Fundamental Liquidity
Make Retail LPs finally profitable by access to fundamental and sustainable LP strategies that make use of proven market making technics
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About
The problem it solves LPs lack profitability despite numerous automation tools. Hence, Token projects often list on CEXs, because DEXs lack liquidity. Most significant LP losses occur at market inflection points: Entering positions at inflated token valuations, Withdrawing during market corrections, Fee income fails to offset impermanent loss Problem: Current tools focus on automation & rebalancing but lack fundamental valuation frameworks && proven market making strategies! Solution: Incentivize professional Strategy Creators to create: Fundamental hi/lo price targets for projects with sound tokenomics, Long-term sustainable strategies avoiding too frequent rebalancing, including Custom v4 hooks with proven market making technics aligned with the chosen strategy to improve profitability. Retail LPs then can easily choose && deploy profitable off the shelf professional LP strategies. Help to grow sustainable DEX liquidity with long-term oriented positions that result in a better DEX price discovery. Abstracting the complexity of this strategy away via a simple UI will further help to drive new users into DeFi, which cannot or do not want to work through the still complex DeFi landscape to be profitable in the long-term. The project architecture and development process ### **Project Architecture & Development Process Summary** ## **Overview** The **Fundamental LP** project integrates **TradFi valuation frameworks** into **DeFi market-making** to improve **Uniswap LP profitability**. Current tools focus on **automation & rebalancing** but lack **fundamental valuation** and **proven strategies**. This project enables **long-term LP strategies** to enhance **DEX liquidity** and **price discovery**. ## **Core Functionality** - **Strategy Creators:** - Develop **fundamental hi/lo price targets** for tokens. - Implement **long-term LP strategies** with **custom Uniswap v4 hooks**. - **Retail LPs:** - **Easily select & deploy** professional LP strategies. - Help **grow sustainable DEX liquidity** and **improve price discovery**. - **Incentivize creators** via **performance fees**. ## **Key Implementation Details** ### **PriceImpact Hook (Sepolia Testnet)** A **dynamic fee hook** to **protect LPs from harmful price impact**. - **Address:** `0x5b62378779eDcf9e905450Ef8769fdcf7b2CA080` - **Mechanism:** - Estimates **price impact** before each swap. - Adjusts fees dynamically: - **Higher fees** for arbitrage trades. - **Lower fees** for retail trades. - **GitHub:** [PriceImpact Hook](https://github.com/fm0909/priceImpactHook) ## **Key Next Steps** - **Apply for Uniswap Hook Incubator** to expand development. - **Develop additional market-making hooks**, including: - **Dynamic fee-setting** based on volatility & order flow. - **Mean-reversion strategies** for fundamentally valued pairs. - **Dynamic range adjustments** using on-chain data. - **Gather early Strategy Creators** and deploy a **user-friendly UI**. ## **Conclusion** The **Fundamental LP** project merges **fundamental valuation models** with **smart contract automation**, creating **profitable, sustainable liquidity provision** for DeFi. Product Integrations Uniswap-v4-template to develop hooks Initial tests with Scaffold-ETH 2 for user interface, but not far advanced Figma for Architecture design Key differentiators and uniqueness of the project The focus on fundamental principles and proven technics and making them available to users instead of just another automation tood. Trade-offs and shortcuts while building Trade-off is that you will need proper incentives for creators and skin in the game. Further, it will be requried to anstract the complexity away from the end user. Additional Features Was build after I completed campBUIDL