Liquidity Nexus

Information on Phuture's liquidity sources

Phuture aggregates liquidity from across the Ethereum network using the 0x API to provide access to best execution and a wide array of assets. Whilst some aggregators optimise for the best quoted price, hoping that the better rate will attract more order flow. The 0x API maximises for the best fee-adjusted price, and as a result provides better execution than other aggregators 72% of the time.

Separating Trade Execution from Index Liquidity

Phuture's use of external liquidity sources effectively separates the cost of execution from the size and depth of the index. This is paramount to Phuture's design because by allowing the creation of any number of indices, it is inevitable the platform will support a long tail of smaller indices. Our design ensures that the trading costs of minting an index with millions under management or an index with a few thousand is exactly the same.

As a result, we remove the liquidity bootstrapping phase that is inherent with Balancer designs. If a new Balancer pool is created it starts off with a minuscule amount of liquidity and thus cannot accept one sided deposits due to extreme slippage. Therefore, users must deposit each constituent asset into the pool until the pool reaches sufficient liquidity and can start accepting one sided deposits. This mechanism is fine if you plan to limit the number of indices created such that each index has adequate liquidity. However, as mentioned above we cannot make this assumption. It's also apparent that index investors typically don't already own the underlying tokens and would prefer to invest through one asset.

Phuture solves both problems by leveraging external liquidity. New indices can accept one token deposits with as little as 1000 USDC in market cap and tap into the deepest exchange reserves for best execution when minting.