

How does it work?

The Beamswap Stable AMM harnesses the power of automatic asset routing, seamlessly providing the best trading option to the end-user.

Asset routing

The automatic routing provided by Beamswap’s Smart Order Router goes as follows:

correlated asset > USDC > GLMR > non-correlated asset

Automated routing allows users to trade without having to worry about choosing the optimal protocol (be it Standard or Stable AMM) and still get the best exchange rate and conditions on every trade.

Upon choosing the swap asset pair, traders are automatically led to the AMM with the highest liquidity, minimal slippage, and fastest execution.

💡 Example

Let’s say you want to move USDC from Ethereum to Moonbeam. Here’s what you could do:

  1. You can use the Nomad bridge and you would receive madUSDC on Moonbeam.
  2. You can use the Beamswap Stable AMM and swap the madUSDC on Moonbeam — on-chain, and with low slippage — which was impossible before.

To put it into a numerical perspective, compare the outcome of the Standard and Stable AMM swaps:

  • Standard AMM: By swapping 10,000 USDC, you’d get 9,800 USDT due to price impact and high slippage.
  • Stable AMM: By swapping 10,000 USDC, you’d get 9,993 USDT, 193 USDT more compared to the Standard AMM swap.

This example above was done using identical liquidity on both AMM pools.

How to use Stable AMM on Beamswap?

On https://app.beamswap.io/exchange/swap, you can exchange assets or add and remove liquidity from the pools. Make sure your wallet is connected to the Moonbeam network.

Exchange assets using Stable AMM

Choose the assets you’d like to trade from the drop-down list. The selection of the optimal AMM route for each trade will be done automatically based on the chosen trading pair and will appear at the bottom of the trading window.

Review exchange details and click Swap.

Add liquidity on Stable AMM

In the top menu of the Beamswap DEX, head to the Beamswap Exchange, and from the drop-down, choose Liquidity. Or, simply click here: https://app.beamswap.io/exchange/pool.

Next, open the Stable AMM tab, and under Manage options, click Add to add liquidity. Apart from the existing liquidity pools, you can add to the newly added ones:

  • 4POOL: USDC + USDT + DAI + bUSD
  • 3POOL: madUSDC + madUSDT + madDAI

Next, input the amount of assets you’d like to add to the liquidity pool and click Approve.

Lastly, finish the process by clicking the Confirm Adding Liquidity button.

❗️ Note: When adding liquidity that doesn’t contribute to the balance of the pool, you will be faced with a price impact percentage on your position. On the contrary, if you add liquidity that will help the pool balance out, you will be rewarded with a bonus percentage on your position.

Unlike Standard AMMs, LPs on Stable AMMs can add or remove liquidity for single assets, for example, only for USDT, only for USDC, or both assets in the ratio of your choice.

Remove liquidity on Stable AMM

To remove liquidity, under the Manage drop-down, simply click the Remove button.

Enter the amount of assets to remove, choose the token of withdrawal — a single one or all — click Approve, and then Confirm Withdrawal.

Details of Beamswap Stable AMM pool

Key variables

  • Virtual price: The average dollar value of the pooled tokens.
    E.g., stable coins pegged to the US dollar have a virtual price of $1.
  • Amplification coefficient: Higher values extend the range of low-slippage fees, while lower values balance out the pool’s composition.
  • Swap fee: 0.04% fee on every trade made through Stable AMM. 50% of the fees go to LPs and 50% to the treasury.

New Pools added

Find newly added pools on https://app.beamswap.io/exchange/pool:

  • 4POOL: USDC + USDT + DAI + bUSD
  • 3POOL: madUSDC + madUSDT + madDAI

New Farms

Yield rewards in newly added farms on https://app.beamswap.io/farm:

  • Anyswap 4POOL single staking
  • Nomad 3POOL single staking

Farms retiring

The following farms will be retired from Beamswap:

  • bUSD/USDC
  • USDT/USDC
  • DAI/USDC

If you hold any stakes in the farms above, you should unstake your assets and migrate them to new stable pools.

Beamswap DEX turns Hybrid AMM

With the latest upgrade, Beamswap has greatly improved the decentralized trading of stablecoins and correlated assets, and the hybrid model of combined Standard and Stable AMMs further optimizes the user experience and expands the range of services for every Beamswap trader and Moonbeam-based DeFi-er.

Harness the highly efficient and best-rate trades with Stable AMM swaps and earn rewards in newly added farms on Beamswap. 👇

About Beamswap

Beamswap is a decentralized exchange (DEX) on Moonbeam with an automated market maker (AMM), providing liquidity and peer-to-peer transactions. Beamswap DeFi hub provides an array of services and features supporting the DeFi and Web3 spaces, including crypto swaps, staking and yield farming, and serves as a launch platform for new and exciting projects built on the Moonbeam Network.

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