Automated Liquidity Management (ALM) Protocols

What is an ALM Protocol?

Automated Liquidity Management (ALM) protocols are designed to optimize liquidity management by automatically adjusting positions within concentrated liquidity pools. Their primary goal is to maximize returns and efficiency in these pools.

In the early days of DeFi, pre-CLAMM Automated Market Makers (AMMs) made it easy for users to provide liquidity with passive options. These initial AMMs allowed users to engage in straightforward LP strategies. However, due to the lack of capital efficiency in early AMMs, the field evolved. AMMs became more flexible, shifting liquidity provision from passive to more complex, active strategies. In the latest AMM, users must now set ranges and adjust their positions to stay within the range in order to collect the fees distributed to liquidity providers. These advancements improved pricing and execution efficiency but reduced opportunities for passive LPs.

To bridge this gap, Automated Liquidity Management (ALM) protocols were developed. ALM protocols offer a middle ground between passive LP experiences and the active strategies now prevalent in the market. These protocols implement active strategies on behalf of users, providing better risk-adjusted returns than passive LPs while maintaining user convenience. Users only need to deposit their funds once, without the need to recalibrate their positions, as the ALM handles all adjustments.

All Automated Liquidity Management (ALMs) protocols supported by the Merkl engine can be found here.

ALM Integration

If you are interested in integrating your ALM with Merkl, please reach out to us on the Merkl Discord by opening a BD ticket to discuss the integration process and by filling out this form.