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Introduction 👋

An overview of the GammaSwap Protocol
GammaSwap is pioneering DEX innovation

What is GammaSwap?

GammaSwap is a novel DeFi primitive built to scale liquidity in Automated Market Makers (AMMs) by providing better risk adjusted returns to Liquidity Providers (LPs). It is well known that LPs in AMMs face the risk of Impermanent Loss (IL), a loss that occurs when the value of the underlying tokens in a pool changes. This is caused by market volatility. Traditionally, liquidity providers take on IL risk but are paid in swap fees from volume. Volatility may be correlated with volume but they are not equal. Research show that volume from swap fees often do not compensate retail LPs adequately for their risk. This is an inefficiency hindering the growth of DeFi.
GammaSwap aims to solve this inefficiency by creating a two sided market for volatility risk. Traders can borrow liquidity from the AMM and get leveraged exposure to any asset without relying on an oracle. Borrowers short IL to profit off Impermanent Gain (IG).
Earning fees from borrowers drives more efficient yields. In periods of higher volatility (more IL), utilization should be higher reflecting in higher fees for LPs.

DeltaSwap, the Feeless Swap DEX

DeltaSwap is a Constant Function Market Maker (CFMM) built by the GammaSwap labs team. It uses the canonical liquidity invariant formula, x*y=k. Unlike other DEXs, it charges no swap fees. Instead LPs earn fees from borrowers exclusively.
The purpose of the feeless swap DEX is to reduce the spread charged to spot traders and drive more efficient trading. Additionally, reducing fees will help increase the adoption of DeFi and reduce CEX<>DEX price latency.

The GammaSwap dApp

The Pools Page
The GammaSwap dApp is live on Arbitrum. Users can connect their wallets to borrow and provide liquidity. The docs explain everything related to using the GammaSwap platform and how to make the most of the protocol.
Here is a breakdown of the available pages in the interface:
  • Trade - the trading interface for borrowing liquidity (trading volatility) and swaps.
    • Borrow - Borrow liquidity to profit off Impermanent Gain
    • Swap - Trade spot assets without any swap fees.
  • Earn - the liquidity provider interface, where LPs can add liquidity to GammaSwap pools.
    • Pools - Provide liquidity into pools to earn trading fees.
  • Portfolio - once you have added liquidity or opened a trade position, your positions will appear here. There are two tabs "Supplied" to view open LP positions and "Borrowed" to view open loan positions.

Liquidity Providers

Borrowers

Spot Traders