Why do we need a new AMM?
Today, the average Automated Market Maker (AMM) Liquidity Provider (LP) loses more money on trades than they earn from swap fees. This means they would have been better off holding onto their capital and doing nothing at all.
Whereas professional market makers operate with sophisticated tooling, simulation engines, order management and other systems, Liquidity Providers (LP) on AMMs move in the dark, working with both:
- limited affordances: LPs can only place static liquidity positions that need manual updating over time, and
- limited information: the lack of data, feedback and tooling make it difficult to monitor and update positions effectively.
AMM profits have so far been concentrated amongst a handful of elite market participants with deep pockets and sophisticated tactics.
It’s clear that AMMs are broken. We believe it’s time to rethink AMMs and build a product that works for, not against, liquidity providers.
Introducing Haiko — a platform for collaborative market making
Haiko is a groundbreaking Automated Market Maker (AMM) protocol and liquidity orchestration layer that allows users to define custom, modular strategies to manage liquidity intents.
Strategies autonomously manage liquidity on token markets for you, updating positions and orders as market conditions change.
In regular AMMs, liquidity positions are placed across a static price range. In Haiko, positions are replaced by strategies, which update positions dynamically based on on-chain data feeds and custom logic.
Crucially, positions update before user swaps, ensuring liveness at minimal rebalancing cost to liquidity providers.
Haiko’s community-first approach to liquidity provision
We believe the unique affordances of blockchain enable a rich, competitive ecosystem of AMM strategies that benefit both traders and Liquidity Providers, drawing on the power of collective wisdom to capture the best market making yield and distribute it democratically.
This is underpinned by Haiko’s innovative features, including:
- ✅ A novel AMM implementation with advanced V4 features and a singleton design
- ✅ Powerful LP tooling like Native Limit Orders and Flexible Market Schemas for custom market types
- ✅ Powerful Strategy Vaults created by and for the community to manage liquidity provision
- ✅ Open Source libraries for strategy building, integration, testing and deployment
- ✅ Strategy Portal to discover and share strategies with the community, create releases and register deployments
- ✅ Tooling to backtest and monitor strategy performance
We are excited to launch an alpha release of our platform today. You can check it out at https://app.haiko.xyz.
We wish for Haiko to become a hub for on-chain liquidity provision, where LPs discover new strategies, curate top yield opportunities, and share them across wider communities.
To encourage broad participation, Haiko will cater to LPs of all levels from Day 1. LPs can choose from one of various entrypoints to the Haiko strategy ecosystem:
- Deposit (all users): LPs that simply want to start earning yield can pick a strategy, deposit to it, and have their capital automatically managed
- Customise (intermediate): intermediate LPs can fork and modify code from existing strategies to integrate custom logic, or deploy them toward new pairs
- Build (advanced): finally, LPs can build custom strategies from scratch, generate fresh alpha, and earn rewards for their contributions. Strategies are easy to assemble from lower level modules and flexible enough to support custom smart contract logic. Builders can benchmark strategies against backtests and live data to optimise them in production.
The first strategy we have built is designed to return market-neutral yield to depositors and offer principal protection against market volatility. You can learn more about it here.
Alternatively, if you want to dive in and start building your own strategy, you can get started quickly using our strategy template here.
Over time, we commit to working with the community to create a rich, expanding, and self-improving ecosystem of strategies, by and for liquidity providers.
No need for speed: ‘before swap’ as the great equaliser
Haiko takes a radically different approach to market making, allowing LPs to compete on the basis of pricing power rather than speed.
In traditional finance, rival firms split profits over nanoseconds, while on the blockchain, they bid for order priority and access to MEV.
While speed is not inherently undemocratic, it does concentrate pricing power amongst those that have it, creating extractive market microstructures and crowding out more meaningful forms of competition.
This is why Haiko intentionally flips the existing architecture on its head. By processing updates only when a swap occurs, and crucially before the swap is executed, we suddenly arrive at a very different outcome: one where LPs no longer care about speed, but rather compete on the decision quality of their strategies.
We see this small but powerful change as a sort of great equaliser — paving the way for more meaningful competition.
Toward sustainable market making
Haiko clears the path for a more enduring and cooperative approach to market making.
However, we expect liquidity provision on Haiko will continue to be a competitive business — of finding and optimising the best strategies, seeking alpha, and allocating and deallocating capital as market conditions change.
Realising this vision requires contribution from a diverse ecosystem of strategy builders who both collaborate and compete to find the best alpha and yield opportunities.
We invite you to join us on this journey.
Phase 1: Launch
In the early days of Haiko, you will find that Haiko much resembles a regular advanced AMM, with a few added features:
- Concentrated liquidity positions
- Single and multi-market swaps
- Native limit orders
- Routing and quoting
- Flash loans
- ERC721 positions
- Custom market types
But that’s just the start.
Phase 2: Transform
The next phase of Haiko will focus on launching strategies and other powerful new features for Haiko LPs. We don’t want to give everything away yet, but here are a few headline features:
- Early access release of first strategies
- Expansion of community Strategy Portal with new tooling and features
- Open source libraries for strategy builders
- Community rewards and incentives program
We will be rewarding early users and active community members, so look out for ways you can contribute.
Phase 3: Evolve
Over the long term, we wish to co-create Haiko with our community and allow each user to customise their ideal LP experience.
Rather than defining a specific roadmap, we commit to staying agile and evolving Haiko to suit the needs and expectations of our community.
We are at the start of an ambitious attempt to redefine on-chain market making. And we can’t do it alone.
So, let’s get to work and build the future of on-chain market making together.
Haiko is currently live on Starknet Goerli Testnet and completing an audit by Trail of Bits.
We will be launching on Starknet Mainnet in the first weeks of Jan 2024. You can learn more about how to prepare for Haiko Mainnet here.
We value early members and contributors. We invite you to join the Haiko community on Discord.
