Developers of the Bancor project have launched on the Ethereum mainnet the Carbon tool. It is designed to increase the profitability of user interaction with DEX.
1/ GM!
Today marks a new era for on-chain trading and concentrated liquidity strategies.https://t.co/JCdJ0L3Nw3 is live on #Ethereum Mainnet and ready for your recurring range trading strategies! pic.twitter.com/rPEGGmjgVX
— Carbon (@carbondefixyz) April 20, 2023
The new solution enables automation of trading strategies by configuring ranges for providing liquidity and limit orders. Just like Uniswap v3, Carbon uses the concept of concentrated liquidity.
2/ With Carbon, you can decide exactly where your liquidity trades.
Buy in one price range and sell in another, on repeat, with a single position.
As the market moves into your ranges, your orders are filled by users trading with Carbon directly, via DEX aggregators or as arbs. pic.twitter.com/zolDLXmodk
— Carbon (@carbondefixyz) April 20, 2023
For example, a trader expects the Ethereum price to fluctuate between $2000 and $2300 in the near term. He can create a strategy whereby the algorithm will buy coins in the $2000-2100 range and sell in the corridor between $2200-2300.
Backtesting on historical data showed the tool delivered 2 to 3.4x higher returns than traditional methods of providing concentrated liquidity, Bancor underscored.
To update the strategy, there is no need to withdraw funds from the position or add them, which helps avoid extra on-chain operations and, accordingly, gas costs.
5/ Adjustable Parameters
Strategy updates can be made in a highly gas efficient manner, without needing to withdraw and re-add liquidity, via exposed parameters in each strategy.
— Carbon (@carbondefixyz) April 20, 2023
According to the developers, Carbon is also ‘resistant to sandwich attacks’ within MEV, whereby the attacker scans the mempool with specialized bot programs to search for large unfinished swap trades on decentralized platforms.
It then initiates two transactions — one before and one after the planned victim swap, forming a ‘sandwich’. As a result the first transaction pushes up the price of the coins bought by the victim. The attacker then profits by executing the assets.
The first such manipulation is believed to have occurred on Bancor on February 27, 2018.
Previously, protection against ‘sandwich attacks’ implemented by the DeFi platform 1inch Network.