Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesCopyBotsEarn

Sushi’s ‘Smart Pools’ hope to boost LP efficiency

BlockworksBlockworks2023/11/09 18:21
By:Blockworks

The DEX announced an integration with Steer Protocol, a liquidity manager focused on making LPing more efficient

DeFi depends on liquidity providers (LPs), but LPs can face an uphill battle in generating yield. Steer Protocol announced on Thursday that it is integrating its so-called Smart Pools on Sushi to try and make liquidity provision more attractive.

Steer’s Smart Pools take some data off-chain and automate aspects of liquidity management to increase efficiency for LPs. The Smart Pool integration comes as Sushi weighs an overhaul of its tokenomics and its native SUSHI token gets swept up in a market rally.

LPs put capital in pools that automated market makers (AMMs) like Sushi use to create order depth for DeFi assets. Providing capital as an LP can be inefficient because of loss-versus-rebalancing (LVR) where an LP essentially faces arbitrage from AMM prices lagging behind centralized venues.

Read more: Bitcoin may be riding the ETF wave, but altcoins are where the rally really is

Steer is an active liquidity management platform (ALM) that focuses on concentrated liquidity. LPs provide the platform with capital for a certain price range to increase their chances of the funds being used for a trade and earning fees. 

The ALM moves some data off-chain to deal with LVR.

“From the arbitrage perspective, we can place liquidity, which looks like books that are on — let’s say a centralized exchange — which allows us to capture that price movement before it actually might happen on-chain,” Derek Barrera, the founder of Steer, said. 

Since launching over the summer, Steer has become the ninth-largest liquidity management protocol by total value locked (TVL), according to DeFiLlama.

Sushi’s Steer integration comes soon after the protocol’s “Head Chef” Jared Grey proposed changes to Sushi’s tokenomics. He indicated that these are meant to incentivize LPs to lock their liquidity into the DEX for longer periods of time. 

Under Sushi’s current tokenomics, an average of over $100 million has been paid out in emissions to LPs for every $300 million in total value locked (TVL) created, the proposal said . 

The price of Sushi ( SUSHI ) jumped from around $0.55 in mid-October to $1.26 in early November, per Blockworks Research, and currently trades at $0.96 at the time of publication.

Don’t miss the next big story – join our  free daily newsletter .

Tags
  • liquidity provider
  • Sushi
  • tokenomics
0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Stake to earn
CEC, QTLX, GDV and other popular new coins are in hot progress!
Stake now!

You may also like

Has Altcoin Season Started With FED Heat? Legendary Analyst Answers

Cryptocurrency analyst il Capo answered the question of whether the altcoin season has started in his statement.

Bitcoinsistemi2024/09/19 21:06

How Much Will Bitcoin Price Be If Trump Wins, How Much If Harris Wins? Standard Chartered Announces Big Bull Forecast

At what price level will Bitcoin, the world's largest cryptocurrency, be after the US elections? Here are analysts' opinions.

Bitcoinsistemi2024/09/19 21:06

Vitalik Buterin’s Wallet is Active Again: Detected in Onchain Data

Another movement was detected in the cryptocurrency wallets of Ethereum founder Vitalik Buterin. Here are the details.

Bitcoinsistemi2024/09/19 21:06