Beefy Officially Enters the Concentrated Liquidity Market by Being the First ALM on Moonbeam
We’re excited to bring to you an explosive announcement;
Beefy will officially enter the concentrated liquidity market by being the first active liquidity management protocol on Moonbeam, focused on supporting StellaSwap’s concentrated liquidity AMM, Pulsar.
This has been at works for several months now, with Beefy finalizing their ALM infrastructure in tandem with the development of Pulsar, the first concentrated liquidity on Moonbeam and the wider Polkadot ecosystem.
Concentrated Liquidity: Highly-Efficient AMM
Spearheaded by Uniswap’s V3 AMM model, concentrated liquidity (CL) has proven to be the most efficient DEX model so far. Right now, the most predominant AMMs are variations of concentrated liquidity deployed by several top DEXes: Uniswap V3, Quickswap V3 on Polygon, Orca on Solana, Trader Joe’s liquidity book on Avalanche, and more. In fact, six out of the top ten biggest DEXes in DeFi has deployed a concentrated liquidity AMM.
That is why StellaSwap decided to launch Pulsar, our own variation of CL that is powered by Algebra. With Pulsar, we’ll allow liquidity providers (LPs) to ‘concentrate’ their liquidity in specific price ranges to maximize capital efficiency. LPs who provide deeper liquidity for ranges where trades actually occur will earn a higher share of trade fees. Here’s detailed breakdown on Pulsar.
The Need for Active Liquidity Management for Concentrated Liquidity
The exponential growth of CL AMMs, both in terms of total value locked (TVL) and volume, has led to a significant demand for active liquidity management (ALMs). ALMs are protocols that serve to address the following issues that are present in CL AMMs;
- Complex: Although CL AMMs provide greater capital efficiency vs standard AMMs, it is more complex to manage. This is because users must understand the different liquidity ranges, their associated risks and deploy their capital with more steps.
- Higher Impermanent Loss: The ability to concentrate liquidity entails greater risk of impermanent loss. If the market price goes beyond users’ established price ranges, then they would face maximum IL. Users must be cognizant of their risk appetite and provide liquidity accordingly.
- Active Management: In order for users to mitigate against IL, they must be active in manually managing their CL positions. This means constantly supervising positions to ensure that current prices do not go beyond the established ranges, else they face the risk of maximum IL.
- Increased Resources for Projects: Projects looking to manage their own liquidity and engage in market-making activities will need to expand more time and resources under a CL environment.
An ALM is focused on active management for CL AMMs so that they can maximize fees generation, minimize impermanent loss and automate the process of rebalancing users’ positions. This means that users can ‘outsource’ the active management of their liquidity on Pulsar in a trustless manner.
Why Beefy is the Perfect ALM
As one of the biggest yield aggregators, Beefy is a well-known multi-chain protocol that solves a real pain point in DeFi: active management of users’ yield farms. With Beefy, users do not need to frequently and manually engage in the cumbersome process of reinvestment to optimize their yields. It’s all done automatically and programmatically with Beefy’s smart contracts.
Just to summarize Beefy’s keywords: Automation, Optimization, Abstraction, Simplicity.
With over $250M in TVL across 18 blockchain networks, Beefy is the solution for many across DeFi. That is exactly why being an ALM is a natural fit; Beefy’s role of streamlining yield farming to concentrated liquidity is simply an extension of what they’ve been doing well over the years.
Furthermore, Beefy has been a prominent protocol within Moonbeam, amassing close to $10M in TVL. With strong familiarity from users and an established credibility, Beefy’s foray into CL would be seen as a natural alignment to their value proposition.
What Can You Expect?
We’re excited and privileged to work with Beefy in their foray into active liquidity management, starting with Pulsar on Moonbeam. As one of the biggest parachains on the network, Moonbeam is the top destination for cross-chain applications across DeFi. Here’s a summary of what you can expect for Beefy’s upcoming ALM on Moonbeam;
⭐️ Passive & Hassle-Free LP Experience: Beefy will manage your concentrated liquidity positions and auto-compound fees to remove the need for active management on your end.
⭐️ Minimize IL & Maximize Fees Generation: The actively managed strategies on Beefy via their smart contracts will ensure optimal range setting and fees optimization to reduce IL risks and enhance trade fee optimization. Beefy’s ALM will ensure constant management of users’ positions to avoid being Out-of-Range (OOR); this will in turn reduce the risk of IL and optimize generated fees.
⭐️ Composability: Perhaps one of the core advantages of an ALM is the composability of the LP tokens. For CL, LP tokens are represented as an NFT, which hinders composability. With Beefy’s ALM, LP positions will be manifested as ERC20 tokens that will be composable across DeFi. This will allow greater usecases across the ecosystem, such as using the LP token as collaterals on Midas Capital or Qidao.
We’re in the midst of our private beta that will run until mid-January.
You can expect the launch of Beefy’s ALM for Pulsar within this quarter. More information would be released soon! 🚀
StellaSwap is a hybrid DEX that features a standard, stable and concentrated liquidity AMM to facilitate the most optimal price discovery for assets on Moonbeam. As the largest DEX and an integrated DeFi gateway, users can access the ecosystem with ease through our native bridge, swap-for-gas feature, as well as various DeFi opportunities in a click of a button.