Float pool
The liquidity which is offered on loan comes from a conventional concentrated liquidity pool (similar to Uniswap v3). This liquidity pool is internal to the InfinityPools protocol and called a float pool. When liquidity is not on loan, it remains in the float pool and is available for performing spot swaps.
From the perspective of users executing spot swaps, the float pool functions identically to a conventional liquidity pool. The float pool has the ability to achieve lower fee levels, while simultaneously offering higher LP yield than a standalone liquidity pool, due to the additional yield and volume coming from lending liquidity.
From the perspective of liquidity providers, the lending of swapper is a source of yield additional to providing liquidity in the float pool. These sources of yield are complementary as the float pool generates yield using only liquidity ranges through which the pool price is passing, while the liquidity ranges lent out can (and typically will be) for ranges some distance from the current price.
Who can use it to swap tokens?
Anyone
Only the borrower
At what price will tokens be swapped?
Pool price (+slippage)
Strike price (no slippage)
Where does the LP yield come from?
Swap fees
Interest (no swap fee)
Liquidity providers are therefore no longer required to hold both assets in a pool to earn yield. In fact, InfinityPools liquidity providers can even choose to systematically move their range away from the current price, aiming to only hold their preferred asset at all times. This continues to generate yield, and is similar to issuing a covered call or put option, with the added benefit of not suffering from the liquidity fragmentation across expiry dates of the options market.
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