Core items:
- Liquidity Book V2.1 offers a market-leading level of customization and flexibility, and Autopools provides a tool to automate the execution of liquidity strategies for Liquidity Book funds.
- The permissionless pool option will be rolled out soon, allowing anyone to open liquidity book pools with an out-of-the-box configuration.
- Limit Order feature is introduced in Liquidity Book Markets, which allows users to create trading instructions to buy or sell a token at specific prices.
Liquidity Book V2.1 and Autopools bring a market-leading level of customization and flexibility to DeFi yield farming, democratizing access to your power. This article will discuss the Liquidity Book V2.1 and Autopools features, as well as the upcoming Limit Orders feature and Audit Contest Program.
Liquidity Book has released V2.1 of its platform, built by Trader Joe specifically for DeFi yield farming. The platform offers a market-leading level of customization and flexibility, and V2.1 further democratizes access to the power of the liquidity book. The bespoke platform was built from the ground up for Liquidity Book’s innovative discretized liquidity architecture. V2.1 is expected to deliver a market-leading experience and mark the beginning of Trader Joe’s pioneering work to shape the future of AMMs and their role within DeFi ecosystems.
Autopools are an exciting addition to the Trader Joe platform, providing a tool for automated execution of liquidity strategies for liquidity book pools. These pools allow users who don’t want to actively manage their liquidity positions to use an autopool instead.
Early autopools will execute a basic market making strategy, concentrating liquidity around the active container when volatility is low and widening the spread when volatility is increasing. Inputs include twap and volatility, while outputs include position and shape size.
What makes autopools even more exciting is the use of off-chain scripts controlled by a “black box” to execute strategies. This allows for dynamic, real-time updates and a constant iteration process to improve performance and optimize market conditions.
Autogroups are in the final stages of testing and more information on release strategies and implementation details is expected soon. With Autopools, Trader Joe’s aims to offer a fully native Liquidity as a Service experience, created by a passionate team dedicated to driving innovation and sustainability in the AMM space.
One option available in the decentralized finance (DeFi) space is to escrow tokens in an autopool. In return, users receive a token receipt that can be used for various DeFi activities, including yield farming, collateral, and leverage. Known as the “V1” style of DeFi yield farming, this approach has gained popularity among many users. Its profitability is due in part to the reasonable liquidity architecture of the liquidity book.
Trader Joe, a DeFi participant, is currently working with various partners at Arbitrum, Avalanche and BNB to explore the integration of autopool token receipts for use in other DeFi applications.
Ledger funds incur fees that are shared with sJOE Stakers on a percentage basis. This fee sharing is specific to the chain, meaning that sJOE on Arbitrum will only share fees on that specific chain, while sJOE on Avalanche will only share fees on that specific chain. The sJOE fee is now active for all V2.1 liquidity pools currently rolling out on Avalanche. As more migrations and V2.1 group deployments take place, sJOE is expected to continue to expand.
The fee participation rate for each market group is given below:
- Stables: 0-5%
- Alternative stables / use: 10-25%
- Majors/Network Tokens: 10%
- Altitude: 15-20%
- Longtail: 25%
It is important to note that the final fee distribution is subject to change and the core team reserves the right to adjust the fee distribution to market levels once it becomes available to ensure optimization for all users.
Currently, Pools of Liquidity Books require approval. However, a permissionless groups feature is coming soon. This allows anyone to open Liquidity Book Pools with a pre-configured configuration set to 100 bps binning, which translates to a 0.8% base fee for trading. It is important to note that Permissionless pools can only be combined with whitelisted assets, including Avalanche (AVAX, USDC, BTC.by UTDT) and Arbitrum (ETH, USDC, USDT and BTC.b). New discretization configurations may be added in the future.
The permissionless group option is expected to go live in the coming weeks. However, governance is still the best way forward for projects that want a custom marketplace for their token. Governance suggestions may be posted on the Trader Joe Discord Forum.
Liquidity Book V2.1 has undergone a complete code overhaul, implementing several key optimizations. The updated version is expected to significantly improve user experience when conducting transactions or managing liquidity in the liquidity book by reducing average gas costs by 30-40%. This improvement is intended to further drive adoption of the protocol among users and partners looking to build on top of the AMM.
A notable optimization in V2.1 is that users can no longer claim the fees incurred. Instead, all fees are automatically collected and credited to the active container from which the fees originated. This improvement is only possible thanks to the fungible discretized container architecture on which Liquidity Book is based. Users can track all accrued charges per hour or per container using analytics built into the liquidity book group pages.
As a result of the full code review, all contracts for Liquidity Book V2.1 are brand new. Therefore, Liquidity Book Pools will be migrated in tranches from the current V2 to V2.1 to minimize platform disruption. The simple migration process involves withdrawing liquidity from the existing pool and then paying it back into a new liquidity pool.
The primary focus on migrating to V2.1 pools will start with smaller liquidity pools in Avalanche and gradually scale from there across chains. The migration process for all strings is expected to take several weeks. All liquidity pools with the “Migration” sign have an active V2.1 pool that can be migrated to. See the supplied manual for step-by-step instructions on how to do this.
There are plans to introduce a new feature in Liquidity Book Markets that will allow users to create trading instructions to buy or sell a token at specific prices. This will be a built-in feature and will act as a ‘maker’ style liquidity order. Users deposit tokens into a liquidity book pool with instructions to withdraw the liquidity once the desired price is reached.
This gives liquidity providers full control over their sourcing strategy and enables them to execute swaps at precise target prices without incurring any costs. In addition, liquidity providers earn their share of the fees charged by the pool when executing the limit order. The release date for the Limit Orders feature has not yet been announced.
Liquidity Book has announced that its partner Paladin Security has performed audits on Liquidity Book V2.1 and Autopools. In order to ensure the highest level of security for its protocols and code, Liquidity Book has decided to participate in an audit competition program with Immunefi in the near future.
The release of the Liquidity Book V2.1 platform brings exciting new features such as Autopools, Permissionless Pools and Limit Orders. These features aim to provide a fully native Liquidity as a Service experience created by a passionate team dedicated to driving innovation and sustainability in the AMM space.
In addition, the complete code overhaul reduces average gas costs by 30-40%, which is expected to improve the user experience when conducting transactions or managing liquidity. In addition, Liquidity Book has announced that its partner Paladin has performed security audits for Liquidity Book V2.1 and Autopools. The company has decided to participate in an audit competition program with Immunefi in the near future to ensure the highest level of security for its protocols and code.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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