BFX Fusion: Revolutionizing Liquidity Provision in Derivatives Markets
In the rapidly evolving landscape of digital finance, the introduction of BFX Fusion stands out as a monumental leap forward. This innovative platform is poised to redefine the mechanics of liquidity provision in derivatives markets, employing a decentralized, algorithmic market-making approach that democratizes access for all. As the derivatives market continues to expand, the need for efficient, transparent, and accessible liquidity solutions has never been more critical. BFX Fusion addresses this need head-on, heralding a new era for traders and liquidity providers alike.
The Challenge of Derivatives Liquidity Provisioning
Traditionally, liquidity provision in derivatives markets has been the domain of professional market makers. Most exchanges that exist in the world operate based on a Limit Order Book (LOB) model. The LOB model has been tested and proven to be the best for market price discovery throughout modern finance. The creation of AMM based exchanges have made it easy for anyone to become a LP, however it has its own drawbacks.
While an orderbook provides price discovery and flexibility for different order types, it requires professional market makers to provide liquidity.
The potential drawbacks of AMM based exchanges include risks such as impermanent loss, smart contract risk, and the need for manual adjustments when out of price range.
We’ve developed two different innovations to tackle these critical issues:
- BFX Fusion: This incorporates AMM liquidity into the Limit Order Book.
- Dynamic AMM: This is the most advanced and intelligent AMM in DeFi.
1️⃣ BFX Fusion: Orderbooks Reimagined
BFX Fusion incorporates AMM liquidity within a Limit Order Book (LOB). Fusion enables anyone to supply liquidity to BFX, with as little as $1.
Market making was once exclusive to professional market makers with unlimited capital, trading experience, and high-grade infrastructure. We sought to make LPing accessible to all, introducing AMM liquidity to a Limit Order Book.
Central to BFX’s innovative advancement is BFX Fusion. This revolutionary hybrid model cleverly blends the liquidity of an AMM with the adaptability and strength of a Limit Order Book (LOB). Fusion works by superimposing the AMM liquidity curve onto the orderbook, allowing retail users to provide liquidity to the orderbook. This brings a number of important benefits.
Best Price Execution
When users trade on BFX, it seamlessly routes order flow between AMMs and market makers to offer best-execution order fulfilment. BFX Fusion is 10x more efficient than the typical Uniswap LP.
Decentralised Market Making
BFX Fusion allows for any type of market making strategy to be deployed on BFX. Users will soon be able to create their own AMM strategies and deploy them on BFX Fusion. Vault deployers will also be able to set management or performance fees and get paid.
Democratising Liquidity Provisioning
BFX Fusion democratizes liquidity provisioning. Allowing anyone create strategies or supply liquidity to Vaults and earn rewards and profits.
2️⃣Dynamic AMM: Smart Liquidity Provisioning
BFX Fusion AMM enables liquidity provision from an AMM, and our Dynamic AMM (DAMM) makes sure that the liquidity is provided in a ‘smart’ way.
The BFX Dynamic AMM (DAMM) ensures that liquidity provisioning is smart by dynamically adjusting price ranges when prices move out of range. Our DAMM ingests and aggregates thousands of price data per second, from multiple centralised and decentralised exchanges. DAMM uses the same high-performance infrastructure used by professional market makers. This reduces the risk of impermanent loss, while simultaneously making it more efficient and safe for liquidity providers.
The DAMM is a “fully informed” model compared to “zero information” x*y=k AMMs. Passive LP’ing is low-information market making, the DAMM is active, high-information market making. Our novel approach sets the Blast Futures Exchange DAMM apart from traditional AMM models and offers users a more secure and stable method of earning yield.
Incentives & Rewards
BFX DAMM earns 5% interest automatically on balances in addition to any profits it makes. Furthermore, DAMM stakers earn a maker fee rebate of 1.5bps for every trade that it fulfils. Dynamic LP (DLP) stakers will also receive 50% of any $BLAST developer airdrop tokens, and earn Blast Airdrop Points.
No Impermanent Loss
The real-time index-based mechanism works by continuously adjusting prices to track the prices of the underlying assets in the spot market. This “high-information” active approach provides a major advantage in mitigating IL risk.
Getting Started: BFX Dynamic AMM
- Navigate to https://app.blastfutures.com/vaults
- Connect with your metamask wallet or other web3 wallets
- Select the “BFX Dynamic AMM” vault
- Click the
Stakebutton - Enter in the USDB amount you would like to deposit and approve for spending
- Once the USDB amount is approved for spending, click
Depositand confirm the transaction in your wallet