Capital Efficiency

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:

The WETH/UNI vault on Polygon achieved up to 164x Capital Efficiency over 5 months

The WETH/UNI vault on Polygon generated Net Returns of 11.4% over 5 months, for an Net APY of around 30.7%

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%.