What is CLP?
CLP is a new liquidity pool token that adds liquidity to perp markets. It is the receipt token of the USD liquidity you deposit into a perp pool.
Perp pools are the latest DeFi solution that performs automated market-making strategies to provide deep liquidity to perpetual markets. In the true sense of decentralization, Demex is opening up the chance for anyone to be a market maker for perpetual pools.
Our perp pools are specially designed such that a single perp pool has the power to provide liquidity to multiple perp markets. This improves the capital efficiency of every dollar of liquidity provided to the pool. The perp pools are also flexible and can be used to connect to new perp markets easily.
Learn more about perp pools from our latest blog post here!
How does CLP generate real yield?
CLP generates yield from 3 sources:
1. Maker rebates when traders open a position against you.
2. Funding fee for ongoing positions, which includes the borrow fee.
3. Trader's P&L from closing positions.
How does it work?
Demex perp pools, developed by Fluo Finance, takes liquidity and multiples it to all the linked perp markets as bids and asks limit orders following a market making strategy.
Let's illustrate this with an example:
Suppose you deposit $1,000 into a Perp Pool that's linked to BTC-PERP and ETH-PERP. Upon your deposit, a $1,000 bid and a $1,000 ask near the Index price will be added to each of these markets (BTC-PERP and ETH-PERP). Thus, your $1,000 liquidity contribution effectively generates $4,000 in order book liquidity.
The bid and ask prices are kept close to the Index price updated by oracles to provide traders with competitive rates. These prices are frequently updated to give the best prices to traders.
Whenever a trader utilizes the liquidity, that amount is simultaneously deducted from elsewhere in the pool, maintaining the overall liquidity balance.
The liquidity providers' liquidity essentially acts as counterparties to all trades occurring on the supported perpetual markets.
When traders make losses, the losses are credited to the pool. When traders make profits, the profits are taken from the pool. However, statistics reflect that leverage traders tend to make losses over time rather than profits, giving liquidity providers the opportunity to earn off traders.
Earn more rewards with $CLP
By staking your $CLP tokens, you can earn $esFLUO tokens.
To maximize your yield even further, you can stake and boost $esFLUO on the Fluo dashboard on Demex.
Demex is a cross-chain derivative DEX that is connected to the most popular blockchains such as Ethereum, Arbitrum, BSC, and so on.
Demex’s primary stablecoin is $USD which consists of a group of selected stablecoins such as $USDC, $BUSD, and $axlUSDC. By depositing any of these stablecoins from selected networks, it gets auto-converted at a 1:1 rate to $USD. Demex’s perpetual markets are settled in $USD and you need to deposit $USD to the perp pool.
0% Performance Fee
Demex does not charge a performance fee for your participation in the perp pools. You can confidently deposit your liquidity knowing the profit is all yours to take home!
Hybrid Liquidity Mechanism
When CLP liquidity is available, it complements the traditional liquidity from traders and market makers, creating a robust and efficient trading ecosystem. Traders benefit from superior liquidity conditions, allowing them to enter and exit positions.
However, if CLP liquidity becomes temporarily unavailable due to withdrawals or other factors, the hybrid liquidity mechanism comes into play. During such periods, traders can still trade against each other and market makers, ensuring continuous tradability and preventing any disruption to the markets. This ingenious approach safeguards traders' interests and maintains the market's vitality even during challenging times.
Demex launches CLP, a Carbon Liquidity Pool token, providing deep liquidity to perpetual markets. Traders can earn from losses made by others. CLP generates yield from various sources, and staking it earns $esFLUO tokens. Demex is a cross-chain DEX with 0% performance fees. The hybrid liquidity mechanism ensures continuous tradability, even when CLP liquidity is low. Boost your yield on Demex with CLP!