Orbs Brings Concentrated Liquidity To QuickSwap On Polygon zkEVM DEX

Orbs has revealed that its popular Liquidity Hub infrastructure is now available Quickswap on Polygon zkEVM, marking its third major DEX deployment. 

The availability of Liquidity Hub on QuickSwap on Polygon zkEVM means users of the decentralized exchange platform can now tap into external liquidity sources that are secured through Orbs’ pioneering Layer-3 infrastructure network. 

Orbs’ Liquidity Hub provides an optimization layer that effectively sits above the QuickSwap on Polygon zkEVM Automated Market Maker, helping traders to access external liquidity and obtain better prices quotes with lower slippage. Rather than sticking to its own, limited liquidity pools, QuickSwap on Polygon zkEVM can now search for better price quotes on additional, third-party liquidity sources such as AMM pools and private inventories. Other accessible sources include off-chain orderbooks, which are accessed through an API, paving the way for market makers and other institutional players to offer price quotes and help to execute swaps. 

Why Fragmented Liquidity Causes Problems

AMM-based DEX platforms have been a game-changer for the crypto industry, transforming the user experience by facilitating peer-to-peer cryptocurrency swaps in a fully self-custodial way, vastly improving security for crypto traders. 

However, as transformational as they have been, DEXs are notorious for something called “slippage”, which is where trades fail to execute at the quoted price (meaning they can be more or less expensive, it’s a total lottery). Slippage is especially problematic for large volume trades as many DEXs lack the liquidity to fulfill such swaps in one go, meaning they have to break them down into multiple bite-sized trades that will all be executed at different price ranges. 

DEX platforms can achieve better prices and support higher volume swaps by obtaining access to more liquidity sources, but the challenge is that the ecosystem is highly fragmented, with liquidity spread across hundreds of DEX AMMs across multiple blockchain platforms. This fragmentation makes it impossible to access third-party liquidity sources from other DEX platforms unless specialized infrastructure is used. 

The fragmentation of DEX liquidity is generally seen as a net negative for DeFi users, as it impacts users with inaccurate price quotes. 

DEX aggregators such as ParaSwap, CowSwap and 1inch have tried to solve this problem, but they only provide limited benefits to traders as they keep a significant chunk of the savings on token swaps for themselves, so users still cannot access the most optimal price quotes. Nonetheless, those platforms pioneered the idea of concentrating fragmented liquidity pools into one unified pool. With Orbs’ Liquidity Hub, that concept finally lives up to its promise. 

Concentrating Liquidity To Solve Fragmentation

Liquidity Hub optimizes liquidity from an array of sources, ensuring that traders can benefit from the full value of the savings offered by concentrated liquidity. It’s built on Orbs’ Layer-3 infrastructure and relies on both on-chain smart contracts and off-chain logic that’s powered by decentralized nodes. With Liquidity Hub, DEXs such as QuickSwap on Polygon zkEVM can attempt to execute each trade without going through its own AMM to try and limit any price impact. However, trades will only be executed if the Liquidity Hub can find a superior price to execute the trade – if the DEX’s own AMM offers the best rate, the trade will proceed that way, as normal. 

In this way, Liquidity Hub will dramatically enhance the user experience on QuickSwap on Polygon zkEVM. It ensures that all funds remain in user’s connected wallets, with trades executed on-chain through the Liquidity Hub’s smart contract, which also verifies that the swap delivers a better execution price than the AMM. Only once the swap is confirmed by the user will the trade be executed. 

The Liquidity Hub offers some handy features too, such as protection against Maximal Extractable Value or MEV attacks. It can be thought of as a fully composable building block for DEX protocols, paving the way for anyone to provide additional liquidity. It offers the ability to connect to multiple solvers, so not only other DEX platforms but also institutions and professional traders with large reserves of liquidity can bid to fulfill swaps. Meanwhile, Orbs’ decentralized network negates any possible trade manipulation. With Orbs, transactions are secured via a network of “Guardians”, which are permissionless validators that utilize a proof-of-stake consensus mechanism. 

Helping DEXs Scale

By bringing the benefits of aggregated liquidity to QuickSwap on Polygon zkEVM, Orbs is helping to provide better price quotes for the platform’s users, while guaranteeing MEV protection for liquidity providers. It means QuickSwap on Polygon zkEVM will be able to support vastly increased trading volumes, scaling without increasing the pressure on its own liquidity pools. 

Orbs’ Liquidity Hub has already been integrated with QuickSwap on Polygon and THENA on BNB Chain, so today’s integration marks the third major implementation of the protocol.