Introducing Price Pools π :
A new way for traders to provide liquidity to the market whilst applying buy-and-hold under the hood. Let's dive in π€Ώ
Today's LP positions run mean-reversion strategies. They were not designed for volatility capture!
Poolshark enables buy-and-hold at the smart contract level, meaning users are able to have a better "goalie netπ₯
" to capture profits as a passive LP.
This is accomplished by having split liquidity curves..
So...we would have one liquidity curve which represents
DAI β ETH
..and another liquidity curve which represents
ETH β DAI
By being on the LP side...users remove some negative externalities:
β½ Gas costs for multiple swaps
π° Swap fees paid to LPs
π MEV searchers front-running your swaps
You are the LP! Thus, users can either match against you or arbitraguers might swoop in and fill your LP.
The implications here are positive for everyone, as no longer will it require advanced off-chain trading infrastructure to be a sosphisticated player.
Poolshark enables everyone to be an LP...even traders.
Some insights from the CT community on this:
twitter.com/BlockEnthusiast/status/1613732359450271744
Not long after the launch of Uniswap v3, @BlockEnthusiast put out an article detailing on how assets could be put to work elsewhere when when your LP position falls out of range.
blockenthusiast.substack.com/p/uniswap-v3-vault-rolling-hills-strategy
With the introduction to Price Pools, vault providers, users, etc. can capture volatility as yield!
We hope DeFi strategists will weave Price LPing into their basket of strategies to enable the next generation of yield farming (post-ponzi era..? π€·ββοΈ).
@safetyth1rd also made a thread on how there is not a great way to take one side of the market over some range.
x*y=k math allows for liquidity distribution over some range, and Poolshark Price LPing allows for buy-and-hold, effectively taking a single side of the market.
twitter.com/safetyth1rd/status/1613730234465124352
The Uniswap team is pretty clear that this was a problem when they shipped v3, and I think it would be unrealistic to expect them to have accounted for every type of LP trading strategy at the onset of Uniswap v3.
twitter.com/safetyth1rd/status/1613730410680455169?s=20&t=UB7GvbUcVEhGckdE2UfNXQ
They actually note this in their whitepaper on Page 2 in the bottom right corner
uniswap.org/whitepaper-v3.pdf
"When the position has been crossed, it needs to be withdrawn. If it is not, and the price crosses back across that range, the position will be traded back, effectively reversing the trade."
That's all on Price Pools for now.
If you have any posts of users thirstry for buy-and-hold LPing, please share them! π
Cheers and be sure to join our Discord for all the latest alpha:
discord.gg/poolshark-896196350310514739