Provide Liquidity

How To Provide Liquidity

Existing Liquidity

Each Uniswap v3 (or alike) liquidity position is an NFT. LP can supply existing liquidity by transferring the position NFT to the LAMM protocol. In the frontend, it lists all position NFTs from the connected wallet to one-click supply any. After supplying, the LAMM protocol handles the accounting for interest earning and yield/point farming from the underlying AMM or chain.

New Liquidity

The frontend also supports a Uniswap v3 like experience to supply new liquidity of any concentrated range. The newly generated liquidity position will be by default transferred to the LAMM protocol.

Yield

By default, the liquidity on LAMM is used by the underlying AMM, which generates swapping fee if the concentrated liquidity is in range. From the AMM point of view, the LAMM contract is an LP owning all the liquidity. For all the swapping fee, yield and other rewards generated by the underlying AMM or chain, the LAMM protocol routes them all to each LP proportional to their deposit.

Each time when some liquidity is borrowed for leverage trading, the LP will earn a 0.02% position fee, proportional to the leveraged position size (i.e. proportional to the amount of tokens borrowed).

During the borrowing period, the LAMM protocol ensures that the borrowed liquidity accrues the same amount of swapping fee, yield and other rewards as if the liquidity were still in the AMM. Therefore, over time, the LP would accumulate higher yield compared to the original AMM liquidity provision.

Impermanent Loss

The borrower of each leverage position is required to pay an upfront collateral. The collateral amount is sufficient so that LP can always withdraw the same amount of tokens compare to the underlying AMM, no matter how the price moves. In other words, the LP would experience no higher impermanent loss, compared to the original AMM.

Withdraw Liquidity

LPs can withdraw the generated swapping fee and the remaining liquidity any time from the protocol. The yield is accrued periodically and can be withdrawn any time after the protocol claims it from the underlying AMM or chain.

Collect Interest

LPs can also collect the accrued interest without withdrawing the liquidity from a liquidity position. This interest includes both the swapping fee generated interest, as well as the position fee and lending generated interest.

Reclaim Liquidity

The borrowed liquidity can be reclaimed via a one-click UI any time by the LP. After reclaiming, the liquidity can be withdrawn within at most 3 days. To protect the LP from frontrun attacks, the reclaimed liquidity position can no longer be borrowed for leverage trading.