Hey, everyone! We know that liquidity is crucial for performing swaps, but its importance can vary depending on the protocol and how it uses it most efficiently. Simon Hans explains how it works for ChainFlip.
In this clip:
- ChainFlip's capital initially came mainly from the FLIP token but has gradually shifted to being community-owned
- Partnership strategy for scalability
- More liquidity doesn’t necessarily mean better pricing
- On ChainFlip, more liquidity means greater capacity to tolerate unidirectional flow
ChainFlip focuses on offering the best swap routes to its users, leveraging all the partnerships and listings they have already established. They aim to use these relationships in their scalability plan, creating space for organic growth.
Growing liquidity is always a goal, but the reasons differ for ChainFlip. More liquidity doesn’t mean better pricing; rather, it increases the capacity to execute unidirectional swaps. While the protocol can handle large amounts easily, it might become unbalanced if swaps predominantly flow in one direction.
To learn more, check out this clip from Chain Chatter!