Wednesday, 17 April 2024

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Orion Unveils Solution to Uniswap Fee Model Following Governance Decision

Orion Unveils Solution to Uniswap Fee Model Following Governance Decision

Grand Cayman, Cayman Islands, March 8th, 2024, Chainwire

In the wake of Uniswap’s fee model being ratified, Orion’s team has built a solution that creates better margins to serve both LPs and stakers needs.

Orion has unveiled a novel solution for DeFi protocols and dApps seeking Liquidity Provider (LP) incentives following Uniswap’s halving of liquidity provider fees. 100% of Uniswap’s platform fees were previously distributed to LPs, which left governance stakers and holders with nothing, significantly lowering participation in the Uniswap DAO and impeding progress. By leveraging Orion’s liquidity network (currently being launched as “Lumia”), decentralized exchanges can tap into centralized exchange liquidity at ~50% lower rates than those offered by Uniswap to its LPs.

Orion’s web3 liquidity solution (“Lumia”) imposes fees of only 0.15% compared to the industry standard 0.3%. For projects integrating Lumia, this offers them ample room to reward stakeholders and generate revenue while maintaining their fees at or below 0.3%.

In Uniswap’s case, 100% of platform fees are currently distributed to LPs, which makes it difficult for Uniswap to earn revenue, incentivize governance voting, and reward loyal UNI stakers.

For example, if Lumia captured just a fraction of Uniswap’s trades, it could translate to substantial rewards. With Uniswap’s lifetime volume at $2.24 trillion, even a conservative estimate of Lumia winning 25% of those trades would mean significant returns for stakeholders and protocol revenue.

Had Uniswap been running on Lumia, it would have translated to over $839.62 million returned to stakeholders and protocol revenue, effectively addressing Uniswap’s ongoing challenges. Importantly, integrating Lumia can enable Uniswap to partially replace its LP system. Not only does Lumia provide superior pricing made possible by tapping into the most liquid markets (CEXs), it also allows projects to create protocol revenue for themselves while maintaining their fees competitive.

AMMs’ dilemma

Without LPs, DeFi platforms such as Uniswap and other AMMs may potentially fail as their existing model is unsustainable. By lowering their LP fees, AMMs risk losing them – and by increasing total fees, AMMs risk losing users. DEXs have been dependent on LPs since their conception, and will, unfortunately, continue to…

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