TL;DR

• Torus allows Liquidity Providers (LPs) to diversify across numerous AMM pools without the costly process of manually shifting their liquidity between them.

• This is achieved with Torus Omnipools, which allow LPs to balance liquidity across Curve, Balancer, and Uniswap v3 in a single transaction to maximize their yields.

• Omnipools also automatically take advantage of boosting platforms such as Convex (for Curve), Aura (for Balancer), and Bunni (for Uniswap v3) to increase yields.

• Furthermore, the Torus protocol is directed by a decentralized governance model that protects the interest of the protocol, the LPs and the AMM ecosystem at large.

What Problem Is Torus Finance Solving?

There has never been more opportunity for liquidity providers (LPs) in the DeFi space. With Curve, Balancer, and Uniswap v3 all competing for their liquidity, LPs are spoilt for choice in terms of options for maximizing their yields. Furthermore, each of these Automated Market Makers (AMMs) offers opportunities for LPs to further increase their returns through yield-boosting protocols such as Convex (for Curve), Aura (for Balancer) and Bunni (for Uniswap v3).

However, the proliferation of opportunities also brings with it a fresh set of challenges. LPs have to be constantly monitoring and shifting between each of these different protocols to ensure they are placing their liquidity in the most profitable pools. This is because which pool is most profitable at any given point in time is constantly changing, due to the volatility of the asset balances, TVL, and emissions that determine optimum yields. What’s more, constantly transferring liquidity between one pool or protocol and another is an expensive and time-consuming process given the high gas costs associated with staking and withdrawing LP tokens.

LPs therefore have a pressing need to find a way to balance their liquidity across all the leading AMMs to diversify their yields without incurring multiple costly and cumbersome transactions.

This is where Torus comes in…

Introducing Torus Omnipools: Allowing LPs To Diversify Across Curve, Balancer, And Uniswap v3 In A Single Transaction

Torus is bringing a solution to LPs that allows them to stay diversified across numerous AMM pools without the costly and inefficient process of manually shifting their liquidity between them. It achieves this through the introduction of a new type of Omnipool. Torus Omnipools will allow LPs to pool a single asset, namely ETH and related LSTs, across popular AMMs including Curve, Uniswap v3 (via Bunni), and Balancer.

Torus Omnipools will give LPs exposure to all of the key AMMs, whilst using a single omnichain LP token. Furthermore, they instantly stake the LP tokens for each protocol on the relevant yield boosting platform. Curve tokens are immediately staked on Convex, Balancer tokens are immediately staked on Aura, and Bunni is utilized to accrue an additional revenue layer on Uniswap v3 positions. Together this ensures that the entire process of balancing and boosting yields across all platforms can be achieved in a single, seamless transaction. Additionally, LPs will receive further upside by allocating their liquidity via Torus Omnipools. This is because by doing so, they will also accrue TOR tokens, which can be locked for vlTOR, the native governance token of the Torus DAO. Not only does this give them the power to determine which pools receive liquidity but it also gives them the opportunity to earn rewards in the process, thereby further boosting their yields.

The key objectives of Torus’ Omnipools are to allow LPs to:

1. Achieve the best diversified yields in a single transaction: By depositing their LP in a Torus Omnipool, LPs get exposure to numerous AMM pools in an automated way that bypasses the cost and complexity of manually shifting liquidity across different protocols on an ongoing basis.

2. Take control of how liquidity is distributed across different protocols and pools: Currently the flow of liquidity across the various protocols and pools is dominated by incentivized liquidity. Torus’ governance model provides an entirely new mechanism for liquidity distribution whereby LPs can directly control which AMM pools receive liquidity. By becoming vlTOR holders, LPs can vote on which pools receive liquidity across multiple protocols and get rewards for doing so.

3. Take an active role in governing the AMM ecosystem: Because the flow of liquidity from Torus’ omnipools is controlled by the Torus DAO, vlTOR holders can ensure that it is distributed in ways that serve the interests of the Torus protocol itself, the LPs who govern it, and the AMM ecosystem at large.

Now of course, rolling all the complexity of balancing and boosting liquidity across each of the key AMMs is no easy task. So how do Torus Omnipools achieve this? Let’s dive into the details…

How Do Torus OmniPools Work?

In our next article, we’ll be doing a deep dive into the technical architecture that allows Torus Omnipools to seamlessly balance and boost liquidity across multiple AMM pools. But the fundamental methodology works as follows:

1. Deposits & Withdrawals: The deposits and withdrawals process is designed to maximize the ease and simplicity for the end user, whilst the protocol takes care of all the complexity behind optimizing their yields. From the user's perspective, all they need to do is deposit their assets (e.g. ETH) into the Omnipool and then withdraw it when they wish to realize their yields. At the point of withdrawal, they will receive back their deposit plus all the rewards they have earned (minus fees). Meanwhile, in the background, the Torus protocol will be applying a range of automated strategies for maximizing yields across the various different AMM pools without the user having to lift a finger. It achieves this through its unique token pricing and automated liquidity balancing processes, which work as follows:

2. Token Pricing Mechanisms

   a) Curve LP Token Pricing: Whereas a manual user would have to rely on the available price feeds to determine the price of their Curve LP tokens, Torus has developed a much more sophisticated process for calculating prices. Taking into account everything from the current allocation of assets across various Curve pools, Curve swap rates and current market conditions, Torus leverages its unique algorithm to arrive at the most accurate and up-to-date price.

   b) Balancer LP Token Pricing: Similarly, on Balancer, the Omnipools will apply a tailored formula to determine LP token pricing. In this case, it will use the NAV model, which takes into account the market price alongside factors such as the total supply of LP tokens, current swap rates, and pool composition.

   c) Uniswap v3 LP Token Pricing: Finally, yet another pricing methodology is applied to Uniswap v3 LP tokens in order to match the specifics of how the protocol operates. Uniswap v3 LP token pricing works by allowing users to provide concentrated liquidity within certain tick ranges, so that they can have more control over price points in where they are providing liquidity. To find a fair market price for the position, the Torus protocol calculates the total value (V_total) of all LP positions in the Omnipool as the sum of LP positions across the individual pools.

3. Rebalancing Liquidity Across Pools: However, the key to maximizing yields for users lies in automatically redistributing the Omnipool’s liquidity across the different available AMM pools as market conditions change. The Omnipool will take the allocation weights that have been defined by the votes of vlTOR holders in the Torus DAO and use them to constantly reallocate liquidity to the highest yield opportunities. This automatic rebalancing ensures optimal asset utilization, promotes better yield returns, and minimizes potential risks associated with overexposure to a single pool.

All of these processes run seamlessly and automatically in the background, with users having to do nothing but make their deposits and withdrawals as they see fit. This means they can sit back and watch their yields roll in, safe in the knowledge that their assets are being deployed in ways that maximize yields and minimize their costs.

Up Next: Light Pools, Dark Pools & A Deep-Dive Into LP Token Pricing

In the present article, we’ve explained how Torus solves the challenges LPs face in cost-effectively maximizing yields across multiple AMM pools. By deploying Omnipools that give LPs exposure to numerous protocols and pools in a single transaction, Torus reduces their cost, increases their efficiency and optimizes their yields. All this is done in a simple, automated way that maximizes ease for the user. Furthermore, it is directed by a decentralized governance protocol that protects the interest of the protocol, the LPs and the AMM ecosystem at large.

In our next article, we’ll be diving deeper into the technical mechanisms that allow Torus to achieve this, taking a look at how it deploys light pools and dark pools, and providing a deeper analysis of the LP token pricing mechanisms.

In the meantime, make sure you are following us on Twitter / X at @Torus_xyz to ensure you are the first to hear about any updates.