A developer working on DeFi’s popular OlympusDAO has released a brand-new protocol that aims to assist with stablecoin swaps without the need for cost curves.
On October 26, OlympusDAO developer “Ohmzeus” announced the launch of Range, a speculative project consisting of decentralized stablecoin pools that do not use a cost curve. The range is an “optimistic stablecoin swap protocol” designed to “abandon a price curve entirely,” according to the creator.
The protocol employs “Range Pools,” which assume that both tokens in a swimming pool are worth the same amount. There are now six active pools for DAI, LUSD, FRAX, USDC, USDT, and MIM, however, the creator has stated that they are not audited and that users should not invest more than they can afford to lose.
They mentioned on Discord that deposits to the USDC/USDT pool have been halted owing to a decimal location error.
Tokens are traded within a protocol-defined range. In the case of a Range 20/70 pool in which DAI is one of the pairings, Ohmzeus said that while the stablecoin variety in the first pool is set to 20% to 70%, DAI must make up at least 20% of the pool and not exceed 70%, with any attempted transaction above those limits being denied.
The protocol’s maintenance of cost parity between stablecoins looks to provide users with arbitrage opportunities, as stablecoins seldom trade at exactly similar worth on controlled and decentralized exchanges.
Ohmzeus said that the method has a number of advantages over traditional automatic market makers for switching stablecoins, including one-to-one stable coin swaps, minimal gas costs, and capital efficiency. They had this to say: “I expect the pool to swing from range extreme to range extremely as the pooled tokens vary around the peg (at least at first).” This should result in a lot more arbitrage fee volume.”