Protocols

Protocols provide liquidity from their own inventory, ensuring liquid markets for their token(s).

How does it work?

Protocols setup one or more Arcadia Account to efficiently manage and automate their Protocol owned Liquidity (PoL).

Arcadia can do the migration from existing liquidity positions to an active Arcadia strategy in a single transaction, ensuring there is never a "liquidity gap" during migration.

PoL strategies

A non exhaustive list of strategies tailored for PoL:

Efficient Rebalancing for Capital Preservation

To optimize liquidity for traders, PoL deployments require regular re-calibration of the position’s ranges. It optimizes rebalances for trading depth and capital preservation using organic yields to offset impermanent loss.

Inventory Rebalancing mitigates Price Impact

Vanilla rebalancing can cause negative price impact when executed in size. Arcadia Pro tooling allows inventory rebalancing, which mitigates negative price impact.

Custom PoL Strategy

Custom PoL strategies, such as padded distributions to support token price floors and increase depth in high volume price areas, can be set.

Take Profit with Zero Price Impact

Tailored strategies can be set to withdraw assets from liquidity positions without direct price impact or temporally removing of the main liquidity positions.

Structured Buybacks

Buybacks can be automated and executed in a structured way to maximise accumulation.

What are the risks

Protocol owned liquidity is exposed to the following risks:

• Smart contract risks

• Market risks

• Impermanent loss

And depending if they use margin or not:

• Interest rate risk (interest rate can exceed yields)

• Liquidation risk