Asset Liability Management

The key concept underpinning Community Market sustainable design is asset liability management (ALM).

Most DeFi protocols today do not use the concept of liability, which makes it so that when you invest in a liquidity pool, the total asset composition of your investment can be significantly different when you withdraw from the pool.

This is very common on double-paired LPs. In this classic system, you are given "LP tokens" representing a share of the liquidity pool. This is a contributing factor to impermanent loss.

With the asset-liability system, what matters is the size of your investment and not the share of the pool your investment represents. The system keeps track of your investment liability, and you always own that amount at withdrawal.

The introduction of Asset Liability Management in the Community Market allows each pool to grow organically based on its natural supply and demand.

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