FAQ
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Questions about CobaltX
What is CobaltX and what makes it unique?
CobaltX is an Automated Market Maker (AMM) platform built on the Soon , enabling users to swap, trade, and provide liquidity to earn yields on digital assets. However, unlike other AMM platforms, CobaltX's AMM provides on-chain liquidity to OpenBook's central limit order book, meaning that CobaltX’s users and liquidity pools have access to the order flow and liquidity of the entire OpenBook ecosystem, and vice versa.
CobaltX’s Best Price Swaps feature determines whether swapping within a liquidity pool or through the OpenBook order book will provide the best price for users.
What is an AMM and how is it different from a traditional exchange?
There are two major types of exchanges that allow users to trade cryptocurrency: traditional exchanges and [automated market maker] (AMM) exchanges. Traditional exchanges use an order book to match users looking to buy tokens with users looking to sell. On an AMM platform, instead of trading between buyers and sellers, users trade against a pool of tokens — a liquidity pool.
However, unlike other AMM platforms, CobaltX's AMM provides on-chain liquidity to OpenBook's central limit order book, meaning that CobaltX’s users and liquidity pools have access to the order flow and liquidity of the entire OpenBook ecosystem, and vice versa.
What are CobaltX Fusion Pools and how do I participate?
Fusion pools are liquidity pools that go beyond COBALTX Token-incentivized farming pools and allow liquidity providers to earn tokens from projects they support in addition to the trading fees contributed to the pool. Fusion pools enable projects to bootstrap liquidity for their token on CobaltX and OpenBook. Some pools also offer Dual Yield, where users can earn COBALTX Token in addition to project tokens.
How can a token get listed on CobaltX?
Anyone can create a liquidity pool on CobaltX for a token pair. Projects or users can leverage CobaltX’s AMM and drive liquidity by creating a Permissionless liquidity pool.
Are tokens on CobaltX wrapped?
Some tokens on CobaltX are wrapped. For example, BTC and ETH are wrapped using the Wormhole bridge. As the ecosystem expands more bridges will likely integrate with Soon.
Other tokens on CobaltX are SPL native tokens.
It's highly suggested to research a bridge before bridging assets.
What wallets can I use with CobaltX?
To connect to CobaltX, you'll need an SPL wallet. CobaltX a number of SPL wallets, including Okx and Backpack. CobaltX will continue to integrate new wallets as they are developed.
Can I use CobaltX on my phone?
You can access CobaltX from your mobile browser by connecting your wallet. The CobaltX team is in the process of rolling out a more mobile-friendly version of the platform.
How can I get in touch?
Questions about Trading
What does "Your ETH balance is low" mean?
ETH is required to pay network (gas) fees. Fees are very low on Soon and you may be able make a number of transactions with a low balance, however it is recommended to keep at least 0.05 ETH in your wallet for gas.
What fees do I pay when I trade or swap tokens on CobaltX?
Swap fee: Every time a user swaps between a pool, a 0.25% fee is taken on the trade. 0.22% of that trade goes back to the LP pool as fees earned and 0.03% of that goes to buying back COBALTX Token.
Network fee: A nominal amount of ETH is also required to pay Soon network fees on each trade. Most trades cost between 0.0001 — 0.001 ETH.
How does the AMM work with the OpenBook Order Book?
The key differentiator in CobaltX’s AMM is that liquidity on CobaltX also creates a market on OpenBook that is tradable on any OpenBook DEX GUI. Because CobaltX’s LPs take orders directly on the OpenBook central limit order book, anyone trading on OpenBook has access to that liquidity. This is different from almost every other AMM protocol where liquidity is siloed off from other trading platforms.
What is price impact?
Price impact is the difference between the current market price and the expected price for a trade. Price impact is primarily determined by the size of your trade relative to the amount of liquidity in the pool. As the number of tokens you buy from the pool increases, the price of the token increases as well. This unfavorable change in price is called price impact.
If you are swapping in a pool with very low liquidity, you may receive a very poor price for your swap. If you see high price impact when swapping, try trading a smaller amount or swapping in a pool with higher liquidity.
Why did my transaction fail?
Insufficient ETH: ETH is required to pay network fees (gas), it's recommended to keep at least 0.05 ETH in your wallet to ensure smooth transactions.
Slippage Tolerance: Transactions will fail if the price of the underlying pool moves past your Slippage Tolerance. Try increasing your slippage tolerance on the Swap page.
Approving Transactions: If you see the “Making Transaction” notification in the lower left-hand corner of your screen, you will need to approve the transaction in your SPL wallet.
Questions about Liquidity & Pools
What's the benefit of providing liquidity on CobaltX?
Liquidity providers earn transaction fees from swaps within the pool. Additionally, the CobaltX AMM market makes on the OpenBook order book, with earnings from maker volume also returned to liquidity providers in the relevant pool.
When you add liquidity to a pool you will receive Liquidity Provider tokens (LP tokens) which represent your proportional share of the pooled assets. For example, if a user deposited $COBALTX Token and $USDC into a pool, you would receive COBALTX Token-USDC LP tokens.
Every time a user swaps within the pool between $COBALTX Token and $USDC, a 0.25% fee is taken. 0.22% of that trade goes back to the LP pool. 0.03% of that goes to COBALTX Token buybacks.
Previously, if there were 100 LP tokens representing 100 USDC and 100 COBALTX Token, each token would be worth 1 USDC & 1 COBALTX Token.
If one user trades 10 USDC for 10 COBALTX Token, and another traded 10 COBALTX Token for 10 USDC, then there would now be 100.022 USDC and 100.022 COBALTX Token.
This means each LP token would be worth 1.00022 USDC and 1.00022 COBALTX Token now when it is now withdrawn.
Additionally, if there is a farm or Fusion pool for the tokens you're LP-ing, you will be able to earn additional tokens.
Which curves do liquidity pools on CobaltX use?
CobaltX currently uses the constant function K = Y*X. This equation has a special property that is stateless and given any two tokens, without any information about their relative prices or value, it can provide “infinite” liquidity to traders. CobaltX utilizes this equation and prices orders on the OpenBook order book according to the Fibonacci sequence to provide up to 20 orders at a variety of prices with spreads as small as 25bps between them, which is optimized for Soon.
How do I earn yield from liquidity provider fees on CobaltX?
Every time a user swaps within a CobaltX liquidity pool, a 0.25% fee is taken on the trade. 0.22% of that trade goes back to the LP pool. 0.03% of that goes to COBALTX Token buybacks. Fees deposited into the LP pool increase the number of tokens that you get back when you withdraw liquidity. Therefore you don't need to "harvest" your earnings at any point.
Additionally, the CobaltX AMM market makes on the OpenBook order book, with earnings from maker volume also returned to liquidity providers in the relevant pool.
What are LP tokens?
Liquidity Provider (LP) tokens represent a proportional share of a liquidity pool. For instance, if you contribute to the ETH-COBALTX Token pool, you will receive ETH-COBALTX Token liquidity pool tokens (LP tokens). If you have deposited liquidity, you can see these tokens in your wallet.
Can I withdraw my liquidity anytime?
Yes, you can redeem liquidity tokens for a proportional share of the pool at any time.
How are projected earnings and APY calculated?
APY from fees is calculated by total fees collected by the pool in the last 24 hours and extrapolating that to a 365 day year then dividing by the total liquidity in the pool.
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