The Next Yield Paradigm: LST Liquidity and LPing


Twitter Space Featuring:

Doctor Steel - Contributor at Maverick Protocol
Bob Baxley - Core Builder at Maverick Protocol
Daniel - founder of Swell
Abishek - Head of Research at Swell
Liquidity Wizard - founder of Tokemak
Craig B - Partnerships & Growth at Tokemak

“Tokemak sits on top of the tokens – in this case, LSTs and the DEXs. So you have an innovative LST like swETH. You have a DEX with powerful tools and capital efficiency like Maverick… You have the LST as the what, the DEX as the where, and then Tokemak as the how.
~ Liquidity Wizard (on Twitter Spaces)

What: Swell

  • Swell, an emergent player in the Liquid Staking Protocol space, is the first to integrate Chainlink’s Proof-of-Reserve, validating the exchange rate of each swETH with verifiable proof of the total value of ETH staked on the consensus layer.
  • The Voyage pre-token airdrop campaign is currently incentivizing the Maverick and Tokemak communities to actively participate in the network.

Where: Maverick AMM

  • Maverick launched its innovative AMM in early March, further diversifying the DEX design space (building upon advancements from simple Uniswap v2 pools, range-bound v3 mechanics, and stableswap solutions such as Curve).
  • Maverick provides Liquidity Providers (LPs) with the ability to automatically reallocate their liquidity concentrations in relation to price movements.
  • With the expected rise in value of LSTs such as swETH due to the accumulation of validator rewards, Maverick offers a solution to the potential challenge for existing AMMs. Maverick's "Boosted Positions" enables protocols to incentivize specific distributions of liquidity, enhancing liquidity within certain price ranges.

How: Tokemak

  • Tokemak functions as a meta-protocol, operating above Maverick and Swell, effectively managing the liquidity dynamics.
  • LPs who hold ETH and wish to position into an LST might find optimizing yield across market options challenging. Similarly, DAOs and DEXs striving to attract liquidity often grapple with unreliable gauges and incentive structures.
  • Tokemak v2 provides a robust solution for both LPs and DAOs seeking predictable control over their liquidity.
  • The Autopilot feature automates yield-seeking behavior across various LSTs, simplifying position management and taking into account incentives, fees, market depth, and other factors.
  • Through Autopilot, Tokemak's Liquidity Management Pools (LMPs) establish a known liquidity rate, which can be used via the Liquidity Marketplace to allow DAOs to secure a predictable amount of liquidity without obscure incentives.

Future of LST-based Ecosystem

  • LSTs are projected to gradually replace bare ETH as the primary base pair asset across DeFi. This transition will likely cause a convergence of DeFi and LSTFi as the usage of liquid staking tokens becomes the standard unit of account.

Upcoming Developments:

  • Tokemak is currently transitioning code to audits and preparing for the imminent launch of the Autopilot product. This will be followed by a swift deployment to various L2s and the introduction of the LMP segment of the v2 product.
  • Swell is excited about ongoing partnerships with Maverick and Tokemak, and is promoting their ongoing Voyage campaign.
  • Maverick is poised to launch phase three, which introduces a voting escrow mechanism. The team is also considering the potential deployment of the protocol to alternative chains.
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