What makes Zircon different?
We know that many projects theory-crafted or even attempted to implement solutions against impermanent loss (Bancor is the most notable). Yet, every one of those attempts mostly failed its stress tests.
We believe that previous attempts focused on fixing the wrong thing. They charged head first into designing compensation for impermanent loss, without asking themselves if liquidity providers are earning enough to be able to afford the compensation in the first place.
And the answer is no. The market is not properly compensating LPs for impermanent loss.
The reason for this mismatch is that LPs only earn from trading fees. But trading volume is mostly independent of the impermanent loss that each individual user suffers.
To completely solve impermanent loss, Zircon is flipping the problem on its head: instead of reducing the already tiny fee income to pay for compensation, we allow LPs to directly sell impermanent loss at a fair price.