One of the main differentiators of Lifinity's DEX is its use of an oracle as the key pricing mechanism rather than relying primarily on a pool's balance of assets. This eliminates the reliance on arbitrageurs to adjust the price, reducing or even reversing impermanent loss for the market maker.

For its oracle, Lifinity uses Pyth, a first-party data oracle that is purpose-built to provide high-fidelity data directly to the blockchain. Pyth provides price updates accompanied by a confidence interval on Solana every slot (about 0.5 seconds), making our DEX extremely difficult to front run.

Lifinity employs three mechanisms to prevent losing trades:

  1. Trades only take place if Pyth has published in the current slot (which requires a minimum number of publishers)

  2. If a slot is not updated for too long, we refrain from trading (this parameter varies by pool)

  3. The confidence interval must be sufficiently narrow (this parameter varies by pool)

You can read more about how Pyth aggregates price feeds from publishers here.

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