Overview

This document proposes a simple, Ethereum-centric application that enables Ethereum users to hedge their LP (liquidity provider) positions on CPMMs or AMMs such as Uniswap or Curve to avoid IL (impermanent loss) and maximize LP yields. Through a simple front-end, users can bridge stable assets such as USDT and hedge their qualifying LP positions on corresponding perpetual markets on Injective. The process of hedging is fully automated with a smart contract approach.

Leveraging Injective’s infrastructure, a highly intuitive Ethereum-user facing application can be implemented with Injective interactions completely abstracted from the front-end. The application will suggest optimal amount of stable assets to hedge their existing qualifying LP positions, guide users through the bridging and Injective gas-free transactions through EIP712 signing, and begin helping users hedge their LP positions against IL (Impermanent Loss) in 1-click.

Refer to Logarithm for inspiration which is a project currently developing a similar product.

Hackathon MVP

• Implement a Cosmwasm smart contract that ingests hedging parameters upon user subscription and executes with user deposited funds when trigger conditions are met. The user should provide permissions to the smart contract through authz, this will negate the need for the contract to hold any funds.
• On the front-end, implement a web application that queries user’s existing Ethereum LP position balance and derive the optimal hedging parameters to suggest to the user. Additionally, leverage Injective SDKs to guide users through the bridging and transaction signing process utilizing Ethereum native wallets for hedging and withdrawal. Applicants will receive bonus points if Injective is completely abstracted from the user experience.

Resources

Protocol docs

Typescript SDK & docs

Mentor

Bojan Angjelkoski, Technical Lead

Discord Username: bangjelkoski