Adding Market Making returns to your portfolio can significantly enhance your overall performance. Since the launch of Uniswap V3, capital deployment in AMMs has become far more sophisticated, and as a result, yield is no longer distributed equally among liquidity providers. Active management is now required to capture meaningful returns, which discourages many investors from participating.

Panoptic takes market making to the next level—offering a more efficient, automated, and capital-optimized way to generate yield. It turns what was once a high-effort strategy into a powerful investment advantage

The additional capabilities that Panoptic offers come primarily from two key features:

• Leverage on LP positions: Panoptic allows you to provide liquidity with more capital than you’ve actually deposited by using your own position as collateral. This creates a highly capital-efficient setup. What’s remarkable is that this leverage is free—investors do not pay any interest on the borrowed exposure.

• Yield from lending your position: The platform enables other users to borrow your liquidity position in order to take the opposite side of the trade. In doing so, you earn an additional yield on top of the usual trading fees, further enhancing your returns.

On the flip side, if our position is borrowed by another user, we lose the ability to close it at will—it becomes temporarily illiquid as long as the price remains within the defined range. This is an important consideration, as it introduces an element of lock-up risk. However, this illiquidity is compensated by the interest paid by the borrower, which boosts our overall return. If the position is not borrowed, we retain full control and can exit the position at any time.

Let’s walk through a real trade I opened on December 19, 2024. While it wasn't highly optimized, it offers a useful look at how Panoptic works in practice.

At the time, I deposited $1,000 in USDC and 0.1 ETH into the platform, with ETH trading at $3,676. That gave me a total initial position value of approximately $1,367.

With that capital, I opened a position using a very wide range—from $2,581 to $4,171—intended as a long-term setup. As expected, such a wide range makes it difficult to earn significant fees from providing liquidity alone. However, the key advantage was the ability to leverage the position, effectively deploying twice the capital I had deposited. This leverage allowed me to double my potential returns despite the conservative range.

Thanks to Panoptic’s leverage mechanism, I was able to deploy a position with 72% more capital than what I had actually deposited. This capital efficiency significantly boosted the potential returns, even within a wide and conservative price range. In traditional AMMs, achieving meaningful yield with such a range would be nearly impossible without active rebalancing or directional bets.

As the market evolved, Ethereum dropped to $1,440—well below my defined range. This caused the position to remain out of range for an extended period, which meant I wasn’t earning any trading fees during that time. Moreover, because I was using leverage, I faced the additional risk of liquidation. To avoid this, I had to deposit more collateral into the platform. This is one of the key risks of leveraged LP positions: while they increase capital efficiency, they also require active risk management in volatile markets.

As shown in the chart, a significant portion of the time the position was not generating any liquidity premiums, since the price of ETH remained outside the defined range.

This is a common challenge in range-based market making strategies: when the asset price drifts too far, capital becomes idle and stops earning fees—unless it is repositioned or rebalanced

It’s clear that this wasn’t a highly optimized position. However, what’s interesting is that—even under these conditions—the position managed to generate around $450 in fees.

That represents a return of roughly 20% on total capital invested, and about 51% on the required collateral. This is particularly notable considering the extremely wide range chosen—where, under normal circumstances, fee generation tends to be minimal.

This example illustrates how Panoptic's leverage and lending mechanics can unlock meaningful returns even from conservative strategies, as long as the position is well-managed over time.

All of this happened while the current price of Ethereum sits at $3,485—still below the price level when the position was initially created.

The built-in leverage helps offset impermanent loss during upward price moves, and the additional yield from lending out the position can significantly boost performance.

Together, these features allow for the construction of much more efficient market making strategies compared to what is possible in traditional Uniswap V3 setups.

Panoptic introduces a new paradigm for liquidity provision—one that combines the flexibility of Uniswap V3 with the capital efficiency and yield-enhancement of options-based strategies.

Through this real-world example, we've seen that even a suboptimal position—set with a wide range and exposed to a prolonged out-of-range period—can still generate attractive returns thanks to three key innovations:

• Built-in leverage allows for amplified exposure without interest costs.

• Additional yield from lending positions further enhances profitability.

• Capital efficiency makes it possible to extract meaningful returns even in conservative setups.

Of course, these advantages come with new risk dynamics, including the possibility of liquidation and temporary illiquidity if the position is borrowed. But for sophisticated users willing to actively manage their risk, Panoptic offers a powerful toolkit for constructing superior market making strategies that go far beyond what’s possible with passive LPing on Uniswap.

As DeFi continues to evolve, tools like Panoptic will be key to unlocking more efficient, customizable, and rewarding approaches to liquidity provision.