Umami Finance 2Xs Arbitrum TCR liquidity with new Uni v3 LPs
Hi there Umami community!
I’m delighted to share with you that Umami has expanded its Uniswap v3 platform to include concentrated liquidity for TracerDAO’s TCR Token. The new TCR LPs provide liquidity for TCR in ETH, USDC & UMAMI and approximately double the available TCR trading liquidity on Arbitrum!
The new TCR LPs are part of Umami’s broader strategy of using actively-managed Uni v3 LPs to deepen Arbitrum trading liquidity, generate fee revenue for UMAMI holders and support Umami’s partner projects, including Tracer DAO.
Read about Umami’s other ongoing partnerships with Tracer DAO here.
Uniswap v3 is the most advanced AMM available on Arbitrum. Its benefits include:
- Allow liquidity providers to craft customizable, price-bound positions that execute buy/sell orders along a smooth curve and generate trading fees.
- Place zero slippage, fee earning, buy/sell limit orders using Kromatika Finance’s automated trade processing app.
- Attract price-arbitrage between exchanges, which enhances trading volume & fees.
- Reduce slippage and increase price stability by concentrating liquidity by as much as 4000x vs. traditional AMMs.
- Customize trading fee percentages.
- Reduce downside risk for liquidity investors by strategically increasing the percentage of exposure to preferred assets.
Umami’s Uniswap position compliments Tracer’s existing high-TCR weighted Balancer pool and enhances Umami’s ability to manage its TCR LPs. The benefits include:
- Balancer will continue to be the main source of supply for market buys due to the fact Umami has a limited supply of TCR from earnings. (This offers large liquidity opportunities for TCR weighted liquidity providers on Uniswap)
- Umami’s Uniswap liquidity will make up for the relatively low ETH supply-side liquidity on Balancer. With over $60,000 of ETH support in concentrated Uni v3 liquidity, we believe that these LPs will play an important role in supporting TCR’s trading price.
- Tracer DAO’s community can now choose between two options for supporting TCR liquidity: a simple balancer pool or customizable Uni v3 LP positions.
- Umami’s position offers a doubling of the Arbitrum TCR liquidity support in a very capital efficient way.
Managing Liquidity With Kromatika
Umami’s innovative strategy employs Kromitka.Finance’s liquidity pool limit orders to maximize capital efficiency.
Using Kromatika, Umami can create fee-earning liquidity positions that are closed via ChainLink Oracles when target price is met. This means Umami is able to provide liquidity for the TCR token and raise funds for its ETH rewards to UMAMI Marinators and depositors in its upcoming delta-neutral USDC vault. This strategy allows Umami to have a net positive impact on the TCR price stability compared to market selling.
A New UMAMI/TCR LP
Pairing UMAMI & TCR allows for Umami to provide additional price support for TCR & maximize fees for its treasury through autorouting & trading arbitrages.
The mechanics of autorouting TCR trades for ETH via the UMAMI/TCR LP are as follows:
- TCR → ETH swap auto-routed by Uniswap due to TCR price arbitrage in UM/TCR LP
- TCR swapped for UMAMI in the LP
- UMAMI is sold for ETH
- ETH is distributed for the swap
Umami’s strategy allows it to accumulate TCR for its treasury at a highly compelling price by absorbing market sell pressure. It also generates significant fee-revenue from otherwise low-yielding treasury assets, further improving Umami’s capital efficiency. Umami plans to allocate ~1% of UMAMI supply to its UMAMI/TCR LP.
And of course, the TCR/UMAMI LP will also incentivize the Tracer DAO community to become UMAMI Marinatoooors with juicy ETH rewards & Umamies to ape into Tracer’s exciting Perpetual Pools (v2 coming soon!) 😋
Umami Finance has even more exciting plans in the works to support its partner projects & become the foundational provider of liquidity on Arbitrum!