The Multipool Advantage

The Multipool Advantage: A Comparative Analysis

To truly understand the benefits of Multipool, let's compare a typical transaction on Multipool with a similar transaction on an Automated Market Maker (AMM) like Uniswap.

Scenario: Buying Tokens

Let's say a trader wants to buy a significant amount of a particular token.

On Uniswap:

When buying directly from an AMM like Uniswap, the trader's order could significantly impact the token's price due to the AMM's pricing algorithm. This is known as "Price Impact". The larger the order, the more significant the price impact, leading to the trader receiving fewer tokens than expected.

For instance, let's consider a trader who wants to buy 10,000 units of a token. Assume that due to the size of the order and the liquidity of the token on Uniswap, the price impact of this trade is 2%. This means that the trader would effectively pay 2% more for the tokens than the current market price. If the current market price is $1 per token, the trader would end up paying $1.02 per token, costing them $10,200 in total.

On Multipool:

With Multipool, the trader's order is first matched with existing limit orders in the order book. This allows the trader to potentially get a better price for a portion of their order, as these limit orders may be priced more favorably than the current market price on Uniswap.

Once the order book is exhausted, Multipool's hybrid protocol then routes the remaining part of the order to existing DEX pools like Uniswap or PancakeSwap. This approach reduces the overall price impact of the order, leading to a more favorable outcome for the trader.

In the same scenario, let's assume that the trader's order can be partially filled with 5,000 tokens from the order book at the market price of $1 per token, costing them $5,000. The remaining 5,000 tokens are then bought from existing DEX pools like Uniswap or PancakeSwap.

Assuming the price impact for the remaining 5,000 tokens on Uniswap is 1% (since the order size is now half), the trader would pay $1.01 per token for the remaining tokens, costing them $5,050.

So, in total, the trader would spend $10,050 on Multipool, compared to $10,200 on Uniswap, saving $150.

The Multipool Advantage:

This example illustrates how Multipool can provide better pricing for traders by intelligently routing orders between the order book and existing DEX pools. By reducing the price impact of trades, Multipool can potentially lead to significant savings for traders, especially for larger trades.

Moreover, Multipool's use of advanced data structures like Segmented Segment Trees ensures efficient order management and reduced gas fees, further enhancing the trading experience.

In conclusion, Multipool offers a superior alternative to trading directly on AMMs, providing traders with better pricing, reduced price impact, and a more efficient trading experience.