🏷️Hybrid Liquidity

With enhanced order types that let traders apply complex trading techniques, Scooby-doo Doge, like other order book exchanges, uses a high-performance matching engine to carry out deals in real-time. But W Hybrid Liquidity stands out because trades are automatically matched with the most advantageous mix of AMM liquidity and other users' limit orders.

Users can interact with liquidity pools in a completely new way thanks to this hybrid execution, which has a number of benefits.

  • Tight spreads and continuous liquidity, especially for long-tail markets, without the cost or complexity of a conventional market maker

  • Possibilities for providing passive liquidity to consumers, as well as returns.

Both online and through the API, the order placement and trading interface for W Hybrid Liquidity is identical to that of a typical limit order exchange. Additionally, a swap UI is included for your convenience.

Hybrid Liquidity

In order to enforce the limitations of the AMM pricing curve and provide customers control over their assets, W Hybrid Liquidity uses smart contracts to govern custody and trade settlement. Three settlement functions are included in the Scooby-doo Doge smart contract, and they can be used in different ways based on the liquidity being matched.

  1. 1.Pool: This settlement is made against the AMM liquidity pool's total available liquidity. When the AMM completely fulfills the order, this occurs.

  2. 2.Limit Order: This settlement takes place in opposition to a certain limit order. This may happen if numerous limit orders are placed at the same price level, or if all of the trade's requirements are covered by the limit orders that are now in effect (i.e., they are at the top of the order book/spread).

  3. 3.Hybrid = Pool + Limit Order: This settlement uses both the limit order liquidity up to the entire liquidity of the first limit order at that price level (by price/time priority) as well as the pool liquidity from the current AMM price to the next limit order. At that price level, any additional limit orders are settled as limit only. Orders that cross several limit order price thresholds will generate a number of hybrid settlement transactions.

Liquidity Providers Profitability

The intricate relationship between trading volume and underlying asset price change determines how profitable liquidity providers are increased trade volumes will, on average, result in increased profitability.

With on-chain execution, traditional AMM designs fall short of capturing the full potential trading volume. On-chain execution serves as a circuit breaker during periods of severe volatility. High fixed execution costs can further reduce the volume of trade, as can quick price swings and wicks that return to the prior price.

Due to quick off-chain execution, any arbitrage chances, no matter how fleeting, can be taken advantage of thanks to the W Hybrid Liquidity design. The low settlement costs of Scroll lower the fixed arbitrage costs and increase the volumes and, consequently, the fees collected by liquidity providers.

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