Providing Liquidity in Quantex

QUANTEX introduces liquidity provision through focused liquidity within a defined price range. Traditional AMM exchanges spread liquidity uniformly across the entire price spectrum, leading to inefficient capital usage, especially in stablecoin pairs where most liquidity outside a narrow price band remains dormant.

Focused Liquidity

With Quantex, liquidity providers (LPs) can zero in on specific price ranges, significantly enhancing capital efficiency. For example, in a stablecoin pair, LPs can choose to allocate their funds solely between 0.99 - 1.01, maximizing the use of their capital. This focused approach leads to a concentration of liquidity around the mid-price, offering LPs higher fee earnings and traders improved liquidity.

Active and Inactive Liquidity

Quantex introduces the concept of active and inactive liquidity. If the price drifts outside an LP's chosen range, their liquidity becomes inactive, halting fee accrual. This mechanism ensures LPs concentrate their funds where they anticipate the most trading activity. However, should the price re-enter the range, the liquidity reactivates, allowing LPs to resume earning fees.

Ticks and Price Space

Quantex uses ticks to define the boundaries of liquidity positions, offering a granular approach to liquidity provision. Each tick signifies a 0.01% price change, allowing LPs to define their position limits precisely. The pool contract manages liquidity within these ticks, transitioning between active and inactive states as the market price fluctuates.