BitCow Swap

BitCow is an AMM offering stable swap and automated concentrated liquidity on the Merlin chain.

Stableswap

BitCow's stableswap allows stablecoin pairs and pegged coin pairs (LSDs) to be traded with simplicity and efficiency. Compared to constant product AMMs or CurveFi's stableswap implementation, BitCow's stableswap has the following advantages:

• High concentration and capital efficiency

• Minimal gas use (same level as constant product AMMs)

• Equilibrium price can be adjusted (for LSDs that slowly appreciate in value over time)

Automated Concentrated Liquidity

BitCow also supports the trading of volatile coin pairs (e.g. BTC-USD) with concentrated liquidity. Compared to traditional concentrated liquidity AMMs, BitCow's implementation has the following advantages:

• Automated pricing: price range is automatically determined using an external oracle, so users do not have to update their prices manually when market moves

• Automated rebalancing: rebalancing is performed passively using market mechanism, so users do not have to manually rebalance

• No impermanent loss: a pool's equilibrium position does not depend on price, so the pool is not forced to sell/buy when market moves. This completely eliminates impermanent loss

• Transparent Profit-and-Loss: all profit and loss (PnL) accrues on the right-hand-side coin (usually a stablecoin). This leads to a numerical index that directly tracks PnL.

For our Automated Concentrated Liquidity, an LP position corresponds to two separate LP tokens. Take BTC-USD as an example, the two LP tokens are:

• BTC-LP token: 1 BTC-LP token is always redeemable to exactly 1 BTC

• USD-LP token: since all trading fees (and losses incurred from rebalancing) accrues in this LP token, 1 USD-LP token may redeem to greater or less than 1 USD token as trading PnL is accumulated