🤝Integrated Liquidity Markets (ILMs)
Greater capital efficiency, continual rebalancing, and a seamless user experience.
Last updated
Greater capital efficiency, continual rebalancing, and a seamless user experience.
Last updated
Integrated Liquidity Markets (ILMs) are an innovative approach to make borrowing more capital efficient across DeFi. ILMs are automated growth strategies that leverage a user's collateral to execute a specific pre-determined strategy i.e. looping. Additional ILMs can be easily spun up and new ILM strategies and markets can be proposed through the Seamless governance process.
Currently there are 3 ILM strategies live on Seamless Protocol
wstETH/ETH 3x Loop: Magnifies staking rewards from Lido Finance without introducing added price exposure.
ETH/USDC 1.5x Long: Increases the price exposure to ETH vs USDC price movements by 1.5x
ETH/USDC 3x Long: Increases the price exposure to ETH vs USDC price movements by 3.0x
A key focus for ILMs is making it simple and seamless for users to get started, automating any borrow/swaps for looping assets. To illustrate, let’s take a look at one of the first ILM strategies, the 3x leveraged wstETH/ETH looping strategy. Here’s how it works:
A user deposits wstETH into the ILM and receives an LP Token signifying their position in the strategy.
ETH is borrowed from the supply side of the Seamless Protocol lending & borrowing markets.
This borrowed ETH is swapped into a concentrated liquidity pool for additional wstETH, achieving a 3x leveraged ratio.
wstETH staking fee rewards generated through this strategy are greater than the cost of borrowing ETH. This leads to the end user earning more staking rewards from this strategy vs simply holding wstETH
Since ILM participants receive an LP token signifying their position in the strategy, ILMs are effectively tokenized. Imagine the possibilities of how this can bring additional utility to ILMs moving forward. Collateral for lending? Swapping for other tokens? The list goes on, this is just the beginning.
