πŸ¦„CULT (Cedro Unified Liquidity Token)

In the world of multiple isolated blockchains, projects that are looking to expand have no other option than to issue their token separately across multiple isolated chains. For example, UNI is deployed on multiple chains, which means it’ll have a liquidity pool on each chain with no interconnection. This fractures the already fractured liquidity and reduces capital efficiency. This problem is tackled by Cedro Unified Liquidity Token. It is a novel feature developed by Cedro.

The Liquidity Pools aren't literally merged though. We are virtually able to merge the pools since all the global state variables are stored in the Root. For the merging, we introduce two additional parameters: Global Liquidity Factor (GLF) and Asset Correlation Factor (ACF).

Global Liquidity Factor (GLF)

GLF ranges from 0 to 1. It is the ratio of liquidity of a multi-chain asset in a chain to the total protocol liquidity of that asset. This factor is assigned to each multi-chain asset in each chain.

Asset Correlation Factor (ACF)

As the name suggests, this parameter calculates the correlation between the prices of two assets. For a multi-chain asset, the ACF should be ~1. However, if this factor deviates by 0.002, Cedro's investigation team will be notified and shall look into the irregularity. This process is in place to prevent the protocol from getting affected by any unfortunate event in this highly volatile space. If the deviation keeps increasing, all the operations on the particular pool will be suspended until a case-specific solution is decided by the investigation team.

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