⚙️A51 Liquidity Automation Engine
Last updated
Last updated
Concentrated liquidity provision, introduced by Uniswap V3, allows liquidity providers (LPs) to allocate their assets within a specific price range. This approach offers several advantages, such as enhanced returns from capturing trading fees within that range, reduced exposure to extreme price volatility, and potentially better capital utilization. The ability to select custom ranges has ushered in a new era, enabling liquidity providers to tailor their investment strategies to achieve specific goals.
However, this freedom has its challenges. It demands a deep understanding of market dynamics and a comprehensive grasp of the risks associated with it. The current AMMs are deficient in tools essential for effective liquidity provisioning. Liquidity providers have limited control over assets and utilization optimization, as well as restricted ability to manage associated risks. Addressing these challenges requires retail liquidity providers to invest time, acquire knowledge, and exercise patience in manually managing capital and making informed decisions.
Just as a blacksmith needs the right tools to forge molten metal into a finely crafted sword, a liquidity provider requires an optimal toolkit and an automation layer over exisiting AMMs to navigate their liquidity provision journey. This allows them to maximize profits safely under various market conditions.
Today's LP tooling infrastructure is flawed:
Lack of LP-centric Tooling: The current AMMs infrastructure only supports the traders leaving LPs with significant risks.
Reliance on Third-Party ALMs: LPs rely on third-party ALMs that often cause rebalancing slippage and neglect individual preferences.
Complex UX: A difficult interface deters beginners from active participation.
At A51, we are striving to:
We are committed to equipping LPs and AMMs with tools to design advanced automated pools and extending this capability to other AMMs by directly incorporating the A51 automation tooling engine to their interface.
Here is the automation tools that LPs will have:
Auto-rebalance User selects mode to dynamically adjust liquidity based on macro market trends.
Auto-exit & Reinvest Automate liquidity exits based on set conditions and reinvest into selected protocols or strategies. (in process)
Liquidity Distribution Determine how liquidity should be distributed within ticks, with options such as exponential, flat, or single tick available out of the box. (coming soon)
Hedging We are building integrations with other protocols for LPs to be able to hedge their positions by borrowing, and buying options. (coming soon)
Using Idle Liquidity Idle or inactive liquidity gets utilized in other protocols to earn extra yield while not being used.
Liquidity Long & Short The long/short LP strategy takes a directional view of where price action is going. Typically, as the ETH price goes up, an LP loses ETH in its position, reducing upside exposure. By placing a wider range where we expect the ETH price to go, we can reduce divergence losses by preserving the better-performing asset in the position.
Cheap Bought Tokens Users who are looking to buy blue chip assets can opt-in for pools that allow them to acquire blue chips like ETH/BTC in a cheaper way by taking advantage of impermanent loss.
am-AMM Model Allows LPs to earn rent from managers who pay to have the rights to collect fees and manage settings associated with fees. Helps against MEV and LVR losses.
