Total Volume + Fees

The tides are turning as now ETF money is running through the markets. Volume through Dexs has also seen a notable increase since crypto apps and especially Defi has been garnering a lot of attention. Speculations on the ETH ETF is also on the rise since BlackRock's Larry Fink "See Value in Having an Ethereum ETF".

Undoubtedly, the ETF has been likened to a trojan horse. . What we are looking for is Wall street actually using Bitcoin.

Pools like PNDC have seen record volume and fees on Ethereum ~ 262k in 7 days

with a TVL of $2.64 M just on the 1% tier

And the TVL for the POND dex itself has skyrocketed

However most of this is the massive surge in price for ETH this week.

You can check out PNDC pool here 👈🏻 with now a better and improved !!!pool exploration experience!!! (but more on that later)

you'll find some really profitable positions for the PNDC/ETH pool.

Especially if you sort by 'SHORT' strategy and sort by ascending Fee APR

And while there are much more fees generated by Ethereum than on Arbitrum, Arbitrum is leading the way in number of LP positions created as per a 24 hour basis at nearly 5 : 1.

While stable pairs are now generating well into 7 figures on a weekly basis.

On the docket 🔵🔵 this week:

Poolfish Pool explorer gets Supercharged
revert launches collaterizing Uni V3 positions.
Gauntlet's research on automated liquidity management

A more powerful 🔶 Pool Explorer

You can expect all the PoolFish to be getting a major revamp in the coming weeks

And we are starting with an enhanced Pool Explorer tool that now includes advanced search capabilities, allowing users to filter liquidity pools by blockchain network, DEX and fee tier, from just ONE central point enabling you to seamlessly sift through liquidity pools

There are so many knobs to turn here that you can surely explore a ton of new pools and chains since it's all in one place. The design is geared towards making discovering pools a lot more faster than other solutions and you can expect it to get even better in the coming weeks.

Revert Lend

Revert Finance just launched a specialized lending protocol tailored for liquidity providers on Uniswap v3 to use their positions to secure loans.

You can collateralize your Uniswap LP tokens in automated smart contracts called Vaults. The Vaults let you borrow other tokens, almost like taking out a decentralized loan with your LP tokens as collateral.

The interest rates are set automatically based on supply and demand - no need to negotiate rates individually. And the protocol is designed to be non-upgradable, meaning no changes can be made after launch, so users can feel confident locking in their assets.

Under the hood, the protocol uses ERC-4626 Vault architecture.

And flexible "position transformers" give more control over managing your collateral over time.

So basically liquidity providers get the most out of their positions - collateralizing them to secure loans, while continuing to earn fees and having access to professional liquidity management.

Which Automated liquidity management is the best?

Gauntlet has taken deep dive into liquidity management protocols in order to figure out how their performance comparisons across investment themes.

The study revolved around Arrakis, Mellow and Gamma Strategies.

They divided the liquidity pools by constituent asset types - stablecoins, BTC, ETH, and other exotic pairings. Their method was calculating historical yields using both price-neutral changes as well as USD returns.

In conclusion their study showed that different protocols are effective in different asset types

They also split the analysis into:

Range-Based Strategies

These involve optimally spreading liquidity across different price intervals and dynamically shifting funds based on market price movements or other trigger logic.

Capital Efficiency Strategies

These involve concentrating capital in specific fee tiers or very narrow ranges to maximize returns on active liquidity.

Their results concluded that no two liquidity management protocols were same and were doing well in different tiers of investments, with each specializing in distinct investment niches and catering to varying risk-reward profiles.

Arrakis

Gauntlet evaluated Arrakis's core v1 and v2 architectures, highlighting v1's usage of permissionless single-position vault strategies and a distinct emphasis on stablecoin exposure. They noted extremely profitable grandfathered leveraged stablecoin positions, though opportunities for new exposure remain limited. The grandfathered positions are just old users who haven't closed their positions and now catering to 90 percent of the TVL has massive fees on V1 Arrakis.

Arrakis mainly employs two strategies for Liquidity management:

Cross fee and Multiple positions. Both are self explanatory and mean to diversify your investments in order to optimize it.

To wrap up Arrakis seems to be less volatile in terms of profits and is great for stable pairs management.

It is also important to remember that incentives and staking derivatives also come into play to make LPs even more profitable from Arrakis.

Gamma

Gamma offers support for the most number of chains and pairs out of the three and employs two methods of managing liquidity positions:

Dynamic Range Strategy: Automated rebalancing of liquidity ranges based on price triggers, with user customization of range width to balance impermanent loss vs fee generation.

Stables Strategy: Historically-based stablecoin liquidity ranges, not dynamically adjusted, offering reduced price volatility exposure.

While Gamma was very profitable it was partly in due to it's generous incentive structure;

"When we broke down Gamma’s returns to isolate the external components of APY, we saw that external incentives made up about half of the pool APY on average. "

Mellow

Mellow is the most sophisticated one of the three and employs multiple creative methods to balance and deploy your LP positions.

Fearless Gearbox Strategy:

Leveraged Curve/Convex stablecoin LP positions to amplify yield through composability.

Uni V3 Boosted Strategy:

Concentrates Uniswap v3 liquidity in narrow ranges, reallocating remaining capital to yield protocols and minimizing inactive funds.

Pulse Strategies:

Rebalances volatile Uniswap v3 ranges upon price movement triggers to limit impermanent loss while integrating 1inch to reduce trading costs.

Tamper Strategy:

Utilizes multiple Uniswap v3 vaults with liquidity shifts between them based on price positioning, also hedging oracle risk via data aggregation.

Mellow offers automated liquidity management vaults with varying strategy performance and transparent reporting that shows some vaults generate compelling yields from trading activity alone, without relying on external incentives, but then again also has a lot of volatility.

Conclusion

Mellow stands out in it's BTC vaults and stands out as the most competent among the three ALMs using the most LP strategies but keep in mind that entering and exiting LP positions multiple times can 'realize' impermanent loss.

As for Arrakis and Gamma, their incentive structure and lack of public data made it hard for the study to give concrete results but with incentives both have proved to be quite profitable.

ALMs are revolutionary ibn the LP world and in the future there could be a lot merging of V4 hooks with present day liquidity management protocols.

Top Pools of the Week

High-Risk

CPOOL/USDC & PNDC/ETH in the exotic pairs category for the ones feeling adventurous.

Low-Risk

MMX/USDT & PYR/ETH for the balanced swimmers.

Safe

DAI/ETH AND ETH/USDT in the 5bps category for the cautious paddlers.

That's all for this week. Let us know how you like the new format of our Pool Explorer tool. We love feedback!

LP fees surge 🔥 after ETF Approval –