Rehypothecation

Liquidity providing positions will never have their full range be utilized. Automatic rebalancing is one approach to deal with this problem. It concentrates a position and shifts it around according to an oracle. This is a very reasonable approach! However it's a lot of work and experiences more IL.

Our approach is with rehypothecation, where any liquidity not used by a swap can be used for other yield purposes. This way all liquidity is "active". The tokens are often deposited into safe vaults for a passive yield. But the unique part of an AMM is IL, and IL underwriting is super valuable. Our type of rehypothecation allows "Takers" to make a bet. That they can sell IL from parts of the liquidity curve for more than what it would earn in swap fees. The tokens never leave the contract so the funds are always safe. The Takers just go out and do things like sell options, perps, and structured products to earn bonus yield. More than the base AMM's swap yield is guaranteed to be passed back to the deposits.