Decentralized automation introduces a whole new set of possibilities for web3 that have second order effects on how the markets behave. What happens when you can set limit orders and stop losses on a DEX? What happens when liquidations are a thing of the past? And what happens when anybody can take a yield-bearing delta-neutral position? The potential is limitless, not only from an on-chain efficiency perspective but most importantly from an end user perspective.
The creation of DeFi services and tools that allow anyone to automate any on-chain action with any on-chain condition is key to making DeFi more scalable and accessible.
Automation changes the rules of the game for DeFi. The ability to configure DeFi platforms to auto-execute certain transactions depending on customizable, pre-set conditions and then letting the technology do the heavy lifting without human intervention makes DeFi more intuitive and broadly appealing. The only way to achieve mainstream DeFi adoption is to offer a wider range of intuitive, customizable trading tools, and that’s exactly what the Autonomy team has done.
DEX Limit & Stop Orders via AutoSwap
AutoSwap is a DeFi tool that allows users to add limit orders and stop losses onto existing DEXs like Uniswap or Trader Joe. By simplifying the process of placing more advanced trades for both profit-seeking opportunities and defensive positioning, AutoSwap is making DeFi more accessible to casual and experienced traders alike.
DeFi has exploded in popularity and complexity over the past year, but most advanced trading features are still only available on centralized exchanges (CEXs) like Binance and Coinbase. This is a serious issue, since the ability to automate limit orders and stop-losses gives traders more control over their investment decisions and added peace of mind – especially during periods of market volatility when effective loss prevention methods like AutoSwap are essential.
DEXs can easily integrate AutoSwap into their platforms to match the functionalities of leading CEXs, and AutoSwap is currently available on most major networks including Ethereum, Polygon, Avalanche, and Solana. By raising the bar on crypto trading optionality, AutoSwap gives crypto traders even more reasons to use DEXs over centralized exchanges and allows DEX developers to focus on other key priorities. Over time, features like this will ensure DEXs will have higher volumes and better payouts, which will provide more opportunities to achieve true financial freedom.
Liquidation Prevention via AutoSafe
The recent meltdown of centralized lending platforms like BlockFi and Celsius has had a cooling effect on the broader crypto market. Contrast that with major DeFi lending protocols such as Aave and Compound which avoided any downtime or withdrawal limitations. That doesn’t mean there aren’t risks involved when using these products, but it certainly highlights the need for fully decentralized lending platforms and protocols to facilitate crypto lending and borrowing since they are fully transparent and the code prevents them from being undercollateralized.
Each time you take out a crypto loan, you have a collateral limit that your asset value must remain above in order to avoid getting liquidated. This is usually denoted by a collateral percentage or LTV value. Volatile market conditions raise the likelihood of unexpected liquidations, and a growing number of DeFi users are looking for ways to prevent losses. Enter AutoSafe.
Simply put, AutoSafe lets you set a custom threshold to auto-liquidate yourself. This tool is designed to let users set a higher threshold above the lending platform’s pre-set liquidation point, which then allows them to liquidate their position without incurring any fees or losses. In other words, AutoSafe makes it safer for DeFi users to take out crypto loans and increases DeFi users’ ability to leverage and borrow more, which in turn drives up the TVL in DeFi protocols. This in turn increases borrowing rates and consequently leads to more profits for lenders, thereby creating a virtuous flywheel reducing friction and protecting users.
Through automation, lenders can begin to experiment with novel loan structures built to accommodate individual borrower preferences; a simple place to start would be lower collateral requirements. An increased sense of security opens the door for experimentation with loans as Web3-native financial instruments. The limit is developer imagination.
Low Risk Liquidity Provision with AutoHedge
In a bull market a rising tide lifts all boats, but in most cases only the truly seaworthy investors are capable of generating value during extended downturns and periods of market volatility. That being said, a new generation of DeFi tools is making it easier for DeFi users to generate gradual, sustainable returns. For instance, you can now use AutoHedge to earn fees with little-to-no risk nor impermanent loss when contributing to a liquidity pool composed of a stablecoin and another crypto asset like ETH (i.e. a stable-volatile LP position). This means if you provide $1,000 in liquidity via AutoHedge, your position will always be equal to $1,000 and you will earn risk-free APY on top of that no matter how the price of the underlying asset changes. This opens the door for a new type of DeFi.
AutoHedge works by using Autonomy’s smart contract automation layer to create delta-neutrality, meaning the value of a user’s crypto position is not affected by shifts in the price of its underlying asset. In other words, this tool is designed for risk-averse investors who want exposure to DeFi markets while avoiding the volatility and unpredictability associated with crypto.
On top of that, AutoHedge will soon grant users the ability to hold hedged LP positions on volatile-volatile crypto asset pairs. These volatile-volatile AutoHedge LP tokens based on assets like ETH-MKR, for example, will essentially behave as decentralized, yield-bearing stablecoins. The LP tokens can then be used as collateral for another brand new stablecoin – one that is backed by the Uniswap DEX itself, for instance, rather than the Uniswap token. In other words, this theoretical “self-collateralizing stablecoin" would be backed by Uniswap’s trading fees and rise in value as swap volume increases.
This is just one example of how AutoHedge can be used to experiment with new financial instruments for both wealth preservation and value creation. The DeFi instruments of the future will likewise be multifaceted to accommodate a wide range of investment strategies.
DeFi Users Need More Autonomy
In the past, the lack of customizable DeFi automation tools has made it more difficult for investors to trade effectively, manage their risk, and capitalize on existing opportunities within the DeFi space. But Autonomy Network’s growing suite of platform-agnostic tools provide the assurances needed to operate effectively within the DeFi space regardless of macro market conditions, and we’re disrupting the DeFi narrative just when it needs a jolt.
Automation unlocks user-friendly trading strategies and infrastructure-level liquidation protection. Its massive potential for DeFi is only beginning to be realized and Autonomy Network is opening up entirely new frontiers of possibility.