State of the Art in DeFi
Since the liquidity in decentralized finance (DeFi) is fractured and price movements don’t propagate to other exchanges, either on the same chain or on other chains, price disparities exist. So-called arbitrageurs can realize these market opportunities by buying a certain token on one market and selling it on a different market as soon as possible for an ideally higher price.
Arbitrageurs provide market stability by taking advantage of price inefficiencies and making simultaneous trades that offset each other to capture profits. To become an arbitrageur one needs sufficient capital to realize the full arbitrage opportunity. Further, arbitrage requires deep technical understanding, since it is typically necessary to create competitive automated trading bots. Since the barrier to entry for this yield-generating strategy is very high, large institutions and already resourceful entities are profiting the most, retail investors are left out of this opportunity.
Interchain Liquidity Protocol
White Whale’s Interchain Liquidity Protocol primarily consists of two components:
- Liquidity Hubs
Liquidity Hubs form the foundation of our protocol. They consist of our Bot first Pools (BFPs) which are nothing more than plain AMM pools which have been pioneered by Uniswap. These pools are necessary to create arbitrage opportunities since they provide a reference price to the local decentralized Exchange (DEX) on its associated chain. On the other side, Liquidity Hubs consist of Flash Loan Vaults. Flash Loan Vaults can be used to create the required capital to arb any price disparities between the BFPs and the local DEX pools. An uncollateralized loan can be taken out of these vaults, which can be used to arbitrage the price disparities and are set to be paid back in the same transaction including the vault fee (0,3% to start and we will probably lower them in the future). Any developer can create their arbitrage bot and make use of our infrastructure.
- The Interchain Command
This is the heart of the protocol, which directs liquidity where it is demanded most. Imagine an aqueduct system, where liquidity can flow from Liquidity Hub A on chain X to Liquidity Hub B on chain Y. Whale stakers will be able to determine the flow of liquidity through a gauge mechanism.
In addition, the Interchain Command collects protocol fees which are redistributed to Whale stakers through $WHALE buybacks. Selective Tokens, i.e. $Atom can be chosen via governance to be distributed directly to Whale stakers.
Due to its interchain design, White Whale can offer market coverage to other projects, which want to export their token to tap into new markets and ecosystems. Two examples of this are Stable Coin and Liquid Staking Derivatives issuers. White Whale can deploy regular (IST/ATOM) and stable swap (IST/CMST) pools across the interchain wherever market coverage is desired. White Whales flash loan vaults further help assets to keep their peg/ conversion rate.