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ICHI's Vaults

Balanced Liquidity Provision is Unprofitable, and Uniswap V3 is too Complex

  • UniSwap V2 TVL has declined from 4B to 1B since Jan. 1, 2022, and Uni V3 can't replace it for most community LPs. Uni V3 requires extra gas and time spent managing positions. https://v2.info.uniswap.org
  • Uni V3 is more profitable than V2, yet no cohort of LPs generated positive risk-adjusted returns. Why? AMM price discovery requires selling too many tokens beneath market value. https://www.thedefiant.io/uniswap-v3-impermanent-loss

Grow Any Token

  • ICHI's Vaults give liquidity providers a Uniswap V3 liquidity management strategy that greedily accumulates more of their deposited asset.
  • Vaults enable users to accumulate their favorite tokens without requiring their projects providing farming rewards.

How Do Vaults Work?

  • Inventory Management: Vaults adjust liquidity ranges to limit the number of tokens sold beneath market value.
  • Liquidity Concentration: Vaults increase the concentration of liquidity to maximize revenue and reduce sell pressure.

Vault Benefits

  • Pool positions are auto-managed.
  • Simple, single-token deposits. More trading fees per $1 of liquidity.
  • Resistant to impermanent loss.
  • Deeper on-chain liquidity.
  • Users maintain control of their tokens (Vaults are non-custodial).

Angel Vaults

  • Angel Vaults follow a different rebalance strategy than Vaults, prioritizing price support in addition to trading fee optimization.

FAQs

How many types of tokens are deposited into a Vault?

The Vault takes single-token deposits which we call the deposit token. Users are unable to deposit more than one asset in each Vault. The Vault is named after the deposit token.

How is initial liquidity supplied to the pool?

A Uniswap V3 pool is created for the Vault that is made up of the deposit token and the paired token. Initial liquidity is deposited at the creation of the pool.

How often do rebalances happen? Are they automated?

Rebalances happen on an as-needed basis. They are monitored by automated software but manually pinged. This will be a fully automated process in the coming months and more information about rebalance strategies will be described in these docs soon.

Who rebalances the Vault?

At the moment ICHI governance has been rebalancing Vaults for partner projects due to the complexity. In the future, this will be automated and up to the Partner project to ping the contract when wanting a rebalance to occur.