Rebalance Mechanism is triggered while ➊ traders use X Swap to swap tokens and help rebalance Y Pool or ➋ LPs directly fund the pool with their tokens (USDT or USDC). While the latter receives liquidity tokens as they help make the pool liquid, the former will receive the rebalance reward $XY for their needs of swap.
Of course, there may be a scenario where most of the liquidity of one single chain moves to the other chain due to the swaps that happened in X Swap, causing an imbalance amongst the pool. In order to prevent a shortage of liquidity in Y Pools and the token imbalance therein, we've devised this so-called “Rebalance Mechanism”, and unlike that of other competitors, we are able to continuously offer instant cross-chain bridging services as well as relatively low swap fees.
Suppose a user of X Swap would like to swap XY on ETH
to Cake on BNB
, and if it just so happens that the USDT on ETH in the Y Pool is facing some acute shortage as well, the user in question may directly or indirectly help alleviate this dire unbalanced situation by trading on the ETH chain. Then the source chain DEX (e.g. Uniswap) will help swap their Cream to USDT on ETH
. Next, the bridging effect of Y Pool kicks in and there will be USDT on BNB
provided in exchange, and then the target chain DEX (e.g. PancakeSwap) will help swap the designated amount of USDT to Cake, hence Cake on BNB
. Below is the route that shows the flow of swapping that helps rebalance the Y Pool.