Thanks to the arrival of blockchain, software and algorithms, it has become possible to optimize the use of our digital assets and this trend is confirmed by the evolving phase that AML (Automated liquidity management) is undergoing within DEFI. Automated liquidity management solutions can be integrated into any operating model, including treasury, to achieve whatever objectives, as cost reduction and capital efficiency are already native foundations of DEFI protocols.
Automated liquidity management is a process that is reducing the difficulty of pool management, improving the friction in the use of blockchain technology and its tools, but above all it helps us to improve our bottom line, as different strategies are executed in real time, depending on how the assets in the pool are behaving in order to always seek the best position, for the benefit that they can bring us. Automated liquidity management solutions in the future (thanks to the hyper-connection between chains) will undergo a notable improvement, making it irresponsible not to use this option, given the great potential and depth that automatic strategies open up by accessing unlimited liquidity from a single central point for all of them. Protocols such as AAVE (with Portals), Synthetix (with Teleporters) or ENS (which once approved an EIP to facilitate the use of oracles to develop multichain ENS and own an ENS on all chains), are preparing for when this time comes. We certainly need a clear determination in this regard in future developments within DEFI to see the same smart contract running on different blockchains.
In a market as volatile, irrational and manipulative as the cryptocurrency market is today, knowing how to manage liquidity correctly is an essential art that can make you solvent and competitive, since often you operate with very low margins, but with very high interest rates, given by the inactivity of the market itself. When there is no appetite for risk, any type of manual action in liquidity management becomes unprofitable, while increasing the cost/opportunity. Today we have what can be called small experiments in these techniques that have only recently arrived at DEFI, with protocols such as GAMMA or ARRAKIS, which allow us to automate the management of ranges in protocols such as UniSawp in its version 3, something that I find extremely interesting, but which leaves a lot of market share out, as they are only effective in a specific protocol.
In my personal opinion, I appreciate the fact that blockchain technology is finally starting to be harnessed to improve the management of capital in the form of digital assets, as well as the visibility it gives organically to institutional money, expanding the investment options available to any user.
The future of decentralised finance lies in intelligent automation, with AI-powered solutions aimed at improving key points such as:
1. Gas tariffs
2. Real-time monitoring of APR and APY
3. Stop loss with non-tariff liquidity management
4. Use of liquidity on a protocol or network basis
5. Automatic rebalancing between L1 and L2