Protocol Overview

In contrast to most other AMMs, Nabla uses single-sided Liquidity Pools (Swap Pools), which work without a pairing asset. These pools are complemented by a Backstop Pool (which makes up about 20%-30% of the total tvl), which covers all the risks in the system*

Swaps happen directly between the two involved Swap Pools, and have an effect on the “Imbalances” in the system, which in turn influences the quoted token prices. The Backstop Pool is not involved in swaps. Its sole task is to cover the claims of the Swap Pool LPs by allowing them to withdraw assets from the Backstop Pool in case the respective Swap Pools are depleted.

*In the future we plan to have more than one “Swap Pool - Backstop Pool ensemble” to separate the risks of different asset classes into different Backstop Pools. These ensembles (which may contain up to 20 Swap Pools each) will ofc need a shared pairing asset to allow swaps between different ensembles.

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