💧Liquidity Model

Liquidity is the engine that drives Amara. Without it, neither perpetual trading nor spot swaps can function effectively. Amara’s design provides two liquidity models: vault-based pools for perpetual markets and AMM pair pools for swaps. Each is built to serve different needs, but together they form a unified framework that supports the growth of synthetic sustainability markets.

Perpetual Vault Liquidity

The perpetual side of Amara relies on a shared collateral vault. Liquidity providers deposit assets into the vault, and these deposits are used as collateral for leveraged trading.

How it works

• Traders borrow liquidity from the vault when they open long or short positions.

• Profits and losses are settled against the vault. When traders win, payouts are deducted from the vault. When they lose, their losses accrue to the vault.

• Liquidity providers earn revenue from trading fees, funding payments, and liquidation penalties.

• Because the vault directly absorbs trader performance, LPs are exposed to directional risk.

This model ensures deep liquidity for leverage trading while directly linking vault health to platform usage.

Spot AMM Liquidity

On the spot side, AmaraSwap uses a pair-based AMM model. Liquidity providers add two tokens into a pool, and traders swap against those reserves.

How it works

• Pools follow the constant product formula (x × y = k), which adjusts reserves with every trade to determine price.

• Liquidity providers receive LP tokens representing their share of the pool. These tokens can be redeemed at any time.

• Revenue for LPs comes from swap fees, distributed in proportion to their share of the pool.

• LPs face impermanent loss if the price of tokens in the pool diverges, but they are not exposed to trader profit and loss like in vaults.

This model provides stable, predictable liquidity for token swaps and yields tied directly to trading activity.

Combined Liquidity Design

Running both systems side by side gives Amara flexibility and resilience.

• Vaults serve high-volume leveraged trades.

• AMM pools serve everyday spot swaps.

• Liquidity providers can choose between higher-risk, higher-reward vault exposure or steadier returns from AMM pools. Some may allocate capital across both for diversification.

Green Basket Index (Planned)

Amara is planning a Green Basket Index to give users exposure to multiple synthetic carbon credits and offsets through a single token.

Design goals

• Provide diversification by spreading exposure across several sustainability assets.

• Improve accessibility by offering one-click exposure to the broader carbon credit market.

• Concentrate liquidity into a single pooled product, creating deeper and more efficient markets.

The Green Basket Index is intended to serve both retail and institutional participants, offering a simple and scalable way to engage with sustainability-linked assets in DeFi.