Stablecoin Liquidity Provisioning Bot
My entry for the Cross-Chain Summer Hackathon, run by Chainflip with THORChain and Maya Protocol from June 22 to August 1, 2024. It won first place in the Chainflip General Track.
Providing stablecoin liquidity is about the safest yield there is: you trade a dollar for a dollar, so there is no impermanent loss. On Chainflip it wasn’t retail friendly, though. To get good yield you need limit orders, because range orders have a lower priority, and keeping limit orders competitive means babysitting the LP dashboard. Less liquidity also means fewer swaps, which means less yield for everyone.
The bot does the babysitting. It runs in Docker next to a Chainflip LP account, and keeps the account’s stablecoin balance working as competitive limit orders, so it earns yield while you sleep. Over 25 days in the USDT/USDC pool it made an APY of 11%. The idea is a flywheel: more liquidity means better prices for swappers, which brings more swaps to Chainflip, which means more yield for liquidity providers, which attracts more liquidity.
During the same hackathon I gave the opening workshop, How to Build with BaaS, on building with Broker as a Service.
- Submission slides (PDF, 12 slides)
Technologies: Chainflip LP API, limit orders, Docker, stablecoin market making.
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