Shared Liquidity

Overview on Shared Liquidity

An underrated property of concentrated liquidity AMMs is that liquidity providers can approximate any feasible AMM liquidity position while not needing new AMM pools. We refer to this property as "shared liquidity" due to its numerous benefits in helping LP-based protocols bootstrap a user base. Duality has the additional benefit of also being simple to reason about because liquidity is traded at constant prices.

Some notable benefits are:

  • Each LP position can use the same underlying pools, so there is no need to constantly initialize new storage.

  • Since all liquidity uses the same pools, the cost to manipulate price considers the sum of the liquidity from every position.

  • Liquidity position-based protocols that build on Duality don't need to bootstrap a network of arbitrageurs

  • Instead of building new, complicated AMMs for custom payoffs, LPs can just take the "discrete approximation" of the liquidity distribution they'd like to create.

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