Automated Liquidity Acquisition

We understand that liquidity is crucial in any trading environment. The main function of these market maker services was to fill buy and sell orders promptly and reduce overall market volatility caused by large orders. However, traditional order books have long been outdated by newer technology, and have been replaced by liquidity pools in a decentralized venue. Just as market makers are compensated for providing a service in the order book environment, proper incentives for adding liquidity are a key factor in any decentralized environment. Problems arise when the liquidity pool provider loses the incentive to add tokens into the pool, which occurs after the token pair is subjected to impermanent loss resulting from arbitrage.

As a solution, Liquidity can be taken as a function of the smart contract using market activity from all swaps and transfers. A portion of these swaps and transfers will be captured by the smart contract and utilized with the function: “_swapAndLiquify”. For this to happen, the portion of the 1,05% fee from swap and transfers of LOOPS can be kept in a standalone pool within the contract itself and automatically converted to the liquidity pool. Liquidity is then managed by the contract as it is sold and paired accordingly thereby alleviating the users from having to subject themselves to any impermanent loss scenarios. Large liquidity pools act to decrease the volatility of the swap impacts against the overall available supply. Therefore, as the token matures, the auto-liquidity can be attributed toward an ever growing market stability capable of absorbing large market activity. 1% transfer tax will also be added to the LOOPS-BNB liquidity pool through the contract to automatically and continuously raise the price floor. The liquidity will be locked and inaccessible.