Shell Protocol just announced its stablecoin liquidity pool, which marks its debut in the much populated stablecoin ecosystem. The company is likely to face much competition as there are already many established players in the stablecoin liquidity pool.
Stablecoin Liquidity Space is Crowded
Over the past few months, the popularity of stablecoins has grown immensely thanks to the dwindling state of conventional currencies fueled by the Covid-19 pandemic. The stablecoin’s market capitalization hit an all-time high of 20 Billion USD.
Stablecoins help the crypto traders escape the crypto industry’s high volatility, bringing in more profits and security.
Aim To Develop Internet Financial System Using Stablecoins
Shell said that its primary objective is to utilize stablecoins for developing a reliable and easily accessible internet financial system that can be used across borders. Shell Protocol team took to a blog post on Medium. It informed the launch of the stablecoin liquidity protocol covering the various aspects of the DeFi Protocol. The liquidity pool would offer large trading volumes within stablecoins with minimal slip in the valuation.
As noted by the company, the pools will have weights, “our maiden pool will have target weights of 30% DAI, 30% USDC, 30% USDT and 10% SUSD.”
Model Charges Dynamic Fees
The model includes two types of fee- A fixed fee associated with every swap and a dynamic price based on the pool slippage increase. When the stablecoin moves away from the peg, then the fee increases. The intent is to bring in profits to the various liquidity providers from the traders. Across the platform, the users can now trade between stablecoins along with tokens like Compound and Aave.
Shell Protocol To Add Newer Pools
Shell also said that it does not have any active liquidity mining program yet, and the governance layer is also not in place. They hinted that there might be some retroactive rewards associated with the program; however, nothing is decided currently. Right now, there is just one pool; however, in the coming days, Shell Protocol would add newer pools, which can be BTC-BTC, ETH-ETH, or USD-USD.
Thus, it would be exciting to see how Shell’s newly introduced stablecoin liquidity pool fares in the crowded space. Does it manage to cut the competition and deliver what it promises.