Does anyone know why concentrated liquidity isn’t supported in TerraSwap? Is it due to a lack of demand from users or a lack of development resources?
The absence of concentrated liquidities results in:
- Capital inefficiency: most of the liquidity remains unused, distributed along the constant product curve. This problem is even worse for stablecoin pairs.
- High level of slippage for low volume assets.
- LPs are not incentivized to offer liquidity to begin with.
Then this problem becomes a classic chicken & egg problem: low efficiency → less LPs → less liquidity → higher slippage → even worse efficiency → …
We are a group of three developers based in the Bay Area and were thinking about building a hybrid version of liquidity pools for both stablecoin & mAssets (for instance something close to curve.fi for stablecoins and concentrated liquidity for <mAsset, UST> pairs). Any comments on the demand for such a feature or the feasibility of the idea would be greatly appreciated!