Meet Poolside: Optimizing stETH Liquidity
Provide liquidity for stETH without losing staking rewards to unnecessary divergence loss.
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:
Reward Accrual: Poolside ensures that rewards generated from stETH rebases are channeled straight to the LPs.
Reduced Divergence Loss: Poolside guards LPs from unnecessary divergence losses and arbitrage during rebase events.
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.
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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!