Swap Overview

IIF Swap: Enhancing Uniswap V2 with TVL Inflation

The IF Swap takes Uniswap V2 to the next level by introducing a feature that artificially increases the total value locked (TVL) for pools that involve stablecoins. This inflation of TVL helps reduce trade slippage, which, in simple terms, means users can get better prices when trading.

Additionally, this feature allows liquidity providers (LPs) to use their capital more effectively, resulting in increased LP rewards.

The xybk Invariant: Introducing Artificial TVL Boost

Impossible Finance accomplishes this through a unique concept called the "xybk invariant."

This concept introduces a variable called the boost variable, denoted as "b." Essentially, the boost variable allows us to set the artificial TVL of a pool at a multiple of the real TVL.

For example, if we have a xybk pair pool with 100 of each token and a boost of 10, it would behave exactly like a Uniswap V2 pool with 1000 of both tokens.

Asymmetrical Tuning: Better Support for Tokens with Varying Risks

In addition to the xybk invariant, we bring forth a new idea called "asymmetrical tuning" to the AMM swap space.

Asymmetrical tuning enables the Impossible Swap ecosystem to support tokens with uneven risks more effectively compared to other swap designs.

For instance, let's say there's a new algorithmic stablecoin project that has strong mechanisms to maintain its peg when the price is above $1. In this scenario, we would adjust the capital efficiencies to be higher when the stablecoin is priced above $1, while still maintaining a regular Uniswap curve when the prices go below $1. This approach allows us to optimize the system for different token behaviors and create a more flexible and adaptable environment.