PRESS RELEASE. According to Hoo users who participated in AMM (Automated Market Maker) test, each liquidity pool of Hoo has listed quantitative data, such as total liquidity, 24H transaction fee, 1 day and 7 days annualized return for users’ reference. Compared to on-chain DEX providing liquidity such as Uniswap, users can operate at the Hoo website without consuming Gas fees, and the operation is faster and without worrying about security issues such as smart contract vulnerabilities and hacker attacks.
At present, Hoo has opened pools of BTC/USDT, ETH/USDT, SOL/USDT, DOGE/USDT, HOO/USDT and other trading pairs. And the exchange will add more trading pairs according to market demand, and add additional coin rewards, Hoo VIP rights and so on.
Hoo AMM Pool Offers Users Commission of Fees
Recently, Hoo Exchange has added the AMM pool feature after updating. It is known that the AMM pool is currently in the gray test phase, and some regular users can experience the scenario and gain benefits from it as a priority.
For DeFi players, AMM (Automated Market Maker Mechanism) has long since ceased to be an out-of-the-way concept, and this mechanism is more commonly used by DEXs such as Uniswap and SushiSwap. It is characterized by supporting all market users to provide liquidity for asset trading pairs, which eventually constitute a liquidity-rich liquidity pool where the asset price varies according to the ratio of two assets in the liquidity pool, and accordingly, the liquidity provider can split the transaction fees generated by the pair.
The AMM pool launched by Hoo is equivalent to the CEX evolution version of the Uniswap AMM mechanism. Back in 2020, Hoo had explored CeFi amid the popularity of DeFi and launched exchange and mining boards such as HooSwap and HooPool. According to the introduction, Hoo AMM pool is considered an iteration on top of HooSwap, except that the liquidity in the pool will be provided to multiple mainstream trading pairs in Hoo’s coin trading area.
Some users who participated in the gray test said that Hoo APP can find the entrance of liquidity. There is a “liquidity pool” button in the top right corner of the Hoo Cryptocurrency trading page, after clicking into it you can inject the corresponding two assets for BTC/USDT and other trading pairs, and then the pool will automatically make a market and issue daily rewards according to the ratio of liquidity funds provided by the user to the total pool.
Page of Hoo Liquidity Pool
Take BTC/USDT trading pair as an example, users can deposit both BTC and USDT assets proportionally according to the current market price of BTC, at which time the liquidity will be automatically added by the system to the BTC/USDT trading pair in the Hoo spot trading area, and whenever investors makes a purchase or sale transaction in the pair, the users involved in providing the liquidity can divide the fee share proportionally.
According to the rules, users can receive their rewards for liquidity issued on a daily basis. Since rapid liquidity in and out may cause the coin price to deviate from the market price for a short period of time, in order to avoid the risk of price fluctuations and to better manage the reward calculation and distribution, etc. Hoo has set some conditions in the redemption process of AMM liquidity pools. Currently, users need to provide liquidity before they can redeem funds after one hour, and only full redemptions are supported, with only one redemption operation allowed within 24 hours for a single pool.
In accordance with test participants, on the liquidity pool page, each pool provides some visual quantitative data for users’ reference. This includes total liquidity, 24H transaction fees, annualized yield for the day, annualized yield for 7 days, etc. In this page, users can check the liquidity and percentage status of their offers at any time. The redemption operation is also relatively easy. Simply click the Redeem button to withdraw liquidity and dividend rewards, and the assets will be automatically transferred to the wallet account in about 3 minutes.
How to Reduce AMM Costs While Ensuring Security?
Some participants said that more guaranteed security has a great significance of Hoo liquidity pool.
In the past few years, although the on-chain ecology is booming, the on-chain security issues have never ceased. Users have a high possibility to face great loss if they are not careful, for example, technical vulnerabilities in smart contracts, backdoors left by project parties, and hacker attacks to steal coins occurring from time to time. But now users give a positive comment that all of the user’s operations are within the Hoo site that is a centralized trading exchange, which is equivalent to being done in a controlled space. Users can enjoy high security.
One head of Hoo said that the probability of a security incident occurring in the Hoo liquidity pool is almost 0. This is because the Hoo AMM liquidity pool is added to the spot module, which is theoretically safer than the DEX on the chain as long as the spot trading order book goes well.
Users need to be aware that whether they are providing liquidity at a DEX such as Uniswap or making a market for a trading pair at Hoo, they will face a common problem of the AMM mechanism, namely incurring impermanent losses. In the case of BTC/USDT pairs, for example, when the price of BTC falls, the liquidity provider will have a corresponding increase in BTC and a corresponding decrease in USDT, resulting in wear and tear on the funds. However, operating on a centralized exchange is more convenient and immediate, so users can take out their assets at the beginning of severe market fluctuations in time to avoid large erratic losses.
Some people in the loop believe that the launch of the AMM pool is a further exploration of CeFi and a benefit to users that is also relevant to the spiritual core of Web3. In this feature, users’ idle assets can be put into the pool to earn income, and exchanges get more abundant liquidity, forming a win-win situation.”
It is expected that the Hoo AMM pool will be fully opened. And more users can experience the role of “Hoo shareholder”. Someone in the loop expects that this model of opening up the exchange construction portal for users and rewarding them may become a fad with the development of Web3, appearing more and more in centralized exchanges.
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