Ammalgam: Recomposing DeFi to Produce Higher Yield With Less Risk

This guest post is by Will Fey, the founder of Ammalgam and Tim McCloud, Head of Marketing at Ammalgam

Imagine a Decentralized Exchange (DEX) as peanut butter and a Lending Protocol as jelly. Ammalgam, a new protocol, has combined the two to create the “peanut butter and jelly sandwich” of DeFi. By integrating lending yields into an AMM, it addresses the current DEX inefficiencies. 

Sounds delicious. 

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Crunchy vs Smooth? 

Market making on-chain has become as complicated and competitive as high-frequency trading, leaving many DeFI users behind. Looking at the charts below, can you guess which of the two charts below is Uniswap V2 and which is V3?

V2 is on the top and V3 is on the bottom and at times, TVL on V2 matched TVL on V3! 

The continued popularity of V2 is intriguing, especially since V3 also supports V2 positions. So, why is this? V2’s appeal lies in its simplicity. There’s no need to worry about staying within certain ranges or keeping up with the latest research on loss versus rebalancing. With V3, while concentrated liquidity can increase fees, it also raises the risk of impermanent loss. 

Ammalgam builds upon the simplicity of V2 and introduces additional yields through lending fees.

The Gestalt of the Peanut Butter and Jelly Sandwich

Adding lending to a DEX does more than taste great. On Ammalgam, users can now borrow against the market-making liquidity to hedge one side of the market, or leverage the position to allow for concentrated returns. 

Ammalgam allows for the permissionless creation of liquidity pools of two assets that can be swapped, deposited, and borrowed. The range of what users can do with these features is endless, so we picked a few recipes to highlight:

• Limitless leveraged shorts and longs

• Long and short straddles

• Call and put like payouts

• Vanilla Uniswap V2 market making

• Leveraged market making like concentrated liquidity

PB&J Your Way

Our intuitive dApp user interface can be catered to the user experience level and need.  

Advanced users can access the entire range of features including the customized recipes referenced earlier. 

While in audits, we invite you to play with our testnet deployment on Sepolia using the invite code “PBANDJ”. 

• Follow Will Fey/Tim McCloud and Ammalgam for all their updates!