Liquidity Shell

What is Liquidity Shell?

Logarithm Liquidity Shell helps Logarithm users by routing their LP tokens to the best liquidity boosts on the market, which is an essential product to navigate through the emerging LPDfi narrative.

The easiest way to think of Liquidity Shell is as a yield aggregation platform or a liquidity router. It aims to deliver the highest yield possible to Logarithm users by deploying the assets deposited into a variety of strategies across LPDfi protocols (Panoptic, Smilee, Infinity Pools, Limitless, etc.).

In addition to benefiting users with high yields, Liquidity Shell is also a helpful service to other LPDfi protocols. Essentially, it serves as a bootstrapping mechanism, bringing liquidity to LPDfi protocols like Panoptic and Smilee, which in turn boosts liquidity on DEXs such as UniV3.

Through our network of LPDfi partnerships, Liquidity Shell is able to eliminate cost, risk, and complexity associated with liquidity mining methods. These different aspects of the LP process are able to be simplified since it’s built on top of LPDfi protocols.

As Liquidity Shell grows, we plan on taking this efficiency to the next step by enabling cross-chain activity. This will allow our users to take advantage of even more yield opportunities wherever they arise, as well as bring liquidity to LPDfi protocols outside of Ethereum and its L2 network. Ultimately, Logarithm strives to be the destination for LPD liquidity.

How it works

Liquidity Shell directs users’ deposits to the highest-yielding strategies across LPDfi.

To maximize efficiency, users will be able to deposit single-sided liquidity, as well as decide whether they want to use our Nautilus Vault strategy.

If the user chooses to use Nautilus Vault, their LP position will be hedged in a delta-neutral strategy using GMX perps as the hedging vehicle. However, the user can choose to simply bypass this and use Liquidity Shell as it is. In that case, depositors will earn boosted yield via our strategic deployment of assets.

Why is that important?

The typical DeFi user doesn’t want to deal with having to constantly determine which protocol they provide liquidity for, or which pair and range can achieve the best yield. Likewise, most LPs are unfamiliar with the intricacies of market making and creating yield aggregation strategies.

In order to make this complex process available to everyone, we built our autonomous yield aggregator, Liquidity Shell, which interacts with many different protocols and finds the optimal strategy among them so that you don’t have to. We want to make high-yield strategies available for retail and institutional users alike, no matter their technical prowess.

Another important effect that Logarithm has on the LPDfi/CLMM market is capital efficiency. Impermanent Loss has been a major issue for CLMMs such as UniV3. IL often causes LPers to lose money, which subtracts from their trading fee income. However, Nautilus Vaults are able to hedge away that IL risk and make LPing more attractive for users. The effects from this on overall CLMM liquidity can only be positive, as there’s more incentive (less risk) in providing liquidity.

In addition, LPDfi protocols like Panoptic, which provide liquidity for CLMMs like UniV3, will also see inflows due to Liquidity Shell. In a way, Liquidity Shell “discovers” LPDfi protocols due to their high yield. For example, Panoptic depositors earn yield from UniV3 as well as Panoptic, which can make for attractive APYs. We believe Liquidity Shell will put protocols like this in the spotlight, and bring more liquidity to them as well.

Logarithm will be bootstrapping liquidity to LPDs and hedge against IL utilizing Nautilus Vaults, playing a crucial part in developing of the whole LPDfi narrative.

Last updated