ThalaSwap: The Liquidity Hub of Aptos
ThalaSwap is Thala’s in-house, rebalancer automated market maker (AMM). Our AMM takes inspiration and iterates on the Balancer and Curve models. While similar in pool and gauge architectures, ThalaSwap differs from these two aforementioned protocols through its synergy with our core product offering: Move Dollar. ThalaSwap not only aims to become the core liquidity hub of Aptos, but to also bolster $MOD’s use-case and yield opportunities.
ThalaSwap aims to become the core liquidity layer for Aptos while ensuring $MOD has deep liquidity across its DeFi ecosystem. The AMM will support three different types of pools: weighted pools, stable pools, and liquidity bootstrapping pools (LBPs). Pool creation on ThalaSwap will be permissionless, allowing any user to create a multi-asset pool of their liking. Swap fees, while fixed, will be a changeable parameter via governance in the near future. At launch, all $MOD liquidity and its corresponding pairs will be live on ThalaSwap.
As a brief primer, weighted pools are liquidity pools that enable greater flexibility around pool weightings and number of pool tokens compared to the two-token, 50:50 limitations of the traditional Constant Function Market Maker (CFMM) model. By allowing for the creation of pools with up to 4 assets, ThalaSwap pools provide more direct token pairs, increasing swap availability and fees that are collected and distributed to liquidity providers. Additionally, a popular use case of the weighted pool design are 80:20 weights for vetokenomics which will be supported with ThalaSwap.
Stable pools enable more capital-efficient swaps of tightly correlated pairs. This may include stablecoins, wrapped assets, and staked derivatives against the base token (i.e. staked Aptos and Aptos). The amplification coefficient, or A-Factor, is a fully tunable parameter that can adjust the price curve for more optimal swaps by minimizing slippage.
Lastly, liquidity bootstrapping pools (LBPs) are specialized weighted pools that enable effective token distribution. As a modified dutch auction, LBPs promote equitable price discovery and distribution for communities while reducing the amount of capital needed with other token distribution mechanisms. Like Fjord Foundry, which leverages on Balancer’s LBPs, Thala is building a similar product and will conduct its token offering as a LBP. We’ll explain LBPs further in the near future in our blog post.
ThalaSwap and MOD
As a pillar of our DeFi stack, we anticipate the AMM to have direct integrations and extra benefits with $MOD, one of our other key products. Given enough liquidity, key liquidity pool tokens (LPTs) such as $MOD-$USDC, can be used as a collateral type in the CDP if approved through governance, opening up strategies that allow users to leverage their position and earn higher yield. If recursive borrowing through ThalaSwap and the CDP isn’t attractive, certain LPTs can be staked directly on the AMM to boost rewards. Three core liquidity pools — $APT-$MOD, $MOD-$USDC, and $THL-$MOD — will be available for staking with more being added in the future through governance.
Stay tuned as we release more information over the coming days on our launch plan, $THL tokenomics, roadmap, and more!
Thala Labs is an organization focused on deploying innovative DeFi products on Aptos. We at Thala Labs are a group of passionate builders, researchers, and engineers with diverse experiences and expertise. Our founding contributors and advisors have both crypto-native and traditional tech backgrounds, including MakerDAO, ParaFi Capital, NEAR, Twitter, Apple, Google, and Amazon.
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