Liquidity Pools
Core pools are multi-asset liquidity pools composed of Core Assets (usually ETH, WBTC, USDC, USDT, DAI, and the native token of the given chain). These assets are commodities that comprise 70% of all trade volume in DeFi.
Example of Clipper Core Assets on the Polygon netowrk
Core pools can be used to trade Core Assets (e.g., ETH → USDC) or to LP and earn yield. Unlike most DEX liquidity pools, Clipper LPs earn yield on a pro rata portion of the entire pool, not just the asset(s) they deposit. Upon deposit, LPs receive LP tokens which represent their fractional ownership of the underlying pool. LP tokens have no value other than this representation.
LP tokens are called CLIPPERLP on the Ethereum network and CLPRDRPL on all other chains--these serve the same purpose.
Each chain has one Core pool. The benefit of using one unified pool is to consolidate liquidity, rather than fragmenting it across multiple pools to achieve the same pairings. This increases capital efficiency, allowing for higher yields with lower fees.
Clipper Coves are an ecosystem of liquidity pools (each pool is a Cove) that enable swaps between different asset pairs. Whereas in Core pools traders can only swap between Core Assets, Coves enable swaps between any asset pair.
How Coves work: Each Cove is a two-asset pool made up of a Cove Asset and LP tokens. Cove Assets are any and all altcoins/tokens that aren’t a Clipper Core Asset, e.g., LINK, AAVE, BNT, etc.
Traders can create new Coves for any tokens they want. The LP tokens in Coves are mainly used on the backend as a “go-between” that enables very low trading costs when swapping assets. This means that traders never actually see CliperLP tokens while interacting with Coves unless they are providing liquidity.
Coves can be used to swap between different Cove Assets (e.g., LINK → BNT) or between Core Assets and Cove Assets and vice-versa (e.g., USDC ←→ BAL). Because the LP tokens here are the same as the Core pool LP tokens, it enables gas-efficient pairing against all of the Core pool assets in a single hop, increasing capital efficiency by ~5x. Coves can also be used to LP and earn double yield, i.e., from both the Cove Asset and the CliperLP tokens in the cove.
Behind the scenes of a Cove Asset swap
Behind the scenes of a Core-Cove Asset swap