title: Biatec AMM - Milestone 3
author: Ludovit Scholtz (@scholtz)
discussions-to: xGov 163: Biatec AMM - Milestone 3 by scholtz · Pull Request #163 · algorandfoundation/xGov · GitHub
company_name: Scholtz & Co
Biatec AMM has recevied xGov grant #80 and is in process of creating concentrated liqudity AMM. This proposal requests funds for milestone 3 - Integration to DEX aggregator. Check our progress - dex.biatec.io.
We will improve Algorand’s DeFi ecosystem and with concentrated liquidity AMM we will give users better swap quotes and liquidity providers better yields in comparision with using traditional AMMs.
This grant proposal aims to advance the development and open source implementation of Automated Market Makers (AMMs) with concentrated liquidity. AMMs have emerged as a crucial component of decentralized finance (DeFi), providing efficient and decentralized mechanisms for trading digital assets. However, traditional AMMs suffer from certain limitations, such as inefficient capital utilization and vulnerability to impermanent loss.
Concentrated liquidity models address these issues by allowing liquidity providers (LPs) to concentrate their funds within specific price ranges, thereby enhancing capital efficiency and reducing the risk of impermanent loss. This proposal seeks funding to support research, development, and implementation efforts focused on creating open source algorand AMM smart contract.
By supporting this grant proposal, you will contribute to the advancement of decentralized finance by addressing the limitations of traditional AMMs and enhancing capital efficiency and risk management through the implementation of concentrated liquidity models. This research and development effort will foster innovation, attract liquidity providers, and improve the overall user experience in the rapidly evolving Algorand DeFi ecosystem.
Scholtz - Product owner. Active on Algorand forum, runs a few projects in Algorand ecosystem such as the VoteCoin, A-Wallet, Aramid Bridge, Stabilitas, ASA.Gold. Has been winner in few hackathons, such as Algorand encode hack 2021, EUvsVirus, Swiss blockchain hackathon 2021, Bitcoin bankathon, Encode DAO hack, Algo HackJam, Greenhouse hack III, Mega Ace Hackathon, …
Scholtz & Co is relay node runner.
We provide many open source tools to help algorand communities - scholtz (scholtz) / Repositories · GitHub
We will build Open source concentrated liqudity AMM integrated to at least one of the Algorand’s DEX aggregotors.
With concentrated liquidity people get better swapping quotes, and liquidity providers will get higher returns on their investments.
We will work using LeSS principles, with 2w sprints & product increments.
Estimated project delivery is 3 months from the project funding.
Amount: 100000 ALGO
Description: We require half of the funds to be prepaid, so that we can pay salaries for developers
Date: T + 3 months
Amount: 200000 ALGO
Date: T + 6 months
Amount: 200000 ALGO
Date: T + 18 months
Description: We will deliver smart contract and web with abilities to open new lp pool with concentrated liquidity, do swaps and manage the liqudity
Please join our discord at OpenAMM
The Algorand community stands to benefit significantly from the development and implementation of an open-source Automated Market Maker (AMM) with concentrated liquidity. Here are some key benefits that such a project can bring to the Algorand ecosystem:
- Enhanced Liquidity Efficiency: AMMs with concentrated liquidity allow liquidity providers (LPs) to optimize their capital utilization by concentrating funds within specific price ranges. This concentration leads to increased liquidity depth and reduced slippage, ultimately improving the overall efficiency of the Algorand ecosystem. Traders will experience improved trade execution and reduced trading costs, attracting more participants to the platform.
- Mitigation of Impermanent Loss: Impermanent loss is a common concern for liquidity providers in traditional AMMs. Concentrated liquidity models help mitigate this risk by allowing LPs to focus their funds on price ranges where they are more comfortable with the potential price volatility. This reduced exposure to impermanent loss makes liquidity provision more attractive and sustainable, incentivizing more LPs to participate in the Algorand ecosystem.
- Diverse Investment Opportunities: The introduction of an open-source AMM with concentrated liquidity on Algorand will create new investment opportunities for LPs. By concentrating funds in specific price ranges, LPs can capitalize on market trends, volatility, and arbitrage opportunities. This flexibility encourages LPs to actively engage in liquidity provision and brings a wider range of investment strategies to the Algorand community.
- Deeper DeFi Integration: The availability of an open-source AMM with concentrated liquidity will strengthen the DeFi ecosystem on Algorand. It will enable seamless integration with other DeFi protocols, such as lending platforms, decentralized exchanges, and yield farming protocols. This integration will enhance interoperability, allowing users to easily move their assets across various decentralized applications, thereby expanding the use cases and liquidity within the Algorand ecosystem.
- Community-driven Development and Innovation: The open-source nature of the proposed AMM encourages community participation, collaboration, and innovation. It provides an opportunity for developers within the Algorand community to contribute to the project, propose improvements, and build additional features. This fosters a sense of ownership, transparency, and decentralization within the Algorand ecosystem, leading to a more vibrant and thriving community.
- Attracting Liquidity Providers: The introduction of an AMM with concentrated liquidity on Algorand will attract liquidity providers from other blockchain ecosystems. LPs are always seeking platforms that offer capital-efficient and risk-mitigating solutions. By providing a robust and efficient concentrated liquidity AMM, Algorand can position itself as an attractive destination for LPs, driving liquidity inflow, and promoting the growth of the ecosystem.
In conclusion, the development of an open-source AMM with concentrated liquidity brings several benefits to the Algorand community. It enhances liquidity efficiency, mitigates impermanent loss, expands investment opportunities, strengthens DeFi integration, fosters community-driven development, and attracts liquidity providers. These benefits contribute to the growth, competitiveness, and resilience of the Algorand ecosystem, positioning it as a leading platform for decentralized finance.
We seek to establish new legal entity for this project and comply with MiCA regulations.
This grant request does not include audits, however we are open to cooperate with any auditors on audits. We assume in next period we will request funding for audits.
We have created project discord - OpenAMM . Please sign in and lets have a chat.