Hi! Welcome to KMM Swap, to introduce the project KMM Swap I suppose there is no better way than sharing the motivation that brought the idea of KMM to us and pushed us to build it.
Uniswap is the pioneer in Automatic Market Maker (AMM) with the legendary formula x*y=k. The success of this formula has raised billions of dollars in liquidity pools (LPs) and provided enormous on-chain liquidity. At the same time, this initial model has its shortcomings which result in high price slippage, high impermanent loss, and low capital efficiency.
Therefore, ever since, variations of this model have been introduced. Notably, Curve introduced a model which is tailored for stable coin swaps. Uniswap V3 introduced concentrated liquidity and Kyber introduced Dynamic Automatic Maker, both of which focus on reducing price slippage and increasing capital efficiency. However, low slippage and high capital efficiency also mean that the new algorithms require much more trading volume to adjust to new market prices. For example, when market price moves by 1%, traditional AMMs such as Uniswap, with high slippage and low capital efficiency, will require X amount of volume to adjust to the new market price; however, for Uniswap V3 and Kyber DMM, the algorithms, assuming a 10x capital efficiency, will require 10X amount of volume to adjust to the same new market price. Therefore, the new models will result in higher impermanent loss to liquidity providers during volatile market since greater liquidity is traded at inferior prices.
KMM Swap is a new AMM that leverages on an on-chain oracle and a new capital distribution model to not only provide a) low slippage to traders but also b) low impermanent loss and c) high capital efficiency to liquidity providers.