The Liquidity Problem

Thin-liquidity tokens have a specific market-structure problem: meaningful token inventory can exist long before the market has enough executable depth to absorb it efficiently. Projects, funds, founders, market makers and large holders may all hold positions that are economically meaningful but large relative to available on-chain liquidity. When that inventory is pushed directly through an AMM, the seller is not only paying a fee. The trade itself moves along the pool’s bonding curve.

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Price impact is structural to AMMs

Constant-product AMMs use x · y = k to price trades against pool reserves. A trade changes the reserve ratio, so larger trades move further along the curve. This is how the AMM works, not a defect in the design. For a simplified constant-product pool with no fee, average execution price impact grows with order size relative to the reserve being traded against: This table is a mathematical illustration of a basic constant-product pool, not a prediction for a routed trade. Real execution depends on fees, concentrated liquidity, route splitting, market movement and depth across venues.

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Routing can find liquidity. It cannot manufacture it

Aggregators and solvers improve execution by searching across available venues. They can split routes, compare prices and use alternative liquidity sources. What they cannot do is remove the structural price impact of a liquidity source that is too shallow for the requested size. If every available route ultimately relies on limited curve-based depth, better routing can reduce the problem without eliminating the underlying constraint. That creates a gap between two things that are often treated as the same decision:

• Immediate market execution: cross the liquidity that exists now and accept the resulting executable price.
• Making inventory available: expose a position to market demand and allow it to be consumed as buyers arrive.

FlowState is designed around the second model.

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Where concentrated inventory comes from

Thin-liquidity markets regularly accumulate sell-side inventory from:

• project and foundation treasuries
• funds and venture investors
• founder, team and advisor allocations
• unlock and distribution events
• market makers and professional traders
• whales and other concentrated holders
• platforms that originate or control eligible inventory flows

The seller may not need to execute the entire position immediately. They may instead need a way to make inventory available without turning the full position into one market order.

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The missing liquidity layer

C1 Pools introduce a separate inventory source alongside existing AMM, RFQ, order-book and intent liquidity. The C1 execution rate is derived from an oracle rather than from the pool’s reserve balance. A C1 fill therefore has no C1 pool-induced price impact. The broader market price can still move, execution can still fail if protection conditions are not met and deposited inventory is not guaranteed to fill immediately. The key change is structural: the seller can place inventory into a shared liquidity layer and let existing buyer demand consume it progressively through integrated execution infrastructure.

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Market scope

FlowState is designed for trades where order size is material relative to available AMM liquidity, particularly where conventional AMM execution would result in more than 1% price impact relative to the pre-trade reference price. Rather than defining this opportunity with a fixed annual trading-volume estimate, FlowState treats it as an execution condition. The amount of flow that meets that condition changes with market volume, liquidity depth and the routes available at the time of execution.