Native Credit Pool

A Liquidity Pool Where LP-supplied Capital Fuels Credit-based Trading

Native Credit Pool is a unified, single-sided asset supply pool that enables market makers to borrow assets for trading, thereby enhancing liquidity in the on-chain spot market.

Single-Sided Liquidity Provision

With a single-sided liquidity model, liquidity providers are no longer constrained by pair-based deposits and suffer the impermanent loss. Assets are borrowed and returned exactly as deployed, along with accrued credit interest.

Liquidity Pairing Mechanism

Native introduces a Liquidity Pairing mechanism that dynamically allocates liquidity as needed to optimize capital efficiency, yield, and risk management.

Liquidity Tiers in Native Credit Pool

Assets added to the Native Credit Pool are categorized into three distinct tiers:

• Smart Pairing Liquidity: Utilized for all trades with the higher yield and lowest risk. Provided primarily by retail liquidity providers (LPs).

• Dedicated Pairing Liquidity: Used specifically for trading the dedicated token. Provided by both retail LPs and asset issuers.

• Bootstrapping Liquidity: Acts as a buffer fund, utilized for all trades to ensure liquidity stability and credit-based trading. Provided by market makers.

Key Benefits

• Tiered Risk Management: Liquidity is allocated across risk tiers, ensuring tailored exposure for LPs and optimal capital deployment.

• Dynamic Liquidity Allocation: Assets are allocated intelligently to meet trading demands, offering smart yield opportunities for liquidity providers.

• Cost-Effective Capital Deployment: Asset issuers benefit from efficient capital allocation and optimized incentives for liquidity provisioning.

Related Concepts

• Total Available Liquidity

• Health Ratio