SteakHut liquidity: The Liquidity Layer of Avalanche
Liquidity keeps DeFi fluid, without liquidity everything grinds to a halt…
SteakHut introduces a novel innovation to Avalanche and the wider Web3, a first-of-its-kind liquidity provision protocol aimed to keep DeFi liquid. We remove fragmentation, capital inefficiencies, and the barrier of entry to concentrated liquidity.
Introducing SteakHut Liquidity…
SteakHut Liquidity introduces a novel decentralized liquidity management protocol that enables liquidity providers and tokenized protocols to optimize their capital on Trader Joe’s DEX V2: The Liquidity Book.
SteakHut’s liquidity provisions will act as both a retail-friendly automated liquidity management service, as well as, a new primitive for protocols looking to integrate Trader Joe V2 pairs.
SteakHut will help create an efficient concentrated liquidity layer for Avalanche.
The Downfalls of Traditional Liquidity
SteakHut liquidity is a necessary response to the many downfalls that protocols and liquidity providers face across traditional liquidity options:
Fragmented Liquidity: Liquidity has become fragmented across blockchains, DEXs, and price ranges.
Stagnant Liquidity: In constant-function AMM models, liquidity is spread thinly across an infinite price range. Meaning liquidity is deployed inefficiently, leading to lower efficiencies and lower swap fee rewards.
Expensive Liquidity: The traditional approach to liquidity is a costly endeavor for protocols seeking liquidity. Liquidity is deployed in an inefficient way and token emissions are used to incentivize liquidity in a model that introduces inflation, high costs, and timely off-chain processes for liquidity seekers.
Complex liquidity: Next-generation concentrated liquidity AMMs drastically improve upon the downfalls of traditional liquidity, however often at the cost of added complexity. Concentrated liquidity can make it difficult to manage and optimize liquidity.
Impermanent loss: Concentrated liquidity AMMs introduce further risks to LPs, with a large majority of LPs receiving negative returns after factoring in impermanent loss. Variable fees introduced by the Liquidity Book solve this problem by adding further rewards for LPs during times of volatility.
Time-intensive liquidity: Concentrated liquidity removes the set-and-forget liquidity options LPs have grown accustomed to. In order to optimise liquidity, LPs will be required to manage, redistribute and reinvest rewards manually.
SteakHut Liquidity is a novel innovation built on top of the Trader Joe Liquidity Book. SteakHut set out to solve these downfalls and create a deep liquidity layer for Avalanche that optimizes liquidity and unlocks the full potential of the Liquidity Book.
A brief summary of DEX V1 vs DEX V2
The traditional DEX V1 approach to liquidity uses a constant function market maker (CFMM) centered around the function:
xy=k
From this two main problems arise:
- High slippage can occur when swapping low-liquidity pairs
- Capital is deployed inefficiently, increasing capital requirements
The liquidity book introduces a novel concept of discretized liquidity, whereby a market is made by grouping liquidity positions into discretized bins. Each bin functions as its own CFMM, with a constant price for each bin.
Instead of evenly spreading liquidity from 0-∞, capital is tightly concentrated around the active price range, which:
- Improves capital efficiency by up to 20,000x
- Increases LP swap rewards
- Creates deep liquidity
- Eliminates or dramatically decreases the need to incentivize liquidity
The challenges of concentrated liquidity
Concentrated liquidity removes the set-and-forget liquidity options LPs have grown accustomed to. In order to tightly concentrate liquidity for higher rewards LPs are required to constantly actively manage, redistribute and reinvest rewards manually-often multiple times per day.
SteakHut’s liquidity provisions remove this barrier of entry and offer LPs a range of “set-and-forget” liquidity options that allow you to deposit your tokens and optimize your returns.
Once deposited, your tokens are rebalanced and reinvested automatically by our contracts. This works to ensure that your liquidity always operates within the bounds of the strategy you choose, saving time and gas.
What is SteakHut Liquidity?
SteakHut Liquidity offers a solution for liquidity providers and protocols looking to optimize and automate their liquidity on Trader Joe’s Liquidity Book. It also enables a new primitive allowing projects to easily deploy automated liquidity positions on DEXV2.
As a user of the new Trader Joe DEX, the concept of concentrated liquidity can be overwhelming. The new DEX allows for countless opportunities to structure and manage your liquidity.
SteakHut Liquidity allows users to stake their tokens and fully automate the optimization and growth of liquidity.
Passive liquidity provisions
Many liquidity providers will be accustomed to depositing their tokens into a liquidity pool or farm and passively earning rewards. SteakHut’s Passive Liquidity provisions offer LPs a range of “set-and-forget” liquidity options to deposit your tokens and optimize their returns.
Once deposited, your tokens will be rebalanced and reinvested automatically by our contracts. This will work to ensure that your liquidity always operates within the bounds of the strategy you choose, saving you time and gas having to manage your own liquidity daily.
Active liquidity provisions
Liquidity should not be treated as a one-size-fits-all approach. The liquidity Book allows for endless ways to structure your liquidity depending on your risk tolerance and objectives.
SteakHut allows for “Strategists” to also create actively managed vault strategies. Users can read the philosophy behind the strategies, check past performance and easily stake their tokens into the strategy.
Strategists are then able to structure liquidity and call a rebalance and reinvest as required to manage the liquidity around their investment philosophy.
Liquidity as a service
For protocols operating with Trader Joe LP tokens or holding POL, SteakHut’s active liquidity product offers a new primitive to create liquidity strategies.
For lending protocols, this allows concentrated liquidity pairs to be accepted as collateral. The protocol can then create permissionless strategies of various complexities. SteakHut will then act as the liquidity layer rebalancing and compounding liquidity around the set standards.
With SteakHut you can create your own permissionless automated liquidity provision strategies.
Example use cases for SteakHut Liquidity
LPs and farmers:
Token holders across Avalanche will be able to access SteakHut Liquidity, and in a few simple clicks stake their tokens into automated and optimized strategies to earn swap fees.
Liquidity seekers, protocols with POL, and pegged asset pairs:
For protocols looking to incentivize liquidity whether for POL, pegged assets, or stables deep, liquidity is essential. Incentivizing liquidity can be extremely costly. Optimized concentrated liquidity can help create deep liquidity very efficiently.
SteakHut liquidity will enable liquidity seekers to create deep liquidity with low or no incentives.
Protocols and builders looking to integrate DEX V2:
SteakHut’s permissionless vault factories allow protocols to easily integrate Liquidity Book strategies. Protocols will be able to integrate automated vaults and have access to ERC20 vault receipt tokens. This will automate the underlying liquidity positions making it easy for protocols to integrate various strategies.
Novel innovation native to Avalanche
SteakHut Liquidity adds a novel innovation using concentrated liquidity to optimize and automate liquidity across Avalanche. Liquidity provisions remove the barrier of entry for liquidity providers, allowing for automatically managed LP positions.
The SteakHut platform provides a range of liquidity provisions on Trader Joe’s Liquidity Book optimizing your capital tightly to effective price ranges. SteakHut creates Avalanche’s Liquidity Layer facilitating deep liquidity and optimizing LP positions.
SteakHut removes the barrier of entry allowing for the growth of Avalanche’s Liquidity layer.
Wen SteakHut Liquidity
SteakHut Liquidity is currently undergoing extensive smart contract audits by Paladin Blockchain Security. Paladin Sec is a reputable service trusted by the Trader Joe team, with multiple mutual developers working on The Liquidity Book, making them the perfect fit for SteakHut Liquidity.
SteakHut Liquidity is just around the corner.
