Greetings to the Algebra community! Today we would like to shed a light on a very influential figure, with which we’ve been collaborating for some time now — indirectly but in a very productive way. Meet Gamma Strategies, an innovative solution to the challenge of liquidity management! In this article, we’ll find out how Gamma works, and what are the perks for concentrated liquidity DEXs to integrate that solution into their platform. Tune in now!
The Concentrated Liquidity Perks & Challenges
The introduction of concentrated liquidity via custom price ranges in the Uniswap V3 upgrade was designed to improve the capital efficiency of liquidity providers. We adapted the concept of concentrated liquidity, refining it with our adaptive fee mechanics and other features to add the missing piece to an already great tech.
The main difference between Uniswap V3’s concentrated pools and Algebra’s concentrated liquidity is that Algebra’s dynamic fees make the process simpler by having only one pool based on volatility and pool volume. Thus, liquidity providers can earn more, especially during times of high volatility, which can help mitigate impermanent loss. The fees are adaptive, allowing LPs to deploy their liquidity without having to make a trade-off or worrying about choosing the pool that will generate the most revenue for them. This way, with Algebra, it’s much easier to manage your funds.
However, the problem of impermanent loss is still present when it comes to concentrated liquidity. Although improvements have been made for LPs, providing liquidity remains a complex and time-consuming process. Price ranges, commission tiers, and the risk of impermanent loss must be considered. That’s where Gamma Strategies takes the opportunity to reduce the issue. Gamma is designed for this difficulty through non-custodial, automated, concentrated liquidity management services.
The Gamma Strategies Solution
Active liquidity management (ALM) are strategies that actively adjust the liquidity parameters on behalf of the LP. As an ALM program, Gamma’s smart contracts automatically manage the prices ranges, rebalances assets, and reinvest the fees earns for optimal yields. Gamma is built with modular components consisting of a Uniswap position manager contract called a hypervisor, which contains a set of functions that are able to be called by an active manager or Supervisor contract.
Gamma is a leading Web3 provider of liquidity management solutions, allowing users to more efficiently and effortlessly manage their assets and take advantage of improved and advanced yield farming opportunities. Since Gamma’s implementation, QuickSwap, the first DEX that was provided with the Algebra Concentrated Liquidity model, has noticed a significant increase in V3 liquidity deposits.
When QuickSwap launched its integration with Gamma, the DEX’s V3 liquidity sat at $39.12 million. And only a week later, QuickSwap’s V3 has approximately $44.52 million TVL. At the moment of writing this, the numbers have increased further, proving the efficiency of the provided solution.
The benefits of Gamma’s active liquidity management include automatic rebalancing of your liquidity to keep it in range and auto-compounding of generated swap fees to maximize capital efficiency.
Besides the QuickSwap V3 x Gamma Strategies partnership, Zyberswap V3 has integrated the Gamma solutions as well. In the future, we hope to expand the list of common partners — other concentrated liquidity DEXs, using our tech, can rely on Gamma, and successfully provide their users with the most efficient liquidity management strategies ever.
Conclusion
Thus, integrating both the Algebra code & Gamma Strategies leads to really exciting results, reducing the impermanent loss and increasing the capital efficiency for all market participants. This alliance dramatically affects the whole market, bringing DeFi’s future even closer to nowadays.
About Algebra
Algebra is a Protocol allowing projects to implement the Concentrated Liquidity tech, along with other groundbreaking features. Already integrated into QuickSwap, StellaSwap, Zyberswap, SpiritSwap, and 5 more DEXes on different chains, Algebra helps them to acquire higher volume & raise the capital efficiency.
