Liquidity providers are the lifeblood of DeFi, but right now, they’re getting the short end of the stick.

Providing liquidity on most DEXs is basically volunteering as tribute. You park capital, hope for volume, and pray impermanent loss doesn’t eat you alive. Spoiler: it usually does.

But even if you survive IL, you’re often stuck earning paltry fees on idle capital in a pool with no leverage. Most DEXs today are optimized for traders, but not for LPs. That’s why returns have been on a slow, downward spiral for most passive liquidity strategies. As more capital flows in, yields go down, volatility strikes, and LPs are the ones holding the bag.

It's not sustainable.

But what if we could change the formula? Think of all the users this would benefit.

The LP Problem: You Risk More Than You Earn

In the traditional AMM model (Uniswap v2/v3, Sushi, etc.), LPs provide two assets of equal value and earn a share of trading fees. Sounds pretty straightforward until one asset moons or dumps.

That price divergence leads to impermanent loss, which means your portfolio underperforms just holding the assets separately. Add in low volume or mercenary liquidity siphoning value from the pool with Just-In-Time liquidity and sophisticated proprietary rebalancing strategies. As a result, you’re left with poor capital efficiency and weak yields. No leverage, no real composability, and little upside.

And LPs are somehow still expected to be the backbone of DeFi.

Why Most DEXs Suck for LPs

Most AMMs are designed to be passive, one-dimensional, and rigid. They aren’t built for LPs who actually want to optimize. They ignore things like:

• Volatility forecasting

• Hedging strategies

• Layered positions with leverage

So what happens? Retail LPs get rekt slowly. And pro market makers build private strategies off-chain or in CEXs where tools are better. The DeFi pie stays small, fragmented, and inefficient.

Ammalgam: The Alpha for LPs Who Are Done Getting Rekt

We built Ammalgam as a new primitive to let LPs offset the risks of impermanent loss by allowing them to earn higher fees on their positions.

The protocol lets you stack yields by compounding returns from deposits for lending and trading simultaneously, hedge IL, and make your capital work smarter, not harder. It’s built to meet the needs of DeFi power users with a simple enough design for anyone to access.

Rather than just dumping your assets in a pool and hoping for the best, Ammalgam lets you deploy custom strategies that actively optimize your capital. You can choose where and how your liquidity is used - whether for tight-range swaps, directional bets, or passive exposure. And here’s the kicker: any portion of your assets not being used for swaps doesn’t just sit idle - it gets lent out to generate additional yield. That means every dollar you deposit is doing something - earning fees, earning interest, or both. This is capital productivity, unlocked.

Additional tools are available, such as:

• Market making with long/short exposure

• Hedging against volatility

• Yield stacking

• Composability with leverage

By treating price as a range rather than a single point, we protect against sudden spikes and manipulation. Loans are based on a more stable, time-tested average, and our system limits how far price can move each block, scaling fees and liquidations accordingly. That means you get access to powerful capital strategies without sacrificing security.

Why This Actually Matters

For years, DeFi has promised better ways to earn on your assets but liquidity providers are still left with the same problem: too much risk, not enough reward. Liquidity provision isn’t always profitable with many LPs unknowingly taking on risk without realizing the potential downside. It’s not uncommon for LPs to end up worse off than if they had simply held their assets, even after earning fees due to impermanent loss and volatile token prices. On platforms like SushiSwap and PancakeSwap, LPs were lured by sky-high yields during the farming frenzy, only to watch token prices collapse like CAKE, for example, which fell from ~$40 to under $3, wiping out any short-term gains. Even in less volatile setups, the math doesn’t favor LPs: traditional AMMs spread liquidity too thin, with over 85% of capital often sitting idle. Most platforms simply haven’t found a way to make LPing both profitable and safe especially in volatile markets.

This is where Ammalgam comes in. It gives LPs more control, letting them manage different types of risk more intentionally to adjust exposure as markets move, and earn from multiple sources simultaneously. In other words, it brings the tools pro market makers use to everyday LPs, making capital work smarter, not harder.

The focus is on building the foundation for DeFi-native market making 2.0. And if you're tired of earning low APY while your assets bleed value, it's time to upgrade your LP strategy. Because the next wave of liquidity belongs to the builders and the degens who know how to wield it.

Ready to stop getting farmed by your own liquidity?

Ammalgam’s Alpha dApp is open for early access. This is your chance to explore impermanent gain mechanics, yield stacking strategies, and composable LP logic before the beta goes live soon.