2.2.8 AMM+

Überblick

Earn smart yield on coinflex.com/amm

What is AMM+

Uniswap and other DeFi exchanges pioneered the concept of Automated Market Making (AMM) which enabled passive capital to enter the space of buying/selling assets and therefore earn from the price differences, fees earned and volatility of the markets.

CoinFLEX is taking this concept and applying it to the perpetual futures markets on our CeFi exchange orderbooks. Users can simply go to CoinFLEX.com, select the assets they wish to use, the range they wish to concentrate their liquidity on – and deploy their capital into an AMM strategy. The end result is a democratisation of market making, enabling a vastly wider user base and capital pool to earn from the volatility of the markets and the takers on the exchange.

With the power of this Orderbook + AMM hybrid model,  AMM+ works to efficiently allocate capital to where markets require it most by rewarding liquidity providers (LPs) who allocate their capital in each market most effectively. 

AMM+ will result in a better spread and greater liquidity in all our trading markets and gives LP’s more control over the decisions they can make to further enhance their APY.

 

CoinFLEX AMM+ Advantages over Uniswap

  • Leverage = Capital Efficiency. Both the AMM+ user and the trader on the other side can be leveraged
  • LPs are earning 0.03% FLEX rebates from each trade
  • Lower taker fees (0.04% vs 0.30%) result in more chances to trade against the AMM
  • Multiple collateral types, enabling you to earn yield on a wide range of assets (i.e use DOGE to trade ETH pairs)
  • Order books running on servers are 10,000x faster than Ethereum at matching trades
  • Derivatives (Perpetual Futures) volumes are vastly higher than spot DEX volumes
  • No risks of front running – MEV (miner extractable value)

 

Other AMM+ Advantages

AMM+ benefits the entire CoinFLEX ecosystem. AMM+ is a way for LPs and market makers to take greater control and earn more APY and also benefits everyday traders by increasing liquidity and reducing the spread and slippage in our markets and on your trades.

 

How AMM+ works

AMM+ works by giving LPs control over a set price range for where their capital will be deployed in any given market. This allows LPs and market makers to concentrate their funds in a set nominal range rather than covering the entire order book.

A good example of how this works is by looking at stablecoin pair market, i.e. USDT-USDC. In these relatively stable markets, prices rarely fluctuate outside the $0.99 and $1.01 price range, however, currently in most DeFi AMM platforms LPs who add capital into the USDT-USDC market have their capital covering a price range from 0 – infinity. 

In contrast, LPs can now farm greater rewards & APY by concentrating their funds in a specific, accurate, and active price range, such as the $0.99 – $1.01 range for USDT-USDC. Their capital is therefore able to represent more of the pool’s total capital in that range, relative to an LP whose capital is spread over a wider, or infinite, range. 

  • By concentrating your capital into a narrow, specific, and accurate range, LPs earn more by representing a higher share of the total pool and consequently get a higher share of the rewards. 
  • By selecting a narrow, accurate and highly active trading range (where the highest volumes are) LPs earn more through the increase in total transactions and consequently fees.

 

Example Guide

3 AMM  bots, same range $500-600, buy only (BCH trading $600)

Scenarios A – you put in $100 and select 10x exposure, the AMM system works out linear/spaced out bids down to 500, calculates what your (negative) p&l is down there from all the trades if executed and then adjusts the amounts so that you are max long adjusted for your p&l losses – so you can see that if you want to be limited to 10X leverage, you cannot be long $1000 worth at $500 per BCH as you have been losing money on existing longs along the way.

Scenario B – put in $100, same range but 2x, well you will end up with a position of much nearer $200 at $500 as you have used much less leverage and so lost less p&l on positions held along the way.

Scenario C – $100, no leverage. At the $500 you are long $90.90 worth of exposure, i.e. 0.1818 BCH or $100 worth of BCH. This is because your average price is $550 (the average of $500 and $600, your min and max) and BCH is now worth $500.


Tutorials

 

Setting up an AMM+ Position:

 

Step 1. Enter the AMM+ page

To begin using AMM+, click the AMM+ tab on the dashboard of the main home page. 

 

Step 2. Setting up your AMM+ 

Select unleveraged or leveraged.

If you are creating an unleveraged position, you can skip directly to step 3.

If you are creating a leveraged position, select the amount of leverage between 1x to 10x and pick a collateral to use from your available balances. For example, if you are choosing the BTC/USD trading pair, you can use any other collateral such as BCH or ETH. 

Be aware that a leveraged position will put you at risk of liquidation if the prices move opposite to your chosen direction. 

 

 

Step 3. Select the direction: Buy, Sell, Neutral

 

When selecting the direction, it’s important to remember the ultimate goal is to stay in range because this is when you are earning trading fees and your AMMs are scalping (working for you). By selecting the direction, you are making a decision on where you think the market price is heading – and based on that what your AMM+ will do in best/worst case scenarios.


Buy

For Buy positions, best case scenario is to be in-range, earn some yield, and then ultimately exit when prices are near/above your range so you won’t exit at a loss or further positional exposure. Worst case scenario: as prices get closer or through the bottom of your range, you are accumulating a long position – which you are not opposed to, as your view is generally bullish and you’re willing to patiently wait for a rebound.

 

Sell

For Sell positions, best case scenario is to be in-range, earn some yield, and then ultimately exit when prices are below your range so you won’t exit at a loss or further positional exposure. Worst case scenario: as prices get closer or through the top of your range, you are accumulating a short position – which you are not opposed to, as your view is generally bearish.

 

Neutral

Best case scenario is to be in-range, earn some yield, and then exit Neutral positions close to your midpoint to minimise losses and positional exposure as much as possible.

 

 

Step 4. Select the trading pair 

Select which asset you want for your AMM+ position. CoinFLEX has a wide range of options to choose from!

AMM+ users can view the transparency page to see which coins have the highest 24 hour average or 7 day average APR. The rates are subject to change and are an average across all users. Depending on your range and leverage you may get a different APR than the 24 hour or 7 day average APR

To find more information on AMM+’s current statistic, you can visit the transparency page.

 

Step 5. Input Amount

Enter the amount of capital you’d like to allocate to your AMM+ position. You will need to input a minimum of 200USD worth of crypto assets as collateral.

For unleveraged neutral positions you will need to have a minimum of 200 USD worth of crypto for both assets in the trading pair as collateral.

 

Step 6. Choose the price range

This is where you select the range where your liquidity will be concentrated. The tightness of the range will determine the size of your returns. 

A broad range will consistently earn fees but will be less concentrated. This has lower risk, but you are more likely to stay within the range and earn trading fees.

A narrow range will result in higher fees when the asset is trading within that price range, but you risk not making any fees if the price goes outside of your range. 

Please remember, if you are leveraged and the price of your assets moves outside your range, you may be liquidated.

 

Step 7. Begin using AMM+

Before proceeding, confirm all the information you have selected on the AMM+ page is correct. After confirming this, click “Begin AMM+” to start earning yield on AMM+!


Managing Your Position 

Once you have set up an AMM+ position, and clicked “Begin AMM+” at the bottom of the “set up AMM+” tab on the AMM+ page, you can manage your open position by switching to the AMM Positions tab. To manage your open positions, use the following steps:

 

Step 1: Review the details of your position

The “open” tab is the default tab, which you can use to manage and review your open positions.

Each AMM+ position will have its own information card, including information such as the title of the AMM+ position, the date of entry, leverage, trading pair, and more.

You can click the balance breakdown button below your APR to review information such as total account balance, initial balance, current balance, and more. 

You can click the more details button to view all the information on the trade history of your specific AMM+ position, your borrow and liquidation history, interest payment history, and more.

If you want to add or withdraw collateral, proceed to step two.

 

Step 2: Add or withdraw collateral 

To add collateral or withdraw collateral, click the add collateral button to the left of the redemption button. This will open a pop up box, which will allow you to proceed.

 

Step 3: Input information

Select whether you want to add or withdraw crypto, the crypto asset you want to select, and the amount from your available balance. 

 

Step 4: Click confirm

 

Redeeming Your Position

Once you have set up your AMM+ position, by clicking “Begin AMM+” at the bottom of the “set up AMM+” tab in the AMM+ page, you can redeem your open positions by switching to the AMM+ Positions tab. If you want to learn how to redeem your open positions, use the following steps:

 

Step 1: Identify your AMM+ position

The “open” tab is the default tab, which you can use to redeem your open positions. You can identify your different AMM+ positions with the ID in the top right corner. 

 

Step 2: Click the redemption button

At the bottom of the box of the specific AMM+ position you want to close, click the redemption button.

 

Step 3: Choose your redemption method. 

To receive the base currency of your trading pair, for example to receive BCH in the BCH/USD trading pair, choose “physical delivery” in the redemption method drop down menu.

The information will show the current Balance and a link to the “add collateral” pop up box to show your estimated redemption balance.

To deliver your position to a sub account, click “sub-account delivery” in the redemption method drop down menu. 

The information will show the current balance, position, and borrow USD Position.

 

Step 4: Redeem.

Once you have chosen your redemption method, click redeem. 

 

Step 5: Review your closed position.

Click the ‘closed’ tab on the AMM+ positions page and review the information.

Step 6 step: Check your wallet.

Ensure your crypto assets have been delivered to your wallet. If you have delivered to a sub account, click the sub-account button under the account dropdown menu next to “Wallet & Order.”

You may have existing open positions on the exchange, so make sure you go to the exchange to close any open positions. 

If you have chosen “physical delivery”, click the “balance” button in the “Wallet & Order” dropdown menu and check that your crypto assets have been credited. 

 


FAQ

What is an AMM?

An automated market maker (AMM) is a type of decentralized exchange (DEX) protocol that allows digital assets to be traded in a permissionless and automatic way by using liquidity pools rather than a traditional market of buyers and sellers.

What is an LP?

A liquidity provider is essentially a market maker. It refers to the user who funds a liquidity pool with crypto assets she owns to facilitate trading on the platform and earn passive income on his/her deposit.

Why use the AMM+?

CoinFLEX’s AMM+ is a hybrid model of DeFi AMM + CeFi Orderbook trading and it’s the first futures/CeFi platform to stake assets and earn yield from futures. There are a number of advantages in AMM+ compared to other DeFi platforms such as higher capital efficiency with the use of leverage and users are earning 0.03% FLEX rebates from each trade.

How to make money using the AMM?

The parameters in AMM+ are highly customizable. There are three strategies: Buy, Sell and Neutral for users to choose on what they think will be the most profitable. AMM+ allows passive liquidity providers (LPs) to compete with professional traders, and offers users an opportunity to earn even higher returns than those found on traditional DeFi platforms.

Where can I see the status of my current profit?

Users can monitor their working orders and positions on the “AMM Positions” section at the top of this page.

I’d like to read more about AMM+

How to Crush AMM+: Where to Set Price Ranges

A Brief Introduction to AMM+ and the Importance of Liquidity

How CoinFLEX’s AMM+ Solves All the Issues of Other AMMs

Trading Options Using LP Tokens on CoinFLEX’s AMM+ Product

I need more help

For enquiries, please contact our customer service via live chat or ask in CoinFLEX official Telegram group: https://t.me/coinflex_EN

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