Introducing Cargo Protocol
Cargo Protocol is aggregating active LP management strategies. It helps DeFi users pick a Uniswap V3 rebalancer according to their risk profile and deploy their tokens accordingly. This is done through vertical integration with the rebalancer market players as well as horizontal add-ons augmenting the risk of such positions (insurance, lending, hedging).
The current state of active liquidity management
We think about the ecosystem using the DEX-Rebalancer-Aggregator trifecta.
DEXs — Level 1
Cargo Protocol is part of a constellation of services orbiting decentralised exchanges. To be more specific, Cargo Aggregator is only interested in those DEXs that offer concentrated liquidity to its users. If you are not familiar with DEXs or concentrated liquidity pools and want to find out more about this concept, please watch this intro: https://www.youtube.com/watch?v=5KonJGrGTiU
Active LP strategy providers — Level 2
Uniswap was the first protocol that introduced this AMM type at scale, thus opening up a blue sky of opportunities to teams developing LP management strategies. At the moment, there are 10+ rebalancers live on Ethereum mainnet and an assortment of L2s providing such services. The type of strategy varies from tracking the spot price and rebalancing with a specific range at a given frequency, to placing range orders based on pre-defined econometric models, with an assortment of variations sitting in between. TVL here ranges from $10k at the bottom of such ranking to a touch under half a billion placed under management with the leading protocol.
Aggregator — Level 3
Going one level up, in our model of the world, we find the Aggregator service that Cargo Labs is continuously working on. Our Aggregator is integrated with all rebalancers in the space, serving up strategies to the users in a homogenous format, making them easy to compare and choose between. Our mission is to elevate the entire sector, making it easier to supply liquidity into smart strategies, identify underutilized rebalancers with higher declared APYs, as well as highlight the leading players. We verify this data with our Analytics service. We are strong proponents of permissionless applications and our initial aim is to make selection and transition between pools or vaults as seamless as possible.
What is coming up?
Currently, we are testing our UI and smart contracts on Ethereum Rinkeby and getting ready for a production launch on Polygon. This will allow us to battle test the code while keeping the transaction costs subdued.
Once our main integrations are complete, on L1 and L2s, we will proceed to work on a roll-out of ancillary products that would improve the users’ experience even further.
First and foremost we will integrate with a permissionless insurance protocol to allow our users to buy protection for their tokens once they are deployed into a rebalancer.
Secondly, we plan to integrate Cargo LP tokens as collateral for main lending/borrowing protocols, improving the composability of such locked liquidity and thus introducing a new DeFi constructor element.
Finally, we just commenced research on the possibility of hedge packages that would help to mitigate impermanent loss risk (straddle option strategies, power perpetuals and so on).
Our view is that incorporating such products at the point of token deposit also directly augments and enhances rebalancer strategies. Not all of such protocols offer those additional options at the inception point, which might be turning some of the users away due to them being risk averse or looking for more composability. As our service becomes more complete, our goal is to reverse this trend.
P.S.
Please feel free to browse our documents page, particularly its FAQ section if you want to find out more: https://docs.cargo.finance/FAQ
