This transformative trend is already reshaping the DeFi landscape and setting the stage for an unprecedented increase in capital efficiency and security accessibility. Now, as a liquidity provider (LP), you may be wondering how to maximize this new source of returns for your liquid staking tokens.

The answer is through Poolside, a platform we crafted to harness the full potential of LSTs, LRTs, and other value-accruing assets within DeFi. 

We did so to ensure Poolside LPs reap unparalleled rewards compared to other DEXs by offering additional yields on LSTs and LRTs. Below, you’ll learn why LSTs and LRTs are the new hot commodity in DeFi and how Poolside is positioned to help you best stack rewards in this new capital-efficient era.

The Rise and Rise of Liquid Staking and Restaking

Imagine a world where your assets work harder, smarter, and in more places at once. That's the promise of LSTs and LRTs. By enabling assets to secure multiple networks simultaneously, these tokens redefine what it means to be "liquid" in the DeFi space.

So far, liquid staking has grown to over $33 billion total value locked (TVL), absolutely dwarfing every other sector within DeFi:

Liquid staking tokens facilitate participation in network security without the constraints of traditional staking mechanisms, allowing assets to remain liquid and engaged in the ecosystem. The introduction of restaking via EigenLayer further amplifies this efficiency, enabling assets to secure multiple networks simultaneously and offering stakers additional rewards for their expanded role.

Liquid staking presents several key benefits to DeFi, including:

• Capital Efficiency: By unlocking the liquidity of staked assets, LSTs and LRTs allow users to leverage their holdings across various DeFi protocols without relinquishing participation in network security.

• Enhanced Security: Liquid staking and restaking distribute security responsibilities across a broader base of participants, thereby strengthening the overall resilience of blockchain networks.

• Accessibility: These mechanisms lower the barrier to entry for staking, enabling smaller holders to contribute to network security and reap rewards previously accessible only to larger stakeholders.

• Innovative Reward Structures: Integrating LSTs and LRTs into DeFi protocols introduces complex reward systems, providing stakers with multiple income streams from a single asset (enter Poolside).

How Poolside Maximizes the Earning Potential for LSTs and LRTs

Most DEXs are playing catch up with the major boom of value-accruing assets like LSTs and LRTs. Not Poolside. Poolside was built from the ground up to accommodate the nuances of liquid staking reward accumulation. This means that Poolside is THE DEX for accumulating the most liquid staking rewards and earning even additional yield on top of normal rewards by stacking Party Points.

But how, you ask?

Poolside's unique AMM is designed with an acute understanding of the dynamics of liquid staking tokens (LSTs) and yield-bearing assets. Unlike traditional AMMs, Poolside's infrastructure is adept at recognizing the accrual of staking rewards, ensuring that the value added through these rewards is not lost to arbitrage. This is a significant advancement over other platforms, where liquidity providers (LPs) often face the erosion of staking rewards due to the design of the tokens or the AMMs themselves.

Most LPs holding liquid staking assets earn staking rewards minus what is lost to arbitrage on platforms like Maverick. On Poolside, LP rewards accumulate in dormant pools (called reservoirs), meaning they earn full payout on their deposits (plus their Party Points).

Thus, for LPs looking to maximize the output of their LSTs and LRTs, Poolside has already established pools and incentives for LSTs such as Lido's stETH and BENQI's sAVAX, among others.

To learn more about Poolside’s infrastructure, refer to our Docs.

Liquid Staking is Brighter When You’re Poolside

With liquid staking assets becoming the largest sector of DeFi, it is clear that LSTs and LRTs are larger than just a trend; they have already become the new building blocks of a more capital-efficient, secure DeFi ecosystem. We created Poolside to ensure a DEX exists that puts liquid staking LPs first and ensures depositors have a platform they can trust to maximize their reward accumulations.

Learn more about how to earn additional yields on your LSTs and LRTs today! Join us at Poolside.party.

The largest liquid asset classes are bonds, stocks, and derivatives. In 2022 the total value of all the world’s bonds, as estimated by the Bank for International Settlements, stood at $133 trillion. Equities’ global market capitalization was a close second at $98.5 trillion, while the gross value of the derivatives market was $20.7 trillion. But while stock market moves make the news, in terms of size, government debt issuers rule the roost. Today, US federal government debt stands at $33.7 trillion, making the US Treasury the king of the $51 trillion American bond market.

Just as Treasuries dominate traditional finance in the US, liquid staking tokens (LSTs) will dominate decentralized finance (DeFi). Fixed-income instruments–of which bonds are the largest and most important–are at the bottom of today’s financial food chain. The interest rate charged by the most reliable issuers serves as the “risk-free rate”, which markets reference as the price of capital, a lever used by central banks today to stimulate or throttle economic activity.

More importantly, fixed-income instruments, in large part have become the base of the modern financial food chain. Like sunlight-fed plankton and algae feed almost all other oceanic organisms, from krill, squid, and corals to fish, sharks, and whales, fixed-income yield nourishes higher financial organisms from banks and pension funds to exchanges and hedge funds. These might include nimble new startups like Meow, with $1B in assets, and giants like Blackrock with $9.1T.

Much like bonds, LSTs continuously produce “yield” in the form of these networks’ native gas token, which users need to pay for transactions. And much like oceanic algae and plankton, LSTs have the potential to feed an explosion of higher financial organisms on smart contract networks like Ethereum, Avalanche, and Solana.

LSTs are poised to become crypto Treasuries because they produce native yield through the most basic, useful activity on smart contract networks, which consists of securing the network against attacks and validating its transaction history. That’s as close as you can get to a “risk-free rate” of return on a blockchain as you can get.

DeFi’s resilience–Steady Lads

DeFi’s total value locked (TVL) has held somewhat steady at about $40B, standing at $46.7B as of November 14, 2023.

However, a more granular view reveals that a vast majority of DeFi TVL is now composed of yield-bearing assets in the form of value-accruing tokens (VATs).

After taking a hit in 2023, the total market value of VATs is now back to early 2022 levels, reaching $35B in November. Looking only at VATs on Ethereum, Avalanche, and Solana, VATs stand at an astounding 80% of all DeFi TVL!

Many crypto teams have staked their future on the thesis that fixed-income instruments will similarly form the base of the DeFi food chain. They have focused on the tokenization of real-world assets (RWA), primarily Treasuries, corporate bonds, and mortgages. Surprisingly, despite the attractiveness of high-interest rates paid on government bonds, it is not RWAs or even collateralized lending positions that now dominate DeFi, but LSTs.

LSTs were worth $26.8B out of $36.4B in VAT total value, versus $747M for RWAs, $443M for rebasing commodities, and $8.3B for collateral tokens.

As of November 15, 2023, LSTs accounted for 76% of VAT market value, marking a new all-time high.

Understanding Value Accrual

What exactly are VATs? Value-accruing tokens are assets that are natively yield-bearing, meaning that the token’s returns are denominated in that same token or the same underlying asset. There are four important types of VATs, three of which accrue value from on-chain processes:

1. First are LSTs, which represent fungible shares of a network’s native “gas” token that have been staked for validation. LSTs allow retail users to delegate network-native tokens to a set of validators, who in turn put up these tokens as collateral to validate network transactions, earning both network fees and emissions for behaving appropriately and risking having their tokens slashed if they misbehave.

2. Second are collateral tokens from protocols like Aave and Compound. These tokens represent the lending positions that a user receives when they deposit collateral into Aave or Compound. The collateral goes into a pool which other users then borrow and in exchange, pay a floating interest rate.

3. Third are RWAs, such as the tokenized Treasury bills on Ondo and others. The value accrues from off-chain sources. In the case of tokenized bills, value accrues from the interest that the American government pays on the bonds which Ondo’s associated entities have purchased and hold off-chain.

4. Fourth are rebasing commodities and currencies like Ampleforth, SPOT, and Lybra’s eUSD. SPOT in particular, is very interesting–it is a robust, inflation-tracking “flatcoin.” It accrues value relative to the US dollar–SPOT’s value relative to the dollar increases at the same rate as inflation.

LSTs are Crypto’s Treasuries

What does it mean for an asset to be natively yield-bearing or for a token to bear its returns in that same token or the same underlying asset? A VAT is more like a modern government bond than a corporate stock. A stock is not redeemable for anything in particular, but it can pay owners a dividend in dollars, an exogenous asset earned through profitable economic activity. Meanwhile, a government bond requires that an investor lock up some dollars now for a promise that can be redeemed for more dollars in the future. After the 1971 break from the gold dollar standard, these future dollars are endogenous assets produced by the state, which is the bond issuer itself.

Smart contract networks like Ethereum provide infrastructure for peer-to-peer computation, which makes them an ideal platform for a new type of finance. By removing intermediaries from financial activity, smart contracts lower the costs of finance by one to two orders of magnitude, a potential already partly realized in the realm of crypto token trading. Removing intermediaries from financial activity also recovers, at least for Americans, Fourth Amendment protections, which had been severely curtailed through the Bank Secrecy Act.

How do these platforms work? Until September 15, 2022, Ethereum used a proof-of-work (POW) consensus mechanism to build its blockchain. Users submitted their desired transactions to a memory pool and paid a fee in ETH, Ethereum’s native token, and the consensus algorithm would pick a node to mine a “block” using these transactions. Nodes would compete with each other to mine the block by using large computer farms to solve a cryptographic puzzle. The winner would win the ETH fees and an additional ETH that was minted by the protocol as a reward.

However, Ethereum has now transitioned to a proof-of-stake (POS) model, in which validator nodes first stake at least 32 ETH to participate. A random selection mechanism then picks a node to build the next block, and a node’s probability of being selected is proportional to their share of all staked ETH. The winner then gets to “build” instead of mine the next block and wins a portion of the ETH fees paid by users, while a portion of that ETH is burned. No new ETH is minted in this process, making ETH deflationary relative to the volume of transactions it processes.

Liquid staking protocols are a non-custodial way for users to deposit their ETH and participate in staking without running a node or owning 32 ETH. Instead, their ETH is algorithmically delegated to a network of nodes who do the staking. The protocol nodes take a 10% service cut of the 3.25% ETH yield currently earned from staking ETH, leaving about 2.93% for users. A user that has deposited ETH will receive an LST in return. In the case of Lido, for example, a user exchanges ETH for stETH, which will rebase as rewards accrue, allowing stETH to maintain a 1:1 redemption ratio with ETH.

Conclusion

I believe LSTs are poised to become crypto Treasuries because they are a means of producing ETH-native yield through economically useful activity–which in this case consists of securing the Ethereum network against attacks and validating its transaction history.

Liquid staking is, at its core, the on-chain financialization of smart contract security itself. It allows a smart contract network platform to perpetually produce an endogenous asset with real value. It is as if Bitcoin users could freely invest in Bitcoin mining themselves. This native yield is a powerful engine for DeFi, fueling a food chain of financial activity from lending and borrowing, to tranching and hedging. Whither go VATs, so goes DeFi.

Special thanks for comments, edits, and feedback to Yissey, Matthew Fisher, Fiddlekins, and Brandon Iles. Originally posted on Thinking Farm.

Did you know that liquidity providers (LPs) are losing their staking rewards and yield to insufficient AMM design? What's worse is these losses are permanent and heightened by design choices. This means existing DEXs can't facilitate deep markets for yield-bearing tokens.

This changes with Poolside V1.

Poolside is a new and exciting DEX live on Ethereum, Avalanche, and Base! Built on an innovative AMM protocol, it eliminates yield loss and optimizes the experience for LPs. This is thanks to critical new infrastructure and a novel rewards program.

Earn swap fees. Earn incentives. Keep your yield.

Token & AMM Design

Understanding Poolside requires a basic understanding of both token and AMM design. Although Poolside can trade any token pair, it works best for yield-bearing tokens. The primary examples are liquid staking tokens and receipt tokens from lending protocols. As these categories mature, tokenized real-world assets and yield-bearing stablecoins will also benefit from Poolside's design.

Protocols that issue yield-bearing tokens must decide how the yield is distributed to token holders. In DeFi, the prevailing token designs for this have been rebase tokens or ones based on cTokens. While these token designs achieve similar outcomes and work fine for entering and exiting positions through the token issuers, they both suffer inside liquidity positions. This is because AMMs need a way of understanding when yield is distributed.

This means yield that belongs to LPs has either been lost or leaked away to arbitrage in existing AMMs. Clever marketing and incentives have masked this truth. Poolside solves this by introducing reservoirs and wrappers. Before diving into our solutions, we should explain the basics and clear up some misconceptions.

AMMs

DEXs are decentralized marketplaces that facilitate permissionless trading of crypto assets. They are built on top of one or more AMMs, which determine price using algorithms. This category has seen a lot of exploration since Uniswap first pioneered the constant product formula. Curve's StableSwap is another example of an implementation that optimizes for pegged assets. Trader Joe and Maverick utilize Liquidity Books, AMMs which have proven to be successful in optimizing for trading volume.

We’d like to remind DeFi participants that, like with many other things, there are trade-offs when it comes to AMM design. There is no free lunch. One misconception is that AMMs designed for pegged assets solve for yield-bearing tokens. Yield-bearing tokens introduce the financial concept of elasticity to DeFi. This elasticity is expressed in the supply of "a token" at some point. With rebase tokens this elasticity appears directly in the supply of the tokens. With cTokens it occurs in the amount of tokens the receipt can claim.

AMMs rely on the balance of token reserves as one of the inputs to determine price. This means yield-bearing tokens become mistakenly cheaper when yield is distributed. This is because AMMs can’t differentiate between a change in value due to yield versus typical trading activity. Let's dive into the two token designs to understand this more fully.

Rebase Tokens

Yield-bearing tokens that rebase update supply to map 1:1 with the underlying asset. The usage of rebase tokens in this manner was pioneered by AAVE's aTokens and Lido's stETH.

stETH, for example, is a representation of ETH collateral committed to validators to earn ETH rewards for securing Ethereum. This means that stETH is a receipt for an amount of the original ETH collateral and the accrued ETH rewards. stETH being a rebase token, when rewards are distributed, the entire supply of stETH changes to match the underlying ETH.

This elasticity in supply offers a familiar UX to traditional finance. Think of interest distributions to a savings account. The number of dollars in that account changes. Similarly, ETH rewards show up as more stETH in users' wallets. The drawback with rebase tokens is the technical difficulty in integrating them. Maverick and Uniswap state in their documentation that rebase tokens aren’t fully supported.

The problem with rebase tokens inside AMMs stems from the volatility in the supply. Since AMMs use the balance of reserves as one of the inputs to determine price, any fluctuation of the token supply will render a new price calculation. So when stETH earns staking rewards, the supply of stETH in a pool goes up, which means that stETH will become cheaper against the other token. This leaves the pool vulnerable to arbitrage. LPs will lose their expected yield and earn less in swap fees as their deployed liquidity has become cheaper.

cTokens

Yield-bearing tokens based on cTokens can be minted or burned according to a floating exchange rate. The majority of liquid staking tokens use a form of this design. Let's use Rocketpool's rETH as an example. rETH is also a receipt for an amount of staked ETH collateral and accrued ETH rewards. When ETH rewards are distributed to rETH holders, the supply of rETH doesn't change. What changes is the exchange rate, so the amount of ETH that rETH can redeem with the primary issuer becomes larger.

While this token design is more straightforward to integrate, providing more DeFi opportunities in the near term, it does introduce some quirks. Because rETH is not pegged to ETH and is continually representative of more staked ETH, it will experience divergences in price over time. These divergences are vulnerable inside liquidity positions, especially inside AMMs for pegged assets.

When staking rewards are distributed to rETH holders, the token becomes intrinsically more valuable, as rETH can claim more ETH than before. This creates value leakage inside AMMs because the price between a pair doesn't change despite the value of rETH increasing. Again, AMMs need help understanding when a token's value has changed outside of the pool. LPs lose their yield to arbitrage as the market price doesn't reflect the value change. Inside AMMs that optimize for pegged assets, less liquidity facilitates more potent trading, but all this means for yield-bearing tokens is that this arbitrage occurs more efficiently.

Poolside

Poolside is an opinion on DeFi's future and an innovation on AMM design to solve the problems above. In traditional finance, we've seen the importance of yield, especially risk-free yield in the form of treasuries. DeFi has an opportunity to onboard more of this market on-chain and also has its own quickly growing native yield offerings. This is why an AMM that removes yield loss is essential to scaling DeFi.

Poolside V1

Poolside V1 removes this yield loss by introducing reservoirs and wrappers. These pieces of infrastructure achieve two things. Wrappers unify yield-bearing tokens by standardizing them into rebase tokens. Reservoirs modulate a pool’s reserves by adding two additional token balances. This means our AMM can recognize a token’s supply change as a yield distribution event.

These innovations allow yield to accrue in reservoirs, pockets of inactive liquidity. This maintains an accurate pool price when yield is distributed. Tokens inside a reservoir can be added to the pool under certain constraints. This means that yield is never lost but preserved for LPs. So, yield that would have been lost in other AMMs is productive for LPs in Poolside.

Earn even more with your yield.

DeFi Cornerstone

An observation that Poolside makes is the importance of AMMs to greater DeFi. AMMs facilitate permissionless trading and are integral for truly permissionless markets. Issuers of yield-bearing tokens and other DeFi protocols rely on liquidity inside AMMs to facilitate financial activity. Without the liquidity inside AMMs, it would be difficult for auctions, liquidations, and flash loans to occur. Without these things, issuers of yield-bearing tokens won’t be able to see their assets used in DeFi as collateral for lending or stablecoins.

Issuers of yield-bearing tokens also benefit from liquidity inside AMMs by being an alternate way for users to enter or exit positions. If everyone exited their liquid staking positions by withdrawing directly from the issuers, the collateral being productive with validators gets disturbed. If these withdrawals are large enough, it could affect expected rewards and protocol health.

This is why LPs for yield-bearing tokens will continue to receive incentives as DeFi scales. The problem with incentives on AMMs where yield loss occurs is that it’s challenging to get LPs to remain after the incentives leave. Why would they? The incentives only make up for the yield loss they are experiencing near-daily. This also means that incentives deployed by protocols or DAOs get wasted, compensating for insufficient AMM design. This is one of the reasons why the ETH/stETH pool on Curve shrank from ~$5.9B to ~$220M in less than 24 months. Poolside solves this yield loss and can facilitate deep liquidity for yield-bearing tokens.

Poolside Party

Poolside Party is a novel take on incentives based on Ampleforth’s Geyser V2. Poolside Party allows LPs to earn multiple incentives without liquidity tokens ever leaving the user’s wallet. Rewards programs can be used to distribute any on-chain incentives algorithmically, like ERC-20s and NFTs. Poolside Party will launch with our own Party Points program, and some pools will also be incentivized with tokens from strategic partnerships.

Rewards programs can also have multipliers! LPs can earn at higher rates based on thresholds set by the rewards program. This aligns incentives with protocol needs and can be used to reward specific types of participants. Poolside’s Party Points will have multipliers, and points will be redeemable for Poolside’s governance token in the future!

Ready to earn swap fees and multiple rewards? While also keeping your yield? Dive into Poolside today!

In the DeFi ecosystem, the hurdle of integrating value-accruing tokens like Lido's stETH in AMMs has always been significant. Practically all protocols grapple with this challenge, encountering liquidity inefficiencies and financial losses for liquidity providers. Yet, it's here that lies an opportunity ripe for innovation.

Poolside steps up to this challenge, promising a vibrant shift in how liquid staking tokens like stETH are handled inside liquidity positions.

The Shortcomings with AMMs and stETH

Let's get straight to it - traditional AMMs stumble when handling rebase tokens like stETH. These platforms misinterpret the systemic adjustment during a rebase as a change in demand. This leads to incorrect pricing and diminished returns for Liquidity Providers (LPs).

This is exactly what Poolside solves for. At the epicenter of Poolside's innovation are our reservoirs, a feature that promises to transform the landscape of liquid staking.

By adding two additional token balances known as reservoirs, one for each token, Poolside manages to achieve the following:

1. Reward Accrual: Poolside ensures that rewards generated from stETH rebases are channeled straight to the LPs.

2. Reduced Divergence Loss: Poolside guards LPs from unnecessary divergence losses and arbitrage during rebase events.

3. Accurate Pricing: Poolside maintains correct pricing, enhancing the potential for swap fees.

As illustrated below, Poolside’s mechanism treats rebase events distinctly from existing AMMs, ensuring that tokens from staking rewards flow into reservoirs instead of directly influencing the active liquidity pool.

This approach maintains the swap ratio, preventing LP tokens from being discounted and securing swap fee potential. This design choice ensures the system's adaptability and flexibility, allowing LPs to maintain balance effortlessly.

Why Poolside is DeFi's Go-To for stETH

With the DeFi space growing yearly, Poolside is the only AMM suited to tackle value-accruing tokens directly, like Lido’s stETH. Poolside provides many benefits for DeFi, Liquidity Providers, and Lido:

• Fast Access to ETH: Bypass the 1-5 day withdrawal wait time. Poolside offers a faster alternative to accessing your capital.

• Boost to Lido's Ecosystem: Users can fluidly enter and exit stETH positions without impacting Lido's TVL and Validators, fostering a healthy ecosystem.

• Enhanced Returns: Poolside prevents rewards generated from stETH rebases from being arbitraged away.

• Secure Investments: Unncessary divergence losses are now a thing of the past with Poolside's reservoirs safeguarding your capital.

• Reliable Trades: Rest easy, knowing that every trade you make on Poolside offers the best possible rate.

With Poolside, your stETH investments aren't just smarter; they're safer. It's about maximizing gains and protecting what's yours.

Ready to take a plunge? Experience a more intelligent DeFi ecosystem with Poolside and be a part of a community at the forefront of decentralized finance's future. See you Poolside!

Dive into the Poolside AMM Today and Join Our Thriving Ecosystem of LPs

We’re happy to announce that Poolside’s highly-anticipated SPOT/AMPL pool is live, signaling a new era for rebase tokens.

It’s been encouraging to see the unwavering support from the Ampleforth community as we reach another milestone in our journey. For reference, the FORTH DAO treasury backed the proposal to seed the pool. This meant leveraging 25,000 AMPL and 25,000 SPOT, which were used to mint and initialize the pool. As explained below, SPOT/AMPL is a great pair because AMPL highlights Poolside’s design as a rebasing commodity.

This post will give background on why this development is so significant to DeFi and what the launch of this pool means for Poolside and our liquidity providers (LPs).

How It All Started

In traditional finance, commodities like gold provide stability because of their consistent value. Rebasing commodities, introduced and standardized by AMPL, aim to offer a similar standard in the digital space. But how does it work?

Rebasing is a novel mechanism wherein the asset’s total supply adjusts or "rebases" periodically to target a specific price.

In the case of AMPL, the supply expands and contracts based on the 2019 Consumer Price Index, ensuring long-term purchasing power. This approach shifts the volatility from price to supply, a groundbreaking shift in how we perceive value in DeFi.

The Pitfalls of Traditional AMMs During DeFi Summer

Ampleforth’s explosion during 2020’s DeFi Summer catapulted AMPL into becoming the most traded asset on Uniswap for several weeks. LPs of this pool likely remember the driver of this – the additional yield earned from Ampleforth’s “smart faucets.”

However, LPs might not remember or even realize the losses they incurred in their positions. You might wonder, with such a unique asset mechanism, why weren’t LPs successful at maximizing their gains during this period? The answer lies in the AMM design.

Traditional AMMs like Uniswap were not built to handle the dynamic nature of rebase tokens. As a result, LPs often face "impermanent loss" - a phenomenon where providing liquidity to a pool might result in less monetary value than simply holding the tokens.

This loss is intensified for rebasing assets like AMPL. When AMPL rebases, especially on platforms like Uniswap, the AMM doesn't account for the supply changes correctly, leading to potential losses for LPs. Many LPs might not have realized this pain point, but it's pivotal for maximizing their investments.

Whereas most other Poolside tokens will tend to experience consistent positive rebases, AMPL experiences positive and negative rebases. For this reason, AMPL perfectly illustrates Poolside’s reservoirs and how they work.

Why SPOT/AMPL Pool is a Game-Changer on Poolside

Recognizing the unique challenges of rebase tokens, Poolside offers a revolutionary solution. Unlike other AMMs, Poolside is designed from the ground up to handle the intricacies of rebasing assets.

By integrating reservoirs, we directly combat the impermanent loss challenges, ensuring that tokens like AMPL are optimized for maximum benefit. This means LPs can now truly leverage the benefits of AMPL without the underlying pitfalls of traditional AMMs.

What are these benefits for LPs?

1. Swap Fees - By supplying liquidity, you can earn fees from swaps without worrying about impermanent loss or value leakage from rebases.

2. Liquidity Flexibility - LPs can opt for a double-sided (SPOT/AMPL) or single-sided deposit (AMPL) to gain exposure to the pool.

3. Transparent Withdrawal - LPs can withdraw and redeem from either a proportional share of the pool and reservoir or from a single-asset reservoir.

Get Started on Poolside Today

The world of DeFi is on the brink of a significant transformation, and with the SPOT/AMPL pool now live, Poolside is leading the charge. We invite our community and liquidity providers to participate in the future of decentralized finance, tailored to serve the unique needs of value-accruing assets.

To participate as an LP on Poolside, navigate to the Poolside application at poolside.party, decide on your liquidity approach (double-sided or single-sided), deposit your capital, and reap the rewards!

Ready to take a plunge? Experience a more intelligent DeFi ecosystem with Poolside and be a part of a community at the forefront of decentralized finance's future. See you Poolside!

Dive into the Poolside AMM Today and Join Our Thriving Ecosystem of LPs

We're excited to announce Poolside's long-awaited launch onto Ethereum! Our groundbreaking AMM for value-accruing tokens will be monumental for DeFi. This launch is just the start! We're on a mission to build the premier market for DeFi's most productive assets.

Liquid Staking Derivatives, RWAs, Elastic Commodities, and more 👋

Everything Poolside

We've been preparing helpful information for Poolside users. Below are links to things that Gigabrain Liquidity Providers will find helpful:

• Poolside Website

• Poolside Whitepaper

• Poolside Documentation

• Poolside Twitter

The builders of Poolside, Buttonwood, host a Community AMA every Tuesday at 9:30 PM EST in their Discord. Join to get the latest updates and to ask any Poolside questions you may have.

So what are you waiting for?

POOL'S OPEN! Provide liquidity today and see what comes next!

TLDR;

• Poolside allows for more potent liquidity rewards

• Poolside solves unnecessary divergence loss and value leakage

• Poolside is the only AMM that integrates elastic assets

Value-accruing tokens are too big to ignore as liquid staking derivatives have risen to become DeFi’s top category. Poolside is the only AMM protocol that provides infrastructure for value-accruing tokens. Technically speaking, this means our DEX integrates assets that rebase or have an intrinsic conversion rate. AAVE's aTokens and Compound's cTokens are two types of value-accruing tokens that have popularized these concepts.

The interesting thing about these tokens is that they introduce elasticity in different ways. The first way is through a rebasing mechanism that updates supply to map 1:1 with the underlying asset. The most popular rebase token is Lido’s stETH. Like aTokens, elasticity occurs in the actual supply of stETH. When this occurs inside of liquidity positions, most AMMs assume that an increase in supply of stETH is driven by a decrease in demand. So, it becomes discounted against the other token it's paired with. LPs' assets become mistakenly cheaper, and stETH rewards are lost due to arbitrage.

The second way is through an exchange rate. Rocketpool's rETH, which behaves like a cToken, represents ownership of the underlying ETH. When rewards are accrued, the supply of rETH remains the same, but the claim on the underlying ETH grows. Said another way, the elasticity happens downstream in the underlying asset. Most AMMs don't realize what has occurred when value-accrual materializes this way. rETH has intrinsically grown more valuable but remains at the same price in the pool. As with rebase tokens, the mispricing results in “value leakage,” where traders arbitrage value out of the pool. The same value that LPs should own.

Poolside solves for this 🏊

Our team has done the complex math and hard work of solving for on-chain value-accrual. We will dive more into this in the future. In the meantime, we suggest reading our whitepaper for a thorough explanation. Just know that Poolside fully integrates tokens that rebase or have intrinsic exchange rates. Ultimately solving for value loss and leakage that occurs with these tokens inside liquidity positions. Something that our friends at Uniswap, Maverick, and others still need to solve.

It might shock some of you, but Stable Math, as popularized by Curve, doesn’t solve for the unnecessary divergence loss that occurs when tokens accrue value.

Poolside is the DEX of the Future

The popularity of value-accruing assets has experienced exponential growth over the past year with no signs of slowing down. Poolside is set to be at the heart of this paradigm shift, with the goal of bringing more liquidity off the sidelines and rewarding LPs, rather than compensating them for their losses. With the recent proliferation of liquid staking protocols, it’s clear that DeFi is ready to operate using the most productive versions of assets. Why not earn fees from swaps alongside interest or rewards from other protocols?

This shift has yet to happen because current-generation AMMs cannot handle the best versions of assets. The kind that earns rewards, interest, yield, and more.

In traditional finance, the majority of financial instruments are value-accruing and elastic. Everything from money supply to treasury bills operates as elastic assets. Our protocol provides the legitimate infrastructure to rehome these types of instruments on-chain. Imagine being a DEX that ignores the possibility of assets with notional values in the trillions of dollars.

We have a lot planned for Poolside in the coming weeks. So please subscribe and stay tuned as we bring the Poolside Party to DeFi!

Find all of the helpful information you need here: https://linktr.ee/buttondefi