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)