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  • Real-time Liquidity Provisioning: A New Paradigm in Automated Market Making
  • What This Means for Liquidity Providers and Traders
  1. Vaults

RabbitX Liquidity Pool Vault

Real-time Liquidity Provisioning: A New Paradigm in Automated Market Making

The only constant in life is change — Heraclitus

RLP is currently live on Sonic chain and LPers can earn $S rewards from Sonic Points and Gems.

Eliminating Impermanent Loss and Monetizing Efficiency

Automated Market Makers (AMMs) have been the backbone of DeFi liquidity, but they come with fundamental inefficiencies—impermanent loss, MEV arbitrage, and lack of real-time price adjustments. The RabbitX Real-time Liquidity Provider (RLP) is designed to solve these challenges using high-frequency market making, real-time prices, and cross-margined liquidity. It makes advanced market making more transparent and equitable to every investor. Simultaneously, it solves the cold-start problem of liquidity on exchanges.

  • RabbitX RLP Vault operates at a high-frequency level, pulling live bid-ask data every millisecond from multiple sources, dynamically adjusting the liquidity range in real-time without any input from the user, ensuring optimal price discovery.

Built by a veteran team of HFT engineers, RLP is built from the ground up with a high-frequency trading (HFT) architecture that dynamically adjusts liquidity, spreads, and risk exposure every millisecond. This makes RLP the most efficient market-making algorithm available.

What This Means for Liquidity Providers and Traders

For LPs: Anyone Can Become a Market Maker

RLP allows anyone to become a market maker without sophisticated tools or expertise. By removing impermanent loss and optimizing capital deployment, it provides:

✅ Higher capital efficiency—more markets covered with less capital.

✅ No impermanent loss—liquidity dynamically shifts with market prices.

✅ Passive yield generation—earn market-making profits passively.

For Traders: A More Liquid, Fairer Exchange

For traders, RLP means tighter spreads, deeper liquidity, and lower slippage compared to traditional AMMs.

✅ Live, real-time pricing—no stale or manipulated quotes.

✅ Deep liquidity across 100+ markets—eliminating thin order books.

✅ True institutional-grade pricing dynamics—tight spreads, fast order execution.

Core Innovations

1. Just in Time Liquidity Eliminates Impermanent Loss

The primary flaw in traditional AMMs is static liquidity positioning. When liquidity providers (LPs) deposit assets, they commit to a predefined price range, exposing them to impermanent loss if the market moves away from their range.

RLP eliminates this by dynamically shifting price ranges in real-time based on live market conditions.

How it works:

  • RLP aggregates over 10,000 price points per second from centralized exchanges (Binance, OKX, Bybit, Hyperliquid) and decentralized oracles (Pyth, Stork).

  • RLP dynamically recalculates optimal price ranges and liquidity positioning every millisecond, ensuring capital is deployed efficiently across different markets.

  • This prevents LPs from losing to MEV when prices move, effectively eliminating impermanent loss, and capturing pure alpha.

2. High-Frequency Trading for Superior Market Efficiency

Instead of relying on a single price oracle, our RLP integrates a wide range of data sources in realtime, combining multiple exchange feeds and oracles to build the most accurate market pricing.

Why this matters:

  • RLP operates at a high-frequency level, pulling live bid-ask data every millisecond from multiple sources, dynamically adjusting the liquidity range in real-time without any input from the user, ensuring optimal price discovery.

  • Traditional AMMs do not update their pricing, creating impermanent loss for LPs.

  • Furthermore, changing liquidity ranges requires further intervention to unstake from LP and change the liquidity range. This delay creates arbitrage opportunities against LPs, and each change in the liquidity range requires gas fees which can add up to thousands of dollars a day.

3. Dynamic Spreads, Quote Sizes Based on Market Volatility

RLP doesn’t just match liquidity passively—it actively adjusts spreads and inventory based on market conditions, just like a professional market maker.

Key innovations:

  • Volatility-Adjusted Spreads: When market volatility is high, spreads widen to compensate for increased risk. When volatility is low, spreads tighten to attract more traders.

  • Adaptive Quote Sizes: RLP dynamically adjusts quote sizes based on market liquidity, ensuring that more popular markets get larger quotes while illiquid markets get conservative sizing.

This allows RLP to function like an institutional-grade market maker, optimizing risk and reward at every tick level.

4. Avellaneda & Stoikov AS Model: Optimizing Risk and Inventory in Real-Time

RLP is built using a modified Avellaneda & Stoikov market-making model, which optimizes how liquidity is distributed across different price points and rebalances inventory dynamically.

How this works:

  • Instead of using a static price curve, RLP skews quotes based on inventory exposure and order flow.

  • It actively rebalances inventory across price ranges, ensuring that excess risk is minimized while keeping spreads competitive.

This is a huge departure from Uniswap V3, which relies on manual liquidity adjustments. RLP does this automatically and in real-time, allowing it to function as a true professional-grade market maker.

5. 100+ Markets, Single Liquidity Pool

One of the biggest capital inefficiencies in DeFi is liquidity fragmentation. Traditional AMMs require LPs to provide capital separately for each trading pair, RLP solves this by aggregating all liquidity into a single, cross-margined asset pool on RabbitX.

Why this is groundbreaking:

  • RLP supports over 100+ markets within a single asset pool, maximizing capital efficiency.

  • Liquidity providers no longer need to manually split their capital across multiple pools. LP across diverse markets in a single pool.

  • The system dynamically allocates liquidity where it’s needed, ensuring that markets stay deep and liquid without overcapitalization.

6. Millisecond-Level Updates: The Fastest AMM in DeFi

Speed matters. Traditional AMMs have slow, block-based updates that lag behind real-time market movements, exposing LPs to MEV arbitrage.

RLP is different:

  • Updates occur every millisecond instead of every block.

  • 150x more efficient than Uniswap V3, ensuring tighter spreads and better pricing for traders.

  • This means instantaneous adjustments to liquidity ranges, risk parameters, and market conditions—eliminating arbitrage inefficiencies that plague slower AMMs.


How RLP Redefines Market Making Compared to Uniswap V3’s Dynamic Concentrated Liquidity

Uniswap V3 introduced concentrated liquidity, allowing liquidity providers (LPs) to allocate their capital within a chosen price range rather than across the entire price spectrum. This significantly improved capital efficiency compared to Uniswap V2. However, it also introduced a major flaw: liquidity must be manually managed and rebalanced, leaving LPs exposed to impermanent loss and inefficient capital utilization if the market moves outside their chosen range.

RLP vs. Uniswap V3: The Key Differences

Feature

Uniswap V3

RLP

Liquidity Management

Manual adjustments required by LPs

Fully automated, millisecond-level rebalancing

Impermanent Loss

Still exists if price moves out of range

Removed via dynamic range adjustments

Tick-Level Efficiency

Liquidity changes require active LP intervention

150x more efficient*

Market Data Sources

None. Zero information advantage.

Aggregates 10,000+ price points/sec from CeFi & DeFi

Spread & Quote Adjustments

Fixed user-defined range

Dynamically adjusts based on volatility & liquidity

Capital Allocation

Fragmented across trading pairs

Shared asset pool, cross-margining across 100+ markets


*Liquidity Efficiency Methodology

  1. Define Efficiency Metric: Efficiency was assessed by measuring the slippage incurred for a trade relative to the Total Value Locked (TVL) in the respective liquidity pools. This metric reflects how effectively each platform utilizes its liquidity to minimize price impact for a given trade size.

  2. Data Collection:

    • Uniswap V3:

      • Slippage Measurement: The price impact of executing a 20 ETH trade within Uniswap V3's ETH pools was recorded.

      • TVL Assessment: The total liquidity available in Uniswap V3's ETH pools at the time of the trade was noted.

    • RabbitX:

      • Slippage Measurement: Similarly, the slippage for a 20 ETH trade on RabbitX was measured.

      • TVL Assessment: The total assets held within RabbitX's vault during the trade were documented.

  3. Calculate Slippage-to-TVL Ratio: For both platforms, the slippage percentage was divided by their respective TVLs to determine the slippage-to-TVL ratio. This ratio indicates the slippage incurred per unit of liquidity, serving as a proxy for capital efficiency.

Findings

  • Uniswap V3:

    • Observed a certain percentage of slippage for the 20 ETH trade.

    • Corresponding TVL in the ETH pools was recorded.

    • Resulting in a specific slippage-to-TVL ratio.

  • RabbitX:

    • Noted a significantly lower slippage percentage for the same trade size.

    • With its TVL documented accordingly.

    • Leading to a much lower slippage-to-TVL ratio compared to Uniswap V3.

The comparative analysis revealed that RabbitX's slippage-to-TVL ratio was approximately 150 times lower than that of Uniswap V3. This substantial difference underscores RabbitX's superior capital efficiency, as it can facilitate large trades with minimal price impact relative to its liquidity reserves.


RabbitX Liquidity Pool Risk Disclaimer

Participating in the RabbitX Liquidity Pool Vault involves inherent risks and may result in substantial financial losses. Before contributing funds, please carefully consider the following risks:

  1. Market Volatility: Crypto markets can experience extreme volatility. Rapid price movements can amplify your impermanent loss or cause significant deviations in the value of your pool share.

  2. Smart Contract and Technical Risks: RabbitX's Liquidity Pool operates on blockchain smart contracts, which carry risks of coding errors, security vulnerabilities, hacks, or other technological issues that could result in partial or total loss of funds.

  3. Liquidity Risks: In certain market conditions, liquidity may become constrained, making it difficult to withdraw or trade your position without incurring significant losses.

  4. External Vaults: Vaults associated with the RabbitX ecosystem are operated by external third parties and are not endorsed or directly managed by RabbitX. Users participating in these vaults assume additional risks, including counterparty risks, operational risks, and risks related to third-party management practices.

How the Liquidity Pool Works:

RabbitX Liquidity Pool earns revenue primarily through trading activities on RabbitX which are then proportionally distributed among liquidity providers based on their share in the pool. Additionally, the RabbitX Liquidity Pool dynamically adjusts liquidity to maximize capital efficiency, potentially enhancing returns by continuously optimizing spreads and inventory in response to real-time market conditions.

By contributing funds to the liquidity pool, you acknowledge these risks and confirm your understanding that RabbitX is not responsible for any financial losses incurred due to participation in the pool.

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Last updated 2 months ago