Setting up a Pool Configuration

Crafting the Optimal Liquidity Strategy

1. Overview

JellySwap's flexibility offers users and projects an array of choices when creating a new pool. This guide explains the considerations surrounding pool types, token composition, fee structuring, and more to amplify liquidity and transaction volume.

2. Deciding on Pool Types

The selection boils down to some elementary factors, predominantly the anticipated price fluctuations of the tokens involved:

  • Weighted Pools: Ideal for non-stable assets, facilitating broader liquidity across multiple tokens.

  • Composable Stable Pools: Suited for stable assets or those with a predetermined exchange rate (e.g., stSEI/SEI).

The JellySwap dApp features an interface for creating weighted pools.

3. Token Composition in Weighted Pools

One pitfall when initializing weighted pools concerns token alignment. Imagine creating a 33/33/33 weighted pool of JLY / ETH / USDC. While the intent might be simplifying JLY conversions, this configuration adversely impacts slippage and overall platform liquidity. A better pairing is the alignment of JLY with a ETH/USDC pool JPT (JellySwap Pool Token). This alignment ensures efficient swap paths from ETH->JLY and USDC->JLY with marginal gas outlays.

Typically, weighted pools are best confined to two tokens, paired with a fundamental routing JellySwap pool, such as JLY-USD or (JLY-USD/ETH). Pools with over two tokens gain traction in stable or managed pools, where the intent leans towards an ETF-like structure.

4. Setting the Right Fees

Formulating swap fees for a fresh pool requires pivotal decisions:

  • Fee Stability: Will the fee remain constant or undergo modifications?

  • Fee Control: Who's entrusted with fee updates? Choices include:

    • Jellyverse governance

    • A dedicated address or contract

  • Fee Quantum: What should be the swap fee?

As for determining the fee magnitude, stable assets typically command lower fees (e.g., 0.1%), whereas non-stable pairs lean towards higher fees (e.g., 0.3%).

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