Guide for PMMs

This page describes core benefits of Liquorice for Private Market Makers

Unified Access to DeFi Order Flow

By doing a single integration with Liquorice, a PMM gains access to core intent-based trading systems, including CoW Swap, Uniswap X, 1inch Fusion, and Bebop. All quotes are passed to the PMM in a unified API format, and a single set of smart contracts is used to inform PMMs of settled trades.

Intent-Based Lending Pools

PMMs may utilize lending capital when settling trades while supplying only a small portion of the trade notional into locked collateral.

When supplying a signed quote, PMMs may specify the details of borrowing off-chain. This is done by simply configuring six numeric parameters:

1. Tokens to be received directly into the PMM's wallet.

2. Tokens to be transferred from the trader to locked collateral.

3. Tokens to be transferred from the trader to the lending pool repaying any outstanding debt in the process.

4. Tokens to be paid to the trader from the PMM address directly.

5. Tokens to be borrowed from the lending pool to pay the trader.

6. Tokens to be transferred from the PMM address to the locked collateral to facilitate borrowing.

Liquorice smart contracts validate these parameters and carry out lending and token transfers appropriately in a single transaction, eliminating the need for the PMMs to write their own logic for complex interactions.

For example, this enables a PMM to facilitate a trade for 10,000 USDC against 4 ETH by supplying only $2,000 worth of collateral without the need to write complex and gas expensive logic involving flash loans.

Liquorice lending pools support partial fills

PMM's quotes that leverage lending pools can be partially filled natively. This capability is crucial when competing for intent order flow, as solvers often incorporate only a portion of the available volume into their solutions.

Rebalancing of locked collateral

As Liquorice handles settlement and landing in one transaction, it adds a lot of flexibility in capital management. PMM's capital will never sit idle, even when it is locked as collateral to facilitate borrowing. Liquorice design allows a PMM to facilitate any trade which rebalances collateral without violating collateralization in a single transaction.

Borrowing Fees Linked to Funding Rate

All borrowing fees on stablecoins are linked to funding rate dynamics. This provides a clear PnL dynamic for PMMs who hedge their risks via perpetual futures supporting trading startegies in the long term.

Analytical module

Liquorice provides connected market makers with various data to help them operate more efficiently in the intents market. For example, we collect and analyze data that compares quotes supplied by PMMs with the on-chain settlement data of winning quotes.