AMMs Strategies

These types of strategies generate returns by providing liquidity (StableCoins) to decentralized Exchanges.

When users use these Exchanges to make swaps, they will pay a small commission for their use, which will mostly be distributed to liquidity providers as a reward for the liquidity provided. In addition, most of the Protocols have liquidity mining programs to incentive liquidity providers.

These strategies have the same level of Risk as the Low Risk ones (Single Lending), but a less predictable APY and exposure to a larger number of currencies (USDC, UST, USDT, MIM, MAI, etc).

The figure below displays the architecture of a Standard AMM strategy.

Furthermore, depending on the protocol and rewards, there could be more variants to this "Standard" Strategy:

  • Stake some of the profits in the AMM in order to boost the APY.

  • Swap half of the rewards and build a Liquidity Pair and provide Liquidity to other pool.

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