This is the newsletter for LPs to help you keep on stacking and earning that sweet yield.
If you’re here, you're early! This is our second newsletter. Hopefully it becomes part of your Friday morning routine!
What we have for you this week:
A new name?
Earning into infinity and beyond
Are LPs profitable?
Top 3 Pools of the week
Total Volume + Fees
Most LPs are happy as dolphins, raking in their usual schools of fees.
Trading volumes are still steady as a sleeping clam, no reason to ring any alarm bells.
TVL 🔻 Decrease of 2.71% over the past week | Sep 6 - Sep 13
The TVL did not experience any vast volatility and it has been smooth sailing as compared to the previous weeks.
Splish Splash, Uniswap.fish Rebranded as Poolfish!
In order to signify a new phase in its trajectory, Uniswap.fish is transitioning into Poolfish.xyz, expanding what it is offering to its users.
In addition to further development of the main LP calculator for Uniswap, Poolfish will be the home to analytics tools for Liquidity Providers looking for improvements in their active or passive LP strategies.
One improvement we made recently is that after you select your pair on the calculator for an analysis, simply clicking the “Create Position on Uniswap” will route you to the Uniswap UI to create a new LP position with the ranges already set for you.
Expect to see more improvements in the app and keep an eye out for more tools and features!
Infinity Pools: A double sided market for double yields
Our team and fishes 🐟🐠 have been intrigued by a new a protocol looking to make a splash 💦. And we are patiently waiting for its mainnet launch to take a dive in its supposed infinite pool of leverage as well as mighty promises for LPs.
On September 8th, InfinityPools @InfPools, a new protocol for LPs and traders, announced the launch of their public beta, which is currently offering trading service in a sandbox environment on testnet, with LP functionality soon to come.
InfinityPools are described as a game changer in the Defi space given its positive sum proposition. For traders, it offers substantial access to leverage and for LPs it combines traditional spot AMM fees and the interest gained from swappers.
This is a clever approach to leverage trading while making use of concentrated liquidity pool positions.
InfinityPools makes sure that traders can always sell their asset for the exact amount of money they borrowed, so they never have to worry about liquidation. Furthermore it allows for more control over withdrawals and allows traders to set an interest rate tolerance to exit their position.
Pretty nifty, right? Its like this protocol's got gills so traders can breathe easy leveraging LP tokens. And for LPs, there are no wiped out wages here - your LP tokens are as safe as a puffer fish in water!
Why is it great for LPs?
The white paper of InfinityPools presents several ways of generating yield for LPs.
LPs can make yield from lending leverage to traders paid on a pro-rata basis.
LPs can earn trading fees from spot swaps in the float pool.
LPs can stake on InfinityPools itself to get a share of the protocol revenues.
LPs are incentivized to provide liquidity to specific pools.
Liquidity providers can provide liquidity by lending out AMM LP tokens, which have no credit risk and generate additional yield by getting lent to traders. Traders can borrow the LP token and use it to go long or short on a particular asset with leverage.
The LP token’s value is determined by the total value of the pool, not just the value of the asset held by the trader. In essence, if the price of the asset falls, there is always enough collateral to “re-create” the LP token. This means the trader can leverage any LP token on V3 Uniswap in a permission-less manner.
InfinityPools does not use any oracle for its price feeds which decreases its dependence on any third party data. This provides credence to the protocol’s integrity as other methods of leverage trading needs price oracles.
We have fished out the link for the beta. It currently offers a sandbox environment for folks to try out the UX.
And if you’re an avid connoisseur of novel DeFi protocols, here are the docs.
Currently the open-beta doesn’t support live smart contracts and is only open for traders who would at this time have their leverage limited.
Fin-tastic Uniswap Updates
Initial list of hook (singleton contracts) resources for Uniswap V4 are released, featuring tutorials and examples for developers looking to initialize their own pools.
This translates to creative and innovative liquidity pools in the near future when Uniswap fully rolls out its V4 contingent upon the next Ethereum update which is poised to take place some time this month, September 2023.
Hooks enable custom trading strategies and optimized yields for LPs. They also allow for granular control of the pool.
We’ll have to do a deeper dive into V4 later. Stay tuned for that!
Are LPs losing money?
In an interview on the Bankless podcast, Dan Robinson claimed, that according to some research, the average liquidity provider in the USDC/WETH 0.05% tier pool is losing money. This pool contributes to about half of the total trading volume of Uni V3.
One hypothesis as to why people continue to provide liquidity was that MEV shops were the main LPs, which was quickly dismissed by Dan Robinson himself.
Another user suggested that Uniswap’s promise for V3 in regards to fees was wrongly interpreted by the masses, while another guess was that whales are providing liquidity to stealthily DCA into and out of ETH in the USDC/WETH pool.
However, this person might have the best take:
People who provide liquidity know why they are doing it.
Price Stability
Earning Profits
Enhanced Market Efficiency
Sell or buy token buy providing liquidity without paying a lot of Gas FEES
1
Top 3 Pools this week
We have compiled one highest-performing liquidity pool each from three distinct risk profiles - high-risk, low-risk, and safe. You can see a complete list here.
High-Risk
USDC/Ultra (UOS) in the exotic pairs category for the ones feeling adventurous
Low-Risk
Quant (QNT)/ETH in the 30bps category for the balanced swimmers
Safe
ETH/USDT in the 5bps category for the cautious paddlers
That’s a wrap folks, we’ll see ya whales 🐳 next week for more liquidity lore and gossip.