The Uniswap V3 liquidity strategy platform Multiple Finance has just launched the mainnet, opening the chain insurance pool and liquidity management for users.
Written by: Xiao Mo
After Uniswap V3 went live, the “specialization” era of DeFi market making officially began. More and more users and funds are embracing Uniswap V3. According to DeBank data , the amount of V3 locked up has been rising since August, and it has broken through 2.5 billion U.S. dollars, setting a record high; at the same time, its total number of users is also increasing. .
The result of moving from passive market making to active market making is, for professional traders, the potential benefits brought about by the improvement of capital efficiency; but for ordinary traders, they enter the market without knowing how to design their own liquidity strategy. It will only further amplify investment risks in a market that is already full of uncertainties.
How should non-professional traders get on this train quickly? Multiple Protocol may be the first solution for ordinary users to try Uniswap V3.
Uniswap V3 spawns new business
In Uniswap V2, although the capital efficiency of passive market making of LPs is not high and the funds earned are also limited, for most ordinary LPs who don’t want to use their brains, this is a good business with money lying down. .
However, in the “centralized liquidity” rule proposed by Uniswap V3, LPs need to actively establish multiple positions in different price ranges based on their own predictions. Only when LP funds are highly concentrated in the range near the current price can they get higher Income.
At this time, a series of pain points of ordinary LP became prominent.
First of all, LPs need to establish multiple liquidity positions in different price ranges. This requires LPs to have more accurate transaction price forecasting capabilities or use more professional forecasting tools to obtain this capability. For ordinary users, they may not have the ability to predict, and there is even no additional cost to use professional forecasting tools, and the threshold for making investment decisions is virtually increased.
Secondly, when extreme market conditions occur, traders need to respond to price changes very quickly and adjust their liquidity position price ranges in real time according to the market conditions. This also requires accurate prediction capabilities, and additional gas costs must be paid.
In general, for professional traders, Uniswap V3 is the coexistence of risks and benefits, while for non-professional traders, there is only a place where costs and risks increase.
Under the contradiction between ordinary users and professional traders, it is a good business to provide LP asset management for the former based on Uniswap V3.
Some useful gadgets have appeared.
On August 31, version 1.0 of the Multiple mainnet, a decentralized financial protocol based on Uniswap V3, was officially launched, and the on-chain insurance pool and liquidity management were opened to the outside world.
Multiple has received the attention of a large number of practitioners long before it is officially launched. The solutions provided by Multiple are recognized by the industry as a shortcut that can quickly help Xiaobai LPs lower the threshold for participating in Uniswap V3.
In June of this year, Multiple announced the completion of a seed round of financing. Participating institutions include Youbi Capital, Pluto Digital Assets, NGC Ventures, Puzzle Ventures, Oasis Capital, Jubi Labs and many other well-known investors.
In terms of team, the core team of Multiple was once the core developer and partner of Clover. The team has more than 20 years of Internet team management, operation, and development experience.
How to lower the threshold for users to participate in Uniswap V3?
Simply put, Multiple builds a bridge between ordinary users and professional traders, and smart contracts provide win-win possibilities for both ends of the bridge.
In terms of specific operations, Multiple introduces a new role, GP (professional trader). After LPs deposit funds to Uniswap V3 through Multiple, the Multiple agreement will automatically allocate LPs’ capital allocation to different levels of GP, and GP will provide professional The flexible AMM liquidity strategy provides asset management services for LPs.
From the perspective of ordinary LPs, GP is mainly responsible for providing professional knowledge, allowing their funds to obtain the most professional management, returning to the “lay-and-earning mode”, and easily obtaining the best returns.
How safe is it?
However, some people wonder, is Multiple really safe? How to ensure that GP will not do evil? How to attract truly capable GPs to Multiple?
Multiple created an algorithm and token incentive strategy called POP (Proof and Profitability) to encourage professional traders to participate in Multiple.
From the perspective of GP, you can not only get real money incentives on Multiple through your own professional knowledge, Multiple is also a training ground for these traders, you can verify your liquidity strategy and position strategy without cost and capital investment. Is it feasible.
In addition, Multiple also presets a series of risk control designs that are responsible for LP funds-such as strict GP screening and competition rules, warning values, clearing systems, and hedging systems.
First of all, GP on Multiple is in a competitive environment. The smart contract will evaluate the strategies provided by the GP in real time and rate the GP according to the strategy rate of return. Only higher levels can obtain more configurable funds and a higher percentage of bonuses. When the GP’s rate of return has been poor, it will receive the system’s downgrade penalty, which will affect the GP’s income.
In addition, Multiple has set a stop loss line for GPs. When all GPs experience impermanent losses, the available funds of existing GPs will reach a warning value. At this time, Multiple will issue additional GPs and introduce new GPs to participate. After the competition comes in, the capital utilization rate will not rise until all GPs start to make profits. At this time, the new GP will directly replace the old GP.
When the fund usage rate is lower than the warning value, the funds in the fund pool will be referred to the compound in the mortgage loan to earn interest. When the fund usage rate is higher than the warning value, the funds in the compound will be withdrawn and returned to the fund pool Used by GP to make profits.
GPs are also required to actively hedge their short-term losses in places such as centralized exchanges. If short-term losses occur, Multiple’s hedging system will play a role.
In addition, LPs can also choose specific GPs to manage their own funds in the private vaults designed by Multiple, with high autonomy.
Before going live, Multiple also released the Playground version in advance to help GPs preview and lay out their liquidity strategy in advance.
Mainnet is online
Just today, the Multiple mainnet has been officially launched and currently supports USDC/ETH0.3%, USDC/ETH0.05%, UNI/USDC, ETH/UNI, USDC/DAI liquidity pools. Its smart contracts have been fully audited by CertiK.
For all ordinary users who want to share the Uniswap V3 wealth cake, a good tool is undoubtedly an important boost, and Multiple is expected to become their traffic portal for participating in V3.
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