Capital Efficiency
Last updated
Last updated
Capital Efficiency is measured as the improvements in liquidity versus Uniswap V2, Sushiswap V2, or a full-range position on Uniswap V3.
From the 15 vaults that was tested by Charm on Mainnet and L2 over 5 months, it achieved on average:
22x better capital efficiency without increasing the risk of financial loss.
The following chart illustrates the above using the WETH/UNI vault on Polygon:
What the above means in practice is that:
For same same amount of deposits, projects using Alpha Vaults can reduce slippage by up to 164x, and increase trade size by 164x.
To get the same level of slippage and trade size as Uniswap V2, Sushiswap V2, or a full-range position on Uniswap V3, projects using Alpha Vaults will need 164x less liquidity. For example, $1000 deposited into Uniswap V2/Sushiwap/full-range will only need $6.09 to achieve the same outcome.
The above can be achieved without financial loss, because the LP's Net APY is 30.7% over 5 months.
Aggregated data across all the vaults shows that over 5 months, the average capital efficiency improvement was 22x, and the average Net APY was 10.31%.
