Zircon Finance launches mainnet to mitigate impermanent losses on Moonriver

Impermanent loss relates to a condition in which investors end up losing assets that they had previously dedicated to providing liquidity to a liquidity pool.

Zircon Finance, an automated market maker (AMM) and decentralized exchange on Moonbeam, has announced the launch of a mainnet to address investor challenges related to impermanent loss in decentralized finance (DeFi).< /p>

Temporary loss relates to a condition in which investors lose assets that they had previously dedicated to providing liquidity to a pool of liquidity to earn profits via returns. The mainnet, dubbed Zircon Gamma, aims to counter these losses with one-sided liquidity on the Moonriver network, which slices or spreads risk between a volatile cryptocurrency and a stablecoin.

For example, in the case of an ETH/USDC pool, Zircon allows Ether (ETH) to maintain full exposure while providing security through the USD Coin (USDC) stablecoin. Additionally, the mainnet allows both parties to earn swap fees.

As explained by Zircon, liquidity pools like ETH double their gains compared to regular pools, but remain exposed to the risk of temporary loss. However, the AMM's internal Async LPing mechanism reduces the risk by at least 90%.

The mechanism does this by incentivizing liquidity pools to replenish lost ETH funded through earned fees. Speaking to Cointelegraph, Andrey Shevchenko, co-founder of Zircon, revealed that his inspiration for creating such a system stems from merchants' need for a flexible, permissionless solution, stating:

"Too many people have been burned by teams making fantastic but misleading claims about removing or offsetting impermanent losses. In some cases, the mechanism (involving dynamic fees) they offer really does nothing. "

Shevchenko acknowledged the obvious failure conditions in the event a token drops to $0, but argued that "but Zircon reduces it enough that impermanent losses are no longer an issue. Additionally, we we can turn it into a weapon to create...