2.2.8 AMM+

Überblick

Earn smart yield on coinflex.com/amm

What is AMM+

Uniswap and other DeFi exchanges pioneered the concept of Automated Market Making (AMM) which enabled passive capital to enter the space of buying/selling assets and therefore earn from the price differences, fees earned and volatility of the markets.

CoinFLEX is taking this concept and applying it to the perpetual futures markets on our CeFi exchange orderbooks. Users can simply go to CoinFLEX.com, select the assets they wish to use, the range they wish to concentrate their liquidity on – and deploy their capital into an AMM strategy. The end result is a democratisation of market making, enabling a vastly wider user base and capital pool to earn from the volatility of the markets and the takers on the exchange.

With the power of this Orderbook + AMM hybrid model,  AMM+ works to efficiently allocate capital to where markets require it most by rewarding liquidity providers (LPs) who allocate their capital in each market most effectively. 

AMM+ will result in a better spread and greater liquidity in all our trading markets and gives LP’s more control over the decisions they can make to further enhance their APY.

 

CoinFLEX AMM+ Advantages over Uniswap

  • Leverage = Capital Efficiency. Both the AMM+ user and the trader on the other side can be leveraged
  • LPs are earning 0.03% FLEX rebates from each trade
  • Lower taker fees (0.04% vs 0.30%) result in more chances to trade against the AMM
  • Order books running on servers are 10,000x faster than Ethereum at matching trades
  • Derivatives (Perpetual Futures) volumes are vastly higher than spot DEX volumes
  • No risks of front running – MEV (miner extractable value)

 

Other AMM+ Advantages

AMM+ benefits the entire CoinFLEX ecosystem. AMM+ is a way for LPs and market makers to take greater control and earn more APY and also benefits everyday traders by increasing liquidity and reducing the spread and slippage in our markets and on your trades.

 

How AMM+ works

AMM+ works by giving LPs control over a set price range for where their capital will be deployed in any given market. This allows LPs and market makers to concentrate their funds in a set nominal range rather than covering the entire order book.

A good example of how this works is by looking at stablecoin pair market, i.e. USDT-USDC. In these relatively stable markets, prices rarely fluctuate outside the $0.99 and $1.01 price range, however, currently in most DeFi AMM platforms LPs who add capital into the USDT-USDC market have their capital covering a price range from 0 – infinity. 

In contrast, LPs can now farm greater rewards & APY by concentrating their funds in a specific, accurate, and active price range, such as the $0.99 – $1.01 range for USDT-USDC. Their capital is therefore able to represent more of the pool’s total capital in that range, relative to an LP whose capital is spread over a wider, or infinite, range. 

  • By concentrating your capital into a narrow, specific, and accurate range, LPs earn more by representing a higher share of the total pool and consequently get a higher share of the rewards. 
  • By selecting a narrow, accurate and highly active trading range (where the highest volumes are) LPs earn more through the increase in total transactions and consequently fees.

 

Example Guide

3 AMM  bots, same range $500-600, buy only (BCH trading $600)

Scenarios A – you put in $100 and select 10x exposure, the AMM system works out linear/spaced out bids down to 500, calculates what your (negative) p&l is down there from all the trades if executed and then adjusts the amounts so that you are max long adjusted for your p&l losses – so you can see that if you want to be limited to 10X leverage, you cannot be long $1000 worth at $500 per BCH as you have been losing money on existing longs along the way.

Scenario B – put in $100, same range but 2x, well you will end up with a position of much nearer $200 at $500 as you have used much less leverage and so lost less p&l on positions held along the way.

Scenario C – $100, no leverage. At the $500 you are long $90.90 worth of exposure, i.e. 0.1818 BCH or $100 worth of BCH. This is because your average price is $550 (the average of $500 and $600, your min and max) and BCH is now worth $500.

 


Tutorial

Setting up the AMM bot

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Step 1. Select either a leveraged or unleveraged position

If you are interested in using leverage, you will need to select one or a multiple of your assets to use as collateral at a later stage. If you are unleveraged, you will only need to choose the trading pair you want to engage with.

Step 2. Select direction

By selecting the direction, you are making a decision on what you think will be the most profitable strategy in the current market conditions. Direction refers to the strategy being used to provide liquidity:

Buy – Scalp with Long positions, ideal for upward trending markets and accumulating long positions.

Sell – Scalp with Short positions, ideal for downward trending markets and accumulating short positions.

Neutral – Scalp with both Long and Short positions, ideal for range-bound markets.

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Step 3. Choose the trading pair that you want to enter as a liquidity provider (LP)

Here you want to select pairs that are going to fit with the direction strategy you chose – ie a market that has stayed within a consistent range would be a good market to select for neutral positions. 

Step 4. For leveraged positions only*

Select the amount of leverage and pick the collateral you wish to use out of your available balances. 

Step 5. Enter the amount of liquidity/size of position you would like to create. The amount will represent the number of your chosen coins and the notional value represents the asset’s underlying value, i.e. for BCH-USD the amount would be the amount of BCH and notional value would be represented by USD.

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Step 6. Choose the price range

This is where you select the ‘range’ where your liquidity will be concentrated and that will determine the success of your position. 

A broad range will consistently get fees but will be less concentrated. 

A narrow range will get higher fees when the asset is trading within that price, but risks not making any fees when the price goes outside of the range. 

Step 7. Click ‘Begin Yield Farming’ and confirm all the details are as desired and begin earning yield immediately as an LP on AMM+

 

Managing & redeeming your position(s)

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You can monitor all you positions on the “Executing LP” Section. If you want to stop providing liquidity, see below steps:

Step 1. Click “Redeem” on the respective position.

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Step 2. Select the LP token you want to withdraw

Step 3. There are 2 ways to withdraw your LP token:

  1. Not closing any positions: A new sub-account will be automatically created for you with your existing position in AMM+. You can then decide whether to manually close the position in the trading platform or keep it.
  2. Physical delivery: If you are in a long position, choosing this option means you are delivering USD from your main account in exchange of the respective asset of your position (BCH in above example).

Final step, click “Redeem”!

 


FAQ

What is an AMM?

An automated market maker (AMM) is a type of decentralized exchange (DEX) protocol that allows digital assets to be traded in a permissionless and automatic way by using liquidity pools rather than a traditional market of buyers and sellers.

What is an LP?

A liquidity provider is essentially a market maker. It refers to the user who funds a liquidity pool with crypto assets she owns to facilitate trading on the platform and earn passive income on his/her deposit.

Why use the AMM+?

CoinFLEX’s AMM+ is a hybrid model of DeFi AMM + CeFi Orderbook trading and it’s the first futures/CeFi platform to stake assets and earn yield from futures. There are a number of advantages in AMM+ compared to other DeFi platforms such as higher capital efficiency with the use of leverage and users are earning 0.03% FLEX rebates from each trade.

How to make money using the AMM?

The parameters in AMM+ are highly customizable. There are three strategies: Buy, Sell and Neutral for users to choose on what they think will be the most profitable. AMM+ allows passive liquidity providers (LPs) to compete with professional traders, and offers users an opportunity to earn even higher returns than those found on traditional DeFi platforms.

Where can I see the status of my current profit?

Users can monitor their working orders and positions on the “Executing LP” section at the top of this page.

I need more help

For enquiries, please contact our customer service via live chat or ask in CoinFLEX official Telegram group: https://t.me/coinflex_EN

 

 

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