⛏️Liquidity - V2

To enhance the platform's liquidity provision capabilities, Peerblue Exchange will implement a concentrated liquidity upgrade, offering variable fees to users and liquidity providers.

To optimize the PBEX platform's performance and provide a balanced solution that meets the interests of all parties (regular traders, arbitrageurs, and liquidity providers), a dynamic fee swap mechanism will be implemented. This mechanism will automatically adjust fees based on market conditions, including volatility, liquidity, and trading volume.

Volatility: Utilizing the time-weighted moving average (TWMA) formula, the current volatility will be calculated in the form of a standard deviation. The derived volatility value will then be used to determine the base fee level using a modified sigmoid function

Liquidity: The amount of liquidity in the pool will be calculated using the geometric mean of the reserves of the first and second asset. This value will be used to characterize the amount of liquidity used.

Trading Volume: To build a general indicator that uniformly characterizes the intensity of trading for different assets, the trading volume of each asset in the pool will be considered.

Dynamic Fee(t) = Base Fee(t) * Volume Factor(t) * Liquidity Factor(t)

Where: Base Fee(t) is calculated using the modified sigmoid function based on the current volatility.

Volume Factor(t) represents the trading volume's impact on the fee.

Liquidity Factor(t) signifies the influence of the current liquidity on the fee.

This dynamic fee mechanism will allow the PBEX platform to concentrate liquidity in a single pool and ensure a balanced environment for all participants. By automatically adjusting fees in response to market conditions, the platform can provide optimal trading conditions and maximize the income of each participant.