Egoras On-chain Protocol Advantage

Overview

Egoras On-chain Protocol is powered by chain-link decentralized price oracle. Chain link price oracles retrieve accurate market prices of assets through a network of nodes. Egoras On-chain Protocol aims to provide an accurate market price for every crypto-asset so as traders will sell/buy without any impact on the price of the crypto-assets. The result is that traders can buy/sell at market price with zero slippage. The following graphs compare the price curves of Egoras (LINK) and Uniswap (AMM).

With everything else fixed, it is clear that the LINK curve is stable than the AMM curve at the market price, indicating higher fund utilization and absolutely zero slippage. Market prices provided by LINK are more favourable than AMM

As the market price changes, AMM passively relies on arbitrage trading to change prices. On the other hand, The Chainlink Aggregating Contract take the market price from the chosen oracles and validates and/or reconciles it for an accurate result.

LINK outperforms AMM solutions in several important aspects.

Fund Utilization

As seen in the above graphs, ChainLink, like AMMs, provides liquidity in the price range of zero to positive infinity, but the LINK price curve is stable at the market price. That is, most of the funds are gathered at the market price, which allows for frequent trading of the fund at zero slippage utilization.

No Impermanent Loss

But what about impermanent loss, i.e. how does Egoras Liquidity Protocol ensure that liquidity providers get what they deposited when they withdraw their tokens? The answer is by encouraging arbitrage trading. Suppose the market price of ETH on Egoras Liquidity Protocol is $400.00. If the price of ETH on the open market is $398.98, arbitrageurs will be incentivized to buy it up and redeem it with them for $400 in Egoras Liquidity Protocol protocol. They'll continue buying on open markets until the number of ETH in the pool is always roughly equal to the number of ETH deposited by liquidity providers The same mechanism works in reverse when demand goes up. If the price of ETH on the open market is $400.02, arbitrageurs will be incentivized to purchase ETH for $400.00. In Egoras Liquidity Protocol, arbitrage trading makes sure that the number of tokens in the pool is always roughly equal to the number of tokens deposited by liquidity providers. This scheme effectively mitigates impermanent loss for liquidity providers, making liquidity provision on Egoras Liquidity Protocol a low-risk affair.