In order to alleviate investor concerns regarding impermanent loss in decentralized finance (DeFi), automated market maker (AMM) and Moonbeam-related decentralized exchange Zircon Finance launched a mainnet network, Zircon Gamma.
The mainnet network seeks to mitigate the circumstances in which investors experience the impermanent loss of assets they previously dedicated to providing liquidity to a liquidity pool for earning profits via yields.
This can be done via single-sided liquidity over the Moonriver network, which tranches or distributes risks between a fluctuating cryptocurrency and a stablecoin.
To further elaborate, Zircon allows the fluctuating cryptocurrency of the trading pair to maintain full exposure and the stablecoin of the trading pair would be used to ensure safety. Moreover, both sides can earn swap fees.
Andrey Shevchenko, the co-founder of Zircon, acknowledged the explicit failure scenarios in the event that the token drops to zero value. But, he argued that “Zircon reduces it enough to make impermanent losses a non-issue. What’s more, we can weaponize it for creating options.”
Shevchenko emphasized various fail-safe mechanisms that help rebalance the liquidity pools in contrast to existing firms that offer protection against impermanent loss. He added, “It’s an incentive-based economic system that you can expect to work 99% of the time”, but advised users to do some research before choosing their trading pairs.
Zircon’s distinctive feature includes reduced swap fees in addition to directly providing liquidity for stablecoins and protecting users against impermanent losses. Shevchenko believes that they will become the more cost effective and liquid option for swapping anything that are not just the prevalent pairs on Uni V3.
