💧Liquid Assets
The Problem
The Cardano dApp ecosystem is rapidly growing and it's becoming increasingly more difficult to keep track of all the opportunities to buy, sell, trade or earn yield from your assets. Various decentralized exchanges, marketplaces, lending protocols, etc are forced to compete for market share and liquidity, while dApp users are limited to deploying their assets to one protocol at a time.
Enter Aggregators
Aggregators have emerged as a popular solution to help find the best opportunities across a specific type of protocol (eg. decentralized exchanges).
But this approach still suffers from the same limitations. Even though the aggregator helps find the best opportunities across multiple dApps, this optimization takes place off chain and the actual assets are still only deployed to one dApp at a time.
Aggregator Example
Alice wants to sell 100 of token X for a certain minimum price.
Alice uses a popular aggregator which determines (off chain) that the best split would be to sell 50 tokens via DEX A and 50 tokens via DEX B to achieve the best price per token.
Alice deploys the tokens to each DEX and once the order is accepted, receives the requested payments in return.
Problems and limitations:
Alice had to send multiple orders, incurring additional transaction fees.
Alice (with help from the aggregator) had to specify exactly where and how much of each token would be deployed to each DEX while paying transaction fees for these transfers.
Any tokens used to place these orders become locked at the DEX contract addresses until the order is accepted or cancelled. While locked, Alice is unable to make use of these tokens for any other purpose.
To ensure the transaction succeeds, it is not uncommon to require allowing for significant slippage. This because aggregation is performed off chain, and there's no guarantee the on chain state will be the same by the time the order is processed.
Aggregators tend to charge additional fees for the providing the service.
Liquid Assets
The Pond smart account solves this problem in a different way. By creating a secure but expressive layer of abstraction that's stored separately from the associated assets, dApp users are able to manage their transaction intents while their assets remain fully liquid. Due to this separation of concerns, not only can dApps natively support the benefits of aggregators, but dApp users may effectively deploy their assets across any number of different DeFi protocols simultaneously.
Liquid Assets Example
Alice wants to sell 100 of token X for a certain minimum price.
Using the Pond smart account, Alice creates and signs an intent for this limit order. Minimal transaction fees are paid, as no assets need to be transferred just yet.
Multiple users across any compatible dApps may accept this exchange, either partially or in full, until all tokens are sold.
When placing the initial order, Alice may create any number of additional intents for different purposes. Eg. To offer these tokens as a loan or to exchange for a completely different amount/token. The first condition to be accepted initiates the actual asset transfer.
Advantages:
Alice pays significantly lower transaction fees.
The order is automatically included in the native on chain aggregation of compatible dApps.
Alice may optionally include intents for completely different protocols at the same time.
Until a condition is accepted, the tokens remain fully liquid and under Alice's control.
To help ensure a successful sale, Alice may optionally include a Delayed Slippage rule as a separate intent.
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