Liquidity is fragmented across constituent chains (e.g., Cosmos, Osmosis, Secret, etc) and across Dexes on each of the constituent chains (e.g., Astroport, Terraswap, Loop, Phoenix). Fragmented liquidity results in poor swap performance (price discrepancies) and may even seize up in severe crashes when LPs are drained. Conversely, good performance provides the confidence in the system needed to weather massive, rapid withdrawals and decrease the likelihood of a crash occurring. Fragmented liquidity is also capital inefficient: the liquidity may not be where it is needed.
White Whale V2 will provide interchain arbitrage infrastructure, inter-blockchain connected Liquidity Pools that represent the interchain price, Flash Loan vaults and open-source arbitrage bots to decrease the fragmented liquidity, fix price disparities, and decentralize market-making by lowering capital and knowledge barriers all in a capital-efficient method for the Cosmos ecosystem.
- Interchain Liquidity: new liquidity infrastructure provides liquidity on the chain where it is needed.
- Stabilizes Interchain Prices: coordinated pool of LPs provides deeper liquidity and infrastructure as a service (arbitrage) both stabilize interchain pricing of the token.
- Decentralizes market participants: flash loans and arbitrage/liquidation bots enable small and medium users to participate in arbitrage, liquidation, and hence price stabilization, decentralizing these tasks.
- Improves Capital Efficiency: interchain liquidity reduces capital requirements; flash loans are highly capital efficient for users.
- Supports Local Dexes: increases volume through arbitrage trading improves liquidity and pricing stability.
- Stable Revenue: fees from liquidity pools, flash loan vaults.
- Critical infrastructure that is not easily displaceable: Interchain aggregator and LP; flash loans, arbitrage, and liquidation bots provide key (irreplaceable) infrastructure to the Cosmos ecosystem.
- First mover advantage: as a first mover, the infrastructure develops, improves, and grows; with time, it becomes harder to replicate and/or compete against.
- Cosmos Community Service: WW protocol and infrastructure are necessary for Cosmos to implement the interchain future.
- Everyone benefits: all users, dapps, stablecoins, tokens, and chains of Cosmos benefit from WW protocol and infrastructure.
- Base and Intermediate Users: Interchain liquidity, Dex Aggregator, Stable Prices, Decentralized Market Making, Stable Reliable Revenue, Flash Loan Vaults Yield (No Impermanent Loss).
- Power Users: Reduced capital requirements, reduced knowledge requirements, increased capital efficiency, more opportunities for arbitrage and liquidations.
- Stablecoin Issuers: Peg-maintenance; liquidity, market coverage.
- Layer 1s: improved liquidity, volume, community, advanced defi tools (Flash Loans and bots), connection to interchain liquidity.
- dApps: stabilized token price, liquidity follows demand, advanced defi tools (Flash Loans).