Lixir Protocol delivers optimal capital efficiency, minimum impermanent loss and solves the inactive liqudity problem in Uniswap v3 yield farming. In other words, given a token pair, Lixir optimizes and auto-balances your positions accordinglyto achieve maximum ROI, minimum Impermanent Loss and minimum inactive liquidity!
Lixir is a liquidity concentration manager and incentivizer that maximizes your returns in the next generation of AMMs.
What is a liquidity concentration manager?
It’s a program that pools assets from users and automatically rebalances the concentration of your liquidity as price moves to maximize ROI on the next generation of AMMs like Uniswap v3. Liquidity concentration managers do two main things in these systems:
incentivize new liquidity to come in so that rebalancing is possible when the price of a pair moves.
automatically manage those rebalancings and incentives so that users earn fees and LP rewards as consistently as possible
What about gas fees?
Lixir uses an algorithm similar to that of Uniswap v2 to track pool ownership. For each re-balance, it calculates the total amount of asset value in a pair pool, at current prices. Then, for each incoming user, it calculates the value of the assets they are putting in, and mints pool tokens proportionally.
As a result, users only spend gas when entering or exiting the pool, and the gas costs are limited to calculating the value of their incoming/outgoing assets.
The fees to re-price the NFT on Uni v3 aren’t too expensive, and are paid by the incoming users at each re-balance event, for which they are rewarded.
Do I have impermanent loss risk?
tldr: yes, but not as much as you’re used to. Normal IL risk is spread out along the whole price curve, whereas with liquidity concentration, the action happens in a narrower part of the curve.
Example: you concentrate liquidity for DAI/USDC between 0.99-1.01.
If the price moves to 1.01, you will be left with 100% USDC and 0 DAI, but the IL is low, because their prices are still so close to each other.
Sounds great! Are there any other risks with liquidity concentration?
Yes, rather than IL, the risk is that you won’t earn fees or LP rewards when the price moves out of your range. You also won’t be able to re-price/re-balance without adding more liquidity to the other side of the pair. Lixir is specifically designed to solve this problem, but the risk is there if you try to do this manually.
When will Lixir be operational?
APP GOES LIVE 22nd May 4pm UTC
The APY itself on concentrated liquidity is already very competitive but once we enable farming on Monday the APY will increase remarkably!
What’s to come: – Lix staking and farming – Lix requirement to join farming – Governance – Single sided liquidity entrance – Pool cap raising – No pool cap after audit
Is Lixir just for Uniswap?
No, it is for any AMM that implements liquidity concentrations. We expect several platforms to follow quickly, and we will expand the automated management to handle those use cases as they come online.