ARC-134: Deploy Duality PCL integration

Proposals ARC (Astroport Request for Comments)
1

Summary

This proposal introduces the integration of Astroport’s PCL (Passive Concentrated Liquidity) pools with Duality, Neutron’s orderbook module. As part of this upgrade, the USDC-ATOM pool will be the first to integrate directly with the orderbook, enabling 20% of its liquidity to be posted across 10 orders on Duality. This integration enhances capital efficiency, allowing liquidity to be traded on preferred venues while enabling competing strategies to interact, which is expected to drive higher trading volumes and generate more fees for liquidity providers (LPs).

Motivation

Astroport’s PCL pools are designed to optimize capital efficiency, and integrating with Duality’s orderbook is a long-awaited upgrade that aligns with this vision. By posting liquidity to the orderbook, Astroport pools can:

  • Increase Capital Efficiency: Liquidity becomes more dynamic, enabling better utilization across trading venues.
  • Boost Trading Volumes: Competing strategies interacting with the orderbook are expected to drive higher volumes, benefiting LPs through increased fee generation.
  • Enhanced Flexibility: Configurable parameters allow governance to fine-tune liquidity allocation for each pool, ensuring optimal performance.

The USDC-ATOM pool is a desirable starting point due to its asset pairing and relatively low liquidity (~$15k), making it a manageable test case. Success with this pool will pave the way for integrating larger pools into Duality’s orderbook.

Implementation

  1. Add New Pool Type: Upload the new pool type code to the Astroport factory to support the Duality orderbook integration.
  2. Migrate USDC-ATOM Pool: Transition the existing USDC-ATOM pool to the new pool type, ensuring a zero migration process for LPs.
  3. Enable Orderbook Integration: Configure the USDC-ATOM pool to post 20% of its liquidity across 10 orders on Duality’s orderbook, parameters can be adjusted through governance at any time.
  4. Monitor and Expand: Track performance metrics and, based on results, migrate other high-liquidity pools to the new pool type.

Technical Details

The new pool type introduces configurable parameters that govern how liquidity is posted to Duality’s orderbook. These parameters are adjustable through governance and allow for fine-tuning. Below are the key parameters:

  • orders_number: The number of buy and sell orders posted to the orderbook. For example, if set to 5, the pool will post 5 buy orders and 5 sell orders, 10 in total.
  • liquidity_percent: The percentage of the pool’s total liquidity allocated to the orderbook. For example, 20% means 10% of each token’s reserves will be posted as buy and sell orders.
  • min_asset_0_order_size and min_asset_1_order_size: Minimum order sizes in specific asset amount to prevent tiny orders that could cause rounding issues. If an order size is below this threshold, it will not be posted.
  • avg_price_adjustment: A small adjustment to the PCL price to account for any rounding issues, ensuring LPs are always protected.

Params used in the proposal:

{
	"orders_number": 5,
	"min_asset_0_order_size": "1000",
	"min_asset_1_order_size": "1000",
	"liquidity_percent": "0.2",
	"avg_price_adjustment": "0.0001"
}

Conclusion

Integrating Astroport’s PCL pools with Duality’s orderbook is a significant step forward in enhancing capital efficiency and driving higher trading volumes. Starting with the USDC-ATOM pool, this upgrade will allow Astroport to test and refine the integration process while generating more fees for LPs. The long-term goal is to expand this integration to all high-liquidity pools, ensuring Astroport remains at the forefront of innovation in DeFi liquidity management.

Executable messages

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      }
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1 Like
2

Yes, let’s kick things off!