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What the heck is a “Liquidity Claw” anyway?

If you’ve been following Libre Defi, by now you’ve probably heard the team mention something they’ve coined a Liquidity Claw, but do you know how it works?

Early DEXs have always suffered from a lack of liquidity out of the gates. This is something that prevents significant volume from entering a project’s ecosystem. Yield generating protocols are typically hindered by the many steps it takes for users to enter farms. The Liquidity Claw solves both of these issues.

The Liquidity Claw is designed to do exactly that: claw liquidity from DEXs with high volume, and bring it back to LibreSwap. This benefits both the Libre ecosystem as well as the DEX in question by providing continuous volume on that DEX. It also cuts out the oftentimes cumbersome and confusing steps for users to enter the farms, by way of the Liquidity Claw, users can simply deposit one asset into their desired farm, and the rest is taken care of. More on that below.

So how does it work?

The liquidity claw functions by utilizing Libre’s “one-click, single asset” farming contracts. Users select the farm they would like to enter, and Libre does the rest. Let’s use an example:

Let’s take our BNB/CAKE farm. Users select the desired amount they would like to add to the farm (remember, our farms require only one asset from users to begin farming), in this case, the base asset will be BNB. The user deposits 10 BNB, Libre will then take 5 BNB (50%) and use that to purchase CAKE from a secondary DEX. The CAKE is then returned to the Libre ecosystem, wrapped with the BNB to create the LP, and then deposited in the selected farm. All of this happens by the user simply depositing the asset and approving the transaction. The LPs are then auto compounded on a daily basis to maximize yield.

There are many benefits of the Liquidity Claw. For starters, it provides constant streams of liquidity on Libre’s own DEX. It also cuts out many cumbersome steps for the user. In most cases, a user must purchase two assets from a DEX, create the LP tokens, move the LPs over to the farm in the protocol they are using, and then auto compound them for optimal yield. Our farms do all of this for the user, which means fewer steps, less time, and no need to operate outside of the Libre Dapp. It also increases the trading volume on LIBRE pairs on secondary DEXs by constantly purchasing LIBRE every time a user enters a LIBRE farm.

If you have any questions, remember, don’t hesitate to reach out to a Libre team member through our socials!

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