101 on InfinityPools (@InfPools): it has opened up a vast arena for DeFi masters to face off. The ingenious design around Uniswap V3's liquidity token also shows the proper perspective of treating it as an option, which must also be based on a deep understanding of liquidity.
@InfPools offers a novel approach to trading perpetual contracts that eliminates the need for third-party liquidators and price oracles. Additionally, it mitigates counterparty risk by enforcing market settlements.
In a nutshell, Uniswap V3's LPs can lend their concentrated liquidity tokens to perpetual traders for leverage. Since the concentrated liquidity token is already priced in advance, the amount of margin the trader needs to deposit is known upfront.
Even if the market price falls below this, the trader only needs to close the position at this price. Therefore, no bad debt will be created. Essentially, LPs provide an option to traders and come in to do underwriting to ensure that the leveraged position does not go insolvent.
The benefit to the LP is the opportunity to collect additional funding fees and swap fees from this protocol even when the market price slips out of range. Still, his requirement to balance the impermanent loss and fee revenue is exceptionally high.
The bottleneck is that the leveraged funds rely on real Uni V3 liquidity, and the scale is not necessarily large. The advantage is that this protocol to reduce liquidation risk may be attractive to open up the market for perpetual contracts for long-tail assets and fill the gap.
Improving understanding and insight into liquidity through data analysis is a goal that EigenPhi has been cultivating. We are excited to see the exploration of the nature of liquidity by such protocols and welcome further collaborative research between related parties and us.