We successfully conducted the first mainnet test on
@Pryzm_Zone of our revolutionary Yield Automated Market Maker (YAMM) today, and it passed with flying colors with the help of anon arbitragooors!
Some Key Principles in Designing Our AMM:
- Automatic Handling of Maturities: Liquidity providers (LPs) don’t need to manually withdraw expired maturities.
- New maturities are automatically added to the AMM and expired maturities are removed.
- Unified Liquidity Pool: Liquidity is provided for all maturities within the same pool. No fragmentation and capital inefficiency with maturities and LSTs in different pools.
- LPs earn swap fees on any maturity swapped, without needing to pick specific maturities or spread their liquidity.
- Efficient Use of Yield Tokens: Yield tokens aren’t required in the pool, thanks to a combination of refracting and flash loans. This means more swap fees for LPs per $ of liquidity.
- Maximized Returns for LPs: LP tokens can be staked for Proof of Stake (PoS) security, allowing LPs to earn swap fees, underlying asset yield, and chain revenue & inflation - (what has now become popularized as restaking)
- Risk Transfer: Avoid aggressive inorganic flattening of curves to prevent transferring risk from traders to LPs.
- Optimize the AMM for Loss Versus Rebalancing (LVR) and Impermanent Loss (IL).
Our Solution For Expirations:
When a maturity occurs, the AMM adds a virtual balance to that asset, increasing its amount (virtual balance plus real balance) and gradually lowering the price. Arbitragers then buy principal tokens trading below their fair value and redeem liquid staked tokens. This process repeats until the pool is drained of the expired maturity and replenished with liquid staked tokens. We observed several arbitrage wallets competing in these transactions, resulting in healthy swap fees for liquidity providers.
Performance:
Holding the LP token has significantly outperformed holding the liquid staked token over 7 days, especially considering they are highly correlated assets. See the image below.
Future Prospects:
The real yield for LPs already far exceeds what is available elsewhere. When LP tokens start receiving chain revenue and inflation (or photons in our upcoming campaign), we believe there will be no better place to deposit your
$ATOM,
$TIA,
$INJ,
$OSMO,
$LUNA and more to earn consistent yield.
Learn more about our AMM and core modules here ->
docs.pryzm.zone/core/amm/yie…