Introduction

Problems

Impermanent Loss

Liquidity providers play an important part in maintaining the functioning of Automated Market Making protocols, yet they suffer from impermanent loss that often exceeds the fee accrued. The impermanent loss problem is inevitable as long as the protocol uses automatic price rebalancing as opposed to external oracle.

On-chain Price Oracle

Current on-chain decentralized price oracle implementations, such as time-weighted average price, have the undesirable tradeoff where price accuracy is traded for security. Off-chain oracles, on another hand, have the limitation of the rate that the price could be updated due to gas cost constraints.

What is NostraSwap?

NostraSwap is an Automated Market Maker aimed to be a decentralized on-chain price oracle that provides both security and freshness of price of digital assets for the Ethereum ecosystem while also minimizing the impermanent loss incurred by the liquidity providers by constantly looking for an arbitrage opportunity between DEXes and compensate liquidity providers with the profit.