IMM Advantages

Minimized Divergence Loss

A common AMM’s exchange rate is equal to its pool’s token -quantity ratio, while the IMM uses a slightly adjusted Oracle price, creating moderated profits for arbitrageurs that are mirrored by reduced divergence loss to the pool.

Reduced Price Gap

The IMM mechanism helps minimize the diversion between the Flype pool's internal price and the Oracle price. This moderated and controlled gap enables the Flype market price to be as near as possible to the Oracle price (unlike common AMM where the price can fluctuate over a wide range around the Oracle price).

High Fund Utilization

IMM, like AMMs, provides liquidity in the price range of zero to infinity. However, the IMM price will always be significantly closer to the Oracle market price, regardless of extreme cases of very large trades in relation with the pool size). As a result, most of the trades and their supporting liquidity are concentrated near the market price, and the liquidity utilization is high in comparison to common AMM.

Reduced Impermanent Loss

In IMM, arbitrage trading contributes to minimizing the gaps between the number of tokens in the pool and the number of tokens deposited by liquidity providers. This method helps reduce the impermanent loss for liquidity providers and lowers the risks of supplying liquidity to Flype pools.