Shared Liquidity Box
Multi-chain Liquidity Superloop
The development of multi-chain networks and the construction of multi-chain ecosystems is gradually maturing. The demand for value flow between chains will become increasingly transparent. To provide users a smooth trading experience with low slippage requires better depth liquidity pools and models with high capital efficiency.
iZUMi Finance proposed the concept of Share Liquidity Box, aiming to map the liquidity of one token to the multi-chain to enhance the capital efficiency and principal’s safety.
There are two main headaches for bridging liquidity from one chain to another chain:
- 1.Safety: New chains are easy to get rugged
- 2.Inefficiency: Idle liquidity on the bridge treasury
Providing liquidity in Shared Liquidity Box, allows LPs to use one liquidity in original chain to farm on multi-chains, which means the principal will be safely kept on original chain without facing any risk of new chains’ rug, and get a multiple times higher APR by providing liquidity on multi-chains.
sl-Token is a token issued by Shared Liquidity Box with over-collateralized on-chain assets. Each slETH, slUSDC, and slBTC can be redeemed from Ethereum Mainnet with 1:1 ratio.
There are four main participants of Shared Liquidity Box:
- 1.Users/Traders: could buy or sell sl-Token, and could use and take sl-Token’s price and liquidity for reference/index used in other DeFi protocols. And users can always redeem sl-Token from the Ethereum mainnet with 1:1 ratio.
- 2.Market Makers: could provide liquidity (e.g. BTC/ETH/USDT) on the original chain to get sl-Tokens on multi-chains’ Smart Boxes, which is different from EOA wallets and will guarantee sl-Token of shared liquidity only to be interacted with authorised Dexes and pools.
- 3.Box Keepers: shall be responsible for custodian, monitoring and clearance.
For example, If a user has 1 slETH on the zkSync network, they can go to the Shared Liquidity Box official website to withdraw. The user can deposit 1 slETH into the Smart Boxes contract and he will receive 1 ETH on the Ethereum mainnet. The relevant slETH on multi-chain systems will be redeemed.
- Liquidity Providers provide liquidity (e.g. BTC/ETH/USDT) on the original chain to get sl-Tokens on multi-chains.
- sl-Tokens could be used on trading, liquidity mining in the authorised Dexes and pools on multi-chains‘ Smart Boxes.
- There is a liquidation flow provided by Box Keepers to monitor the balance between sl-Tokens and staked Tokens on the original chain to ensure fully collateralized.
- Traders could get sl-Tokens when trading in any shared liquidity pools on multi-chains.
- Transferring the sl-Tokens to the withdrawal contract of Shared Liquidity Box can get back the staked tokens on the original chain.
- After the withdrawal, the amount of corresponding sl-Tokens on all the chains will be decreased.