Isolated Liquidity Pools

A Collection of Single-Asset Pools

Lynx is designed with a unique system of isolated, single-asset liquidity pools. When a trade is closed with a positive PnL, earnings are taken from one of Lynx's single-asset liquidity pools; likewise, if it's closed with a negative PnL, the losses get removed from the trader's collateral and paid to the relevant single-asset pool. Every liquidity pool on Lynx thereby serves as the counterparty to specific traders, effectively absorbing their PnL and a portion of the trading fees they generate. Anyone can act as a liquidity provider on Lynx by depositing into any one of Lynx's pools.

For each trade, the specific pool assigned as the counterparty matches the collateral asset used in that trade (eg. a trader using ETH as collateral would trade against the ETH liquidity pool). As explained above, the PnL would be settled in terms of the collateral asset (eg. the trader would either receive or lose ETH).

Lynx's unique liquidity pool design enables permissionless listings of collateral assets, allowing anyone to list new tokens to Lynx. Permissionless listings are handled seamlessly behind the scenes by creating a new pool for each listed token, then automatically adding the token as a selectable option on the trading interface. Through permissionless listings, traders no longer need to hold blue-chip assets like BTC, ETH, or DAI to trade perpetuals as trading becomes accessible to thousands of long-tail asset holders across DeFi.

Last updated