Playing with Diesel Pools on Hive-Engine: HIVE<->HBD, and some FinTech opportunities

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I've been eagerly awaiting the coming of Diesel Pools on Hive-Engine so that we have ways to keep markets liquid without relying on order-books and market makers. As soon as @aggroed announced that diesel pools were live, I went and created my own for exchanging SWAP.HIVE and SWAP.HBD which are the pegged tokens for HIVE and HBD on Hive Engine.

Creating HIVE<->HBD swap

The creation process was easy: pay 1,000 BEE and select a pair. There's no obligation to add liquidity, but one really should. So, I went to add liquidity and discovered that diesel appears to take the initial pricing appears from the Hive Engine exchange, and the spread was terrible. So, I put in some tokens and then performed swaps to move the pricing to what external markets report.

At first, Diesel rejected my swap transactions due to slippage, so I made several smaller transactions until the swap pricing got close to the pricing reported by Coingecko. If I were to do this again, I'd first stuff a few orders into the order book to close the spread before creating the swap pool. Using swaps to adjust the pricing on a live market asks for somebody attentive to acquire your bags.

If all of this swap stuff seems alien to you, what it means is that it becomes easier to for dApps to accept any crypto you want to supply and have it changed into the crypto that they wish to. That means you could use your rewards from one dApp and use it to buy things in another. Your dCity SIM could get your Splinterlands DEC, for example.

Big news for HIVE FinTechs

What are the opportunities for FinTechs? The most obvious is that there will be many exciting arbitrage opportunities the more swap pool there are. With HIVE's no gas fees, it will be easier for arbitragers to keep the markets fair. What this means for customers is the fairest rates for their token swaps. I'll repeat myself for the soundbite. HIVE can have the fairest swap rates because there are no gas fees.

The second fintech opportunity is to do with the deep of pools vs price stability. Liquidity pools often need many tokens locked up sitting there relative to the size of trades that go through the pool. If the pool lacks liquidity, then ordinary trading will swing the prices too much. Slippage controls how much prices move between the time the user sees a price and the trade occurs. But, slippage control happens after the user submits a swap transaction. There's room for HIVE FinTechs to provide firm price quotes so that customers and dApps can act with certainty and not have to worry about slippage at all.

Sure, this is stuff the big guys do already, but their granularities are long and contract sizes too large. On HIVE, price quotes could even be offered on a micro-transaction by micro-transaction basis in realtime and last for only as long as useful.

And that's the buzz.


Here's why you should vote for my Hive Engine witness, @eturnerx-honey, on TribalDex.



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22 comments
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hey thanks for making the HBD:HIVE pool. Should be good to see more people trading HBD on Hive-Engine.

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Will users be able to provide liquidity through Hive-Engine too?

Posted Using LeoFinance Beta

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Yes. You can already add liquidity but there are currently no rewards for liquidity providers.

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Just sent you some LUV tokens for your efforts.

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Very cool. I am looking forward to seeing all the pools that roll out in the next few months, if we can get more HBD and BTC markets that would be amazing

Voted for your Tribal DEX witness too

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The possibilities are endless. Initially, a lot will depend on which pairs get created and how easy the UI makes it to swap. It.moght be enough to create a pair between token X and SWAP.HIVE because it could be done transparently in two swaps via SWAP.HIVE if a direct pair doesn't exist.
Thanks for the witness vote, being a top Hive Engine witness provides me the funds to do neat things on Hive.

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So let me get my head around it having SWAP.HIVE LP pairs allows for swapping between any token as long as theirs liquidity

So I can swap DEC for PAL because both have liquidity? Then what’s the value of having direct pairs?

Also is their incentives? I assume with no fees on trades what’s in it for Liquidity provides? Or am I missing something?

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So let me get my head around it having SWAP.HIVE LP pairs allows for swapping between any token as long as theirs liquidity

Pretty much. It's a two-step process (TokenA -> SWAP.HIVE -> TokenB) though hopefully future UIs will hide the steps and make it look direct - or use a direct pair if it's a better choice.

So I can swap DEC for PAL because both have liquidity? Then what’s the value of having direct pairs?

Fewer RCs, less slippage, and eventually lower fees. Don't get me wrong, as a default, a token probably wants to first establish a pair with a common base token (e.g. SWAP.HIVE) to provide the most on/off ramps for their holders.

Also is their incentives?

Right now, no. Maybe there might be in future. I'd like to see an NFT issued to the pool creator that claims a very small part of the fees and the rest go to the liquidity providers.

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This is very exciting news.

Will provide some liquid soon.

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Yeah I'm a little confused by this stuff but I'm trying to follow😌!

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It eventually gets easier to understand! For end users it means fairer prices and more convenient exchange from one crypto to another.
Most of this only needs to be known by people building platforms for end users.

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