Kromatika

Kromatika Incentivized Limit Orders Ushers A New Paradigm For DeFi Protocols: The Case For UMAMIKromatika limit orders never cease to amaze its users with its functionalities and benefits — the incentivized limit orders set Kromatika head and shoulders apart from other DEXes.As a trader/hodler/enthusiast, imagine getting access to all the trading features you’ve ever wished for within a DEX! Kromatika aims to become your start-to-finish, versatile decentralized platform, so you no longer need to look for alternatives.Kromatika has coined an acronym for its limit orders that best describes its benefit: FELO (Fees Earning Limit Orders). FELO provides the following benefits: no front-running bots, automated limit orders, no price slippage, no swap fees &amp; traders earn fees on their filled limit orders.A sauce for the goose is also a sauce for the gander, as seen in the case of “Umami Finance”. Umami is building highly scalable DeFi vaults that provide real yield on core crypto assets including $USDC, $ETH, and $BTC for its depositors. Umami Finance leverages Kromatika FELO to maximize profitability and the efficiency of its protocol owned liquidity.Impressive right?Below is a quick look at Umami Protocol Mechanics regarding Uniswap V3 LP From Umami’s DocsUmami uses its Protocol owned liquidity (POL) to support its primary $UMAMI LP on Uniswap v3.Umami makes use of Uniswap v3 LP to provide liquidity for its own $UMAMI-$ETH and $UMAMI-$USDC LPs.Umami provides $ETH, and $USDC liquidity for partner tokens $KROM and $L2DAO.Umami uses UniswapV3 LP to fill liquidity gaps on Arbitrum, and also generate APR for Umami’s treasury.I mention all these points, but how exactly does Umami Finance accomplish it?Umami does all these in Uniswap V3 LP with the help of Kromatika’s FELO (Fees Earning Limit Orders).Now let’s deep dive into how Umami uses Kromatika FELO to increase its efficiency &amp; profitability.Minimize Volatility &amp; Maximize LiquidityIn order to minimize volatility and maximize yield for capital efficiency, Umami specifically utilizes this approach to minimize slippage during volatilityUmami adds liquidity to Uniswap V3 LP with the help of Kromatika FELO.Kromatika FELO utilizes Uniswap V3 concentrated liquidity technology which helps users concentrate their capital at custom price ranges. Users are then able to provide liquidity within their desired price, making LPs more capital efficient. As a result, users can earn more fees as long as the asset is trading within the specific range.Because of the UniswapV3 tech, Kromatika FELO allows LPs to provide a single token liquidity above or below the current price. The user no longer needs to provide liquidity for both sides (tokens) of the pair.When the market enters into the user-specified price range, one asset is sold for another while swap fees are earned by the user. Think of this as placing buy/sell limit orders in a typical order book market. For example: A CEX order book works along the same lines.By automating the entire process, Kromatika’s FELO provides incredible value and convenience compared to using Uniswap V3 directly.In practice, this has favored Umami Finance as volume for the UMAMI/ETH pair continues to grow. Over 450 ETH have been raised using Kromatika positions and have resulted in $15,000 LP fee rewards. This shows how capital efficient accumulating and distributing tokens with liquidity positions can be.Kromatika’s incentivized limit orders (FELO) will continue to allow Umami to maximize its yield while accumulating $UMAMI and raising additional funds for the treasury during the upcoming $UMAMI Bull run.Tactical Range LevelsKromatika FELO allows Umami to “set and forget” tactical accumulations on key levels without the burden of gathering the 5 to 7 multisig wallet signers when prices reach those key levels.Normally, gathering the multisig signers needed to process these transactions at key levels, timing can be crucial; ultimately these multisig logistics affect the action required where utmost accuracy and precision are vital.By allowing protocols to set specific key levels earlier, Kromatika reduces the burden of needing to gather all the multisig signers at any given time to process transactions at market value.Why go through the hassle of manually pushing this transaction when Kromatika’s FELO automates the entire process?Kromatika FELO monitors liquidity actively, and removes it in real-time when they are fully filled (100%). Hence, Umami Finance doesn’t have to worry about price slippage thereby equally giving the best returns (more than the intended amount, thanks to LP fees).Accruing Value to the Umami Dao TreasuryDo you know why many protocols fail?While there are many reasons for a protocol to fail in a bear market, one of the biggest problems is the inability to manage inflationary rewards. When protocols lack a proper strategy to accrue value in their treasury, their run rate ultimately decreases until the project can no longer be supported. This is called a “slow rug”.In today’s era of #realyield, protocols continually look for ways to optimize their treasury to ensure their longevity and success. It is crucial that protocols refine their strategies and include best practices, and Kromatika is here to support you and your team.So, how does Umami optimize their treasury using Kromatika FELO?Umami Finance uses Uniswap V3 LP with the help of Kromatika FELO for its own token $UMAMI to deepen its liquidity (in active ranges), thereby accruing more capital when the assets are trading at the higher end range.Umami also uses Kromatika FELO to return $UMAMI tokens to the treasury and reduce its circulating supply by setting limits and accumulating at lower trading ranges.Kromatika FELO is able to do this through its sleek trading experience, which offers protection against bots, and price slippage.<img src="https://miro.medium.com/v2/resize:fit:700/0*S_tKPVQ03MPNp9by" />FIG 1.1. Illustration on Uniswap V3 LP with UMAMI/ETH PairLet’s take a look at the above illustration if Umami Finance used the UniswapV3 platform to perform the trade. Liquidity is provided with $0.5 UMAMI and $0.0473 $ETH. The specified range of 0.011985 and 0.015544 is chosen with UMAMI trading at the current price of 0.015021 ETH.Umami Finance earns fees in this range. Once it reaches the maximum price, the total assets are accumulated into $ETH and returned to Umami’s treasury. When the value drops to the minimum price, the $UMAMI tokens will be automatically accumulated at the specified key level and returned, in full amount, to the Umami treasury.Now, let’s replicate the same order using Kromatika FELO as shown below. Let’s pick the same amount of $UMAMI token to sell at the max price range (the black highlighted mark).<img src="https://miro.medium.com/v2/resize:fit:700/0*dPn0vSeFFeR6A474" />FIG 1.2.Limit Order on Kromatika DEX to sell 0.5 umami to ETHAs you can see, Kromatika operates similarly to the Uniswap V3 LP, as seen in Fig 1.1.The highlighted area is the minimum amount of ETH you will receive. Other DEXes, at best, will offer you the same rate. More likely than not, that amount will be less.Using Kromatika DEX, Umami Finance receives more than the minimum amount, allowing Umami to accumulate more $ETH at the higher price range.When the Umami Token is trading below after monthly unlocks, Kromatika allows the team to repeat the process using the accumulated $ETH to accumulate more $UMAMI Tokens at the min price range, ultimately distributing more liquidity to LPs.We would have loved to demonstrate an example of this, but the price of UMAMI’s token kept pumping upward. This is due to the price being higher than the requested accumulation rate.<img src="https://miro.medium.com/v2/resize:fit:700/0*EfgybLsDObkaigKu" />FIG 1.3. UMAMI/ETH Processing Limit OrderTo summarize, Umami takes advantage of Kromatika limit orders and with the help of its chainlink keepers does the following:<ul><li>Real-Time Order filling</li><li>Takes control of the fees</li><li>Highly reliable orders</li></ul>To read more on Kromatika Limit Orders, <a href="https://blog.kromatika.finance/kromatika-launching-the-first-decentralized-limit-order-manager-powered-by-uniswap-and-961e0da4d15a" rel="noopener noreferrer nofollow">you can refer to this article</a>.Umami Finance recently conducted a Twitter Spaces with Kromatika and discussed various topics including FELO. Here is a link to the recording: <a href="https://twitter.com/i/spaces/1RDxlabNwVlKL?s&#61;20" rel="noopener noreferrer nofollow">https://twitter.com/i/spaces/1RDxlabNwVlKL?s&#61;20</a> .Follow Umami Finance on Twitter: <a href="https://twitter.com/UmamiFinance" rel="noopener noreferrer nofollow">https://twitter.com/UmamiFinance</a>Follow Kromatika Finance on Twitter: <a href="https://twitter.com/KromatikaFi" rel="noopener noreferrer nofollow">https://twitter.com/KromatikaFi</a>WANT TO CONTRIBUTE?<ul><li>Join <a href="https://discord.com/invite/Uv2Q2v26JG" rel="noopener noreferrer nofollow">Discord</a></li><li>Join <a href="https://t.me/joinchat/09jBPxB1cl85OTBk" rel="noopener noreferrer nofollow">Telegram</a></li><li>Visit <a href="https://kromatika.finance/" rel="noopener noreferrer nofollow">kromatika.finance</a></li></ul>

DeFi platform Umami Finance utilizing Kromatika FELO for its LP strategy

Kromatika Finance

2023년 3월 6일에 게재된 다른 기사

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