Solana-Based Alfprotocol Delivers Capital Efficiency

Alfprotocol is a Solana protocol for leveraged and unleveraged liquidity provision and capital allocation of yield farming. The protocol is an immutable-based Automated Market Maker (AMM) protocol and a money market application designed to offer short-term loans for trading activities. The most important contributions of the Solana ecosystem are to take advantage of the positions of liquidity providers in AMM pools and yield farming procedures.

Alfprotocol and its innovation: full use of bonding curves

The protocol will provide its users with AlfMM and AAlf, a decentralized exchange service and an over-collateralized borrowing service, respectively. On the other hand, leveraged liquidity is managed by one of the Alfprotocol modules that interfaces with external protocols such as Solaris, Jet Protocol and others to offer leveraged products up to 200x.

One of the latest breakthroughs in DeFi is the development of DEXs that can autonomously manage conversions between different crypto assets. Solana’s decentralized exchange protocols always include a liquidity pool (LP) of two or more assets linked to maintain a mathematical relationship with each other, as defined by a particular function or curve. Such functions include constant-sum and constant-product AMMs.

Dynamic curves and on-demand curves

Such actions have the potential to reduce the liquidity pool. In particular, market price changes can result in decreased liquidity for one or more assets and a decrease in the overall value of the LP. The concept of dynamic curves is introduced to build AlfMM using information from a market price oracle to manipulate the mathematical connection between assets and ensure that the pool price remains constant and the same as the market price. Using Solana Blockchain, Alfprotocol will implement arbitrary curves that use and efficiently allocate liquidity. This method allocates more liquidity to the current reference price and less to extreme price levels.

Alfprotocol increases capital efficiency and enables more liquid markets by connecting low-effort investors who provide liquidity and seek low risk to risky loan protocols. It allows capital to be connected with active management investors that focus on providing leveraged liquidity and yield farming positions. Alfprotocol is currently under development. To learn more about the project and stay up to date with the current progress of the project, please visit the website and check out the whitepaper review.

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