Liquidity Pools
Last updated
Last updated
You can use all tokens from your Prime Account, whether deposited, borrowed, or swapped, to create LP positions. If you use borrowed tokens, you can provide capital into integrated DEXs beyond your usual limitations. This is capital that would usually be trapped as TVL in lending protocols but instead regains life to provide depth into Avalanche's (syntethic) DEX liquidity pools.
By providing liquidity through DeltaPrime you not only lower the slippage for people swapping on these DEXs, improving capital efficiency across the chain, but you also capture a multiplied percentage of the swapping fees these protocols pay to liquidity providers.
At the top of the LP interface, you see the tokens & DEXs integrated into DeltaPrime. If you want to provide a specific token, or to a specific DEX, you can select them here.
Here it shows the token-pair you are providing, as well as the DEX the tokens are provided to.
Similar to the token balances in the Exchange section, your Balance shows how much of the asset you are holding. Contrary to what you might expect, these numbers do not say a lot about the tokens that you provided. This is where the dollar value comes in handy. In the USDC-AVAX pair in the example above we own ~0.000041 USDC-AVAX, which amounts to a pair of ~200 USDC and ~16 AVAX. Instead of the exact tokens, this number represents which part of the pool you own.
Composition (optional)
Some liquidity pools (eg concentrated & synthetic) don't always hold a 50/50 ratio of your assets. In those pools you often see a composition column. The composition can change based on its use in the underlying protocol, and is a key metric for managing price risk.
Trend (7D) (optional)
Some LP tokens show its pricing over the past 7 days. Initially this only shows for GMX, where counterparty exposure significantly affects profitability of the pool. In the future this will show for more pools.
The trend line of perpetual derivative exchange LPs, can be changed for showing the Open Interest (OI) instead once opened up. The OI shows the long/short exposure of the counterparty and can be used for risk management.
Rewards (optional)
Pools that don't autocompound rewards or give bonusemissions in different tokens (like Trader Joe or Balancer) there is a reward column. This column shows the pending rewards. While there is a claim function, withdrawing from the position automatically claims as well.
This is the Total Value Locked (TVL) in the liquidity pool. In general: the higher this number, the more stable the APR shown, and the lower the impermanent loss (IL). This is a general rule, as trading volume plays a crucial part in APR just like the exact IL is dependent on the price divergence of both tokens within a pair. Additionally, with similar trading volume, a lower TVL pool will generate a higher APR than a higher TVL pool.
This is the APR that the pool gives at 100% health. By placing your full portfolio in this pool, without borrowing or compounding, you can expect to get the shown percentage in rewards, over the course of one year. This number does not take into account potential impermanent loss.
Multiply your returns. Sometimes, your returns can be multiplied through borrowing and investing. This depends on the yield received from the pool and the interest paid for borrowing. Where the Min. APY shows the returns with 100% health, the Max APY shows the returns with 10% health, if you put your full portfolio into this pool. While you could further lower your health for a higher APY, this also brings the account closer to liquidation. In the end, DeltaPrime provides you the freedom to manage your own risk, so the exact place on the 0%-100% health meter where you feel confident is all up to you. This number does not take into account potential impermanent loss and assumes you are borrowing the asset with the lowest borrowing APY.
If you already have LP tokens on one of the integrated DEXs, you can add them to your Prime Account here. This will increase your health, and allow you to use the LP tokens within your Prime Account to borrow against, or farm.
You can also choose to create an LP position directly through DeltaPrime. For this you need an equivalent value of the two tokens you want to create an LP of. If this token is in the LP asset list, you can create an LP token right there.
Withdrawing LP tokens works the same way as withdrawing other tokens. As long as you have the borrowed assets covered 1-1 on the Exchange, you can withdraw as much as you want, back to your wallet, up to the point of liquidation (which is not recommended).
If you instead want to unwind your LP tokens, you can do so by pressing "Unwind LP Token". When you do this, the value of your current LP balance will be split into the two tokens you started with. You can then freely use them across your Prime Account however you want.
