Resolving Liquidity #6: Wombat Exchange

Resolving Liquidity #6: Wombat Exchange

It’s time to start burrowing into a new world of liquidity with our latest partner, Wombat Finance!

We are excited to announce our integration with Wombat Finance as a means to overcome the liquidity issues prevalent across DEXs. This partnership marks a significant step towards our mutual goal with Wombat of enhancing DeFi liquidity.

Their ever-expanding multi-chain stableswap has already achieved an impressive trading volume of over $2.9 billion.

By adding an extra layer of utility to assets, we are thrilled about the prospect of elevating these numbers even further. It’s time to empower our users in our joint mission to resolve liquidity issues.

Entangle Partners With Wombat Finance

DEXs have long struggled to maintain liquidity without resorting to predatory tokenomics. In efforts to incentivize new users, they often distribute excessive token emissions to capture market share. However, when these tokens are depleted, both the user and the protocol suffer from a lack of liquidity due to inadequate token incentives.

Wombat Finance has recognized this issue and constructed an innovative solution to combat the problems related to liquidity incentives. Through their bribe market, protocols can jumpstart their liquidity by providing bribes that incentivize veWOM holders to vote for their gauge. This enables them to accumulate a larger share of WOM emissions.

As DeFi pushes toward greater efficiency, a central challenge with current designs is scaling while remaining capital efficient. Wombat's design aims to:

  1. Enhance the gas efficiency of the algorithm
  2. Enable single-sided liquidity provision
  3. Remove the liquidity constraint for assets in the same pool.

The simplicity of Wombat's design results in significant gas efficiency, allowing for lower slippage, since the cost of smart contract development is tied to the number of calculations involved.

Single-sided liquidity provision in decentralized exchanges reduces the risk of impermanent loss by allowing contributions of just one token type, thus limiting exposure to undesirable price volatility.

Their bribe market offers a cost-effective solution for protocols to bootstrap liquidity, while also allowing liquidity providers to earn a sustainable yield.

Entangle understands their vision and is keen to contribute to their goal of bootstrapping liquidity. Users can transition from dealing with the limitations of single-utility LP assets to a more efficient and user-friendly DeFi ecosystem, achieved by transforming any LP asset into a versatile LSD.

Here's an illustration of a user journey that shows how to maximize your assets and provide stable liquidity through our integration with Wombat Finance:

1. User provides DAI Single Sided Liquidity into Wombat Exchange

2. Wombat Exchange gives the user an LP Token into return as a receipt

3. User stakes LP Token via Entangle

a. Entangle stakes and auto-compounds the LP Token on Wombat Exchange

b. Entangle issues the user a Liquid Vault, representing the staked amount of LP Tokens

4. User can use Liquid Vaults for further options: Capital Efficiency via Lending & Borrowing or supercharging their yield!

Liquidity Rich Future

By integrating Wombat into our infrastructure, we establish a relationship rich in liquidity. This partnership is anchored by a mutual goal: to address the challenges of fragmented liquidity and capital efficiency, all the while aiming to provide a seamless DeFi user experience.

Wombat's strategy to attract a new user demographic, combined with the Entangle Protocol's mission to resolve fragmented liquidity in the DeFi sector, positions both platforms to play pivotal roles in consolidating liquidity and user bases across the wider DeFi ecosystem.

About Wombat

Wombat Exchange is a multichain stableswap native on the BNB and Arbitrum chain, focused on re-engineering the stableswap experience with its innovative algorithm design as the next-generation stableswap 2.0.

About Entangle

Entangle is an omnichain dApp chain designed to unify fragmented liquidity and unlocking value of yield bearing assets via liquid staked derivatives. Powered by our unique oracle solution to facilitate cross-chain smart contract automation.