In response to DeFi's liquidity fragmentation challenges, the Liquidity Hub is poised to streamline trading for DEX users.
QuickSwap, the leading DEX on Polygon, has partnered with Orbs, the Layer-3 infrastructure network, to launch Liquidity Hub, seeking to optimize liquidity for DEX-AMM users, mitigating some of the price pressures traders often encounter.
The architecture of the Liquidity Hub integrates on-chain smart contracts with off-chain logic, driven by Orbs' decentralized L3 nodes. This design offers DEXs the potential to initiate trades while mitigating the typical price impact associated with Automated Market Makers (AMMs).
If the Hub finds itself unable to secure an advantageous trade rate, it is designed to revert to the traditional AMM process.
Emphasizing the importance of security in its model, Orbs states all assets remain on-chain in a non-custodial setup. Every transaction is routed through the Hub’s smart contract, making certain trades not only adhere to both parties’ stipulations but are also executed at the most favorable prices:
“Orders are executed on-chain through the Liquidity Hub’s smart contract, verifying that the swap upholds both sides' requirements at a better execution price than the AMM.”
The Liquidity Hub comes equipped with a Maximal Extractable Value (MEV) protection mechanism, geared toward safeguarding liquidity providers. Furthermore, its DeFi protocol is adaptable to various solvers, as well as potential trade manipulations are protected through Orbs' decentralized infrastructure.
Ran Hammer, vice president BizDev at Orbs, commented on the Liquidity Hub, stating, "Liquidity fragmentation is one of the biggest issues currently preventing DeFi DEXs from being able to compete with centralized off-chain venues and on-chain volumes to aggregators.”
The Liquidity Hub will allow existing DEX-AMMs can stay competitive by tapping into additional liquidity sources — without jeopardizing the incentives for liquidity providers.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.