Automated market makers (AMM) are becoming more popular as innovation and development in decentralized markets continue to accelerate.
In the past two years, the demand for alternatives to centralized exchanges has been growing exponentially with the introduction of “Know Your Customer” (KYC) regulations and the implied interest shown by the “Securities and Exchange Commission” (SEC) on cryptocurrencies and crypto exchanges. In addition, as decentralized exchanges’ customers’ numbers continue to increase, more and more products and services are being introduced to cater diverse interests of new users.
Alfprotocol will utilize Solana’s blockchain to expand on decentralized liquidity provision and yield farming with previously unseen leverage ranging up to 20x.
The protocols will efficiently handle capital deployment between traders and investors to maximize liquidity provision (LP) for AlfMM (a decentralized exchange service) and AAlf (an overcollateralized borrowing service) for unleveraged liquidity while providing leveraged liquidity via external protocols which are handled by one of the protocols associated with Alfprotocol.
Alf Leverage 101
Solana’s Alfprotocol comprises several modules that will work together to provide users with a complete intermediary product that will facilitate liquidity provisions.
The treasury is one of the core modules that will handle collateral and the tracking of leveraged positions. It is the basis of all user interactions with the leverage protocol and will be responsible for any borrowed funds on behalf of users. The treasury module will not handle any position initiation or liquidation; the liquidation of unhealthy positions will therefore be the responsibility of the second module, which is the auction module that will get triggered by the treasury.
Another core set of modules are the protocol connectors that are responsible for initiating and modifying positions triggered by the treasury module; these modules are responsible for connecting the treasury with the users and with external liquidity pools so long as the positions remain in a healthy state and are not subject to a liquidation trigger. Alfprotocol will continue developing and expanding connector modules to other Solana platforms to incorporate more use cases that suit users’ requirements.
The final module is the lockbox module that will secure the collateral and track the value of positions. Lockboxes will be automatically created for leveraged users’ positions by initiating a wrapper on the deposited tokens to incorporate them into the Alfprotocol.
Alfprotocol is an extensive protocol with many underlying advantages and high leverage liquidity, providing solutions for decentralized markets traders and investors using the Solana blockchain.