Diamond Protocol: Provide V3 Liquidity Without Impermanent Loss
Liquidity providers have the risk of impermanent loss, more so when the prices of the assets they pooled drop significantly. This is one of the reasons why I personally do not like providing liquidity because of the volatility.
In Uniswap V3 for example, a study has indicated that about 49.5% of the liquidity providers are at a loss. That's not exactly good, isn't it? We want to be earning and having profit, not losing.
Enter Diamond Protocol, with its aim of solving the issue and improving the profitability of liquidity providers.
Diamond Protocol
This is a "modular vault protocol where Decentralized Finance (DeFi) strategists can build and deploy on-chain strategies without ever writing a line of code. It aims to provide users with a source of sustainable yield on crypto assets with minimum risk."¹
Per the introduction on the BNBChain Blog, the protocol "stratifies the V3 LP positions into a no-market risk fixed return product that bears no Impermanent Loss (IL) risk and a higher risk & higher yield leveraged product that bears the IL risks. All assets are deployed on-chain, with zero custodial of assets."²
Diamond Platform (Unibot)
This is an Automated Leveraged Liquidity Provision Platform that operates on top of Decentralized Exchange (DEXs) (DEXs). It is designed to solve the problems for Uniswap V3 and Pancakeswap liquidity providers, leveraging the liquidity pools "to offer higher capital efficiency, in-protocol lending pools, and automation position management."³
It allows liquidity providers on platforms like Uniswap and Pancakeswap to hedge their LP positions by borrowing and shorting volatile assets,"⁴ allowing them to earn stable lending interest with zero market volatility risk and gives them the ability to create long/short positions on ETH to profit from both liquidity provision and market movement."⁵
Users can trade (Diamond Factory) and deposit assets to earn yield (Diamond Pool). There is also a leaderboard that ranks users based on their realized profits.
Features
✅Diamond Factory
This allows anyone to create their own leveraged Uniswap V3 and Pancakeswap liquidity-providing positions by utilizing the assets in the Diamond Pool.
Here, users can trade (provide liquidity with up to 3X leverage and automation). There are separate factories for each chain (Polygon, BNB Chain, Arbitrum).
This is a preview of what's available on Binance Smart Chain (bsc). To trade, go to this link, connect your wallet, and click on the pair you want to leverage from. Enable the factory and approve the transaction in your wallet.
Here's the trading window showing the Pancakeswap markets (BNB network). It is still in beta so users are advised to use it at their own risk.
✅ Diamond Pool
Users can provide liquidity in single-asset pools and earn yield without impermanent loss risk. This pool acts as the lending counter-party for all Diamond Factory positions, and any IL risks are taken and contained within Factory positions.
The pool enables users to add liquidity simply using a single token. When users leverage into their v3 positions on PancakeSwap through Diamond Factory, they borrow the tokens from Diamond Protocol's Pool and lock the assets on PancakeSwap, facilitating seamless liquidity provisioning. Borrowers incur interest when they borrow tokens, and the interest yield is paid to users who provided liquidity in Diamond Protocol’s pool.⁶
There are 6 available pools in various networks (1 in BNB Chain, 2 on Polygon, and 3 on Arbitrum).
To provide liquidity, go to the following links, connect your wallet, and deposit your preferred assets.
You can also wrap and unwrap ETH and $MATIC there.
The supplied assets can ONLY be borrowed by Factory in this protocol for opening Uniswap v3 (and Pancakeswap) positions and earning trading fees. When the position is closed or liquidated, the borrowed assets will be returned first, and then the residual tokens will be distributed back to the trader. Our design will ensure the Pool lenders are the highest tranches of the protocol.⁷
Leaderboard
This page displays the rankings of users based on their realized profits, Top Open Positions By USDT (fees earned), Top Open Positions By APR%, Top Closed Positions by USDT value, and Top Closed Positions by Profit and loss (PnL).
Portfolio & Profile Page
The portfolio page summarizes and displays the user's factory account, pool, and factory positions. Whereas the Profile Page displays the account's total balance and NFTs.
For information only. Source: [Whitepaper / Medium / Diamond / Pancakeswap / BNB Blog / Publish0x / Medium]
Lead photo created on Canva. Screenshots linked directly to their sources. No copyright infringement intended. 17092023/10:05ph
Posted Using LeoFinance Alpha
It seems I heard about diamond protocol earlier but didn't have knowledge about it. Now I have gained some knowledge about it.
Thanks for sharing 😊.
!PIZZA
That's cool, Inti. Thank you too for reading :)
!PIZZA
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Thanks for sharing.
Pleasure is mine, thank you :)
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!PIZZA
What is your experience with the product? I would like to know the pros and cons of providing liquidity on this protocol.
Unfortunately, I have not tried it. Was considering putting my CAKE into it once it gets unlocked on PCS, but that will be in a few month's time, lol!
https://twitter.com/lee19389/status/1703402380497215998
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Yan din reason kaya iniiwasan ko mag-liquidity provider. Mukhang okay tong Diamond.
Oo nga. Hindi talaga maiwasan yung mag lose ka unless labas ka kaagad pag may profit, lol!
D ko pa na-try tong diamond :)
!PIZZA
https://twitter.com/jewellery_all/status/1703466004641407066
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Same thing happened to me, I also invested money in a project and there was a roll applied and the second coin that was there was going automatic and the first one was going to expire.
That sounds interesting, care to share what project is it?
!PIZZA
The project name is seedify protocol.
Oh, okay. Thanks for sharing. I did hear about it but have not done any further research. All the best to you on your investments :)