FAQ
What is Medallion?
Medallion helps every LP earn higher yields on Uniswap V4. It achieves this by recovering LP losses, and uses a public auction to select the best strategy to recover the losses.
**The LP losses are known as LVR (loss-versus-rebalancing).
What problems does Medallion solve?
Low LP yields and liquidity fragmentation.
Most liquidity providers (LPs) are not profitable. They lose over 20% a year to arbitrageurs, resulting in losses exceeding $500 million each year. Medallion recovers these losses and pay it to LPs.
When Uniswap v4 launches, liquidity will be fragmented across multiple hooks, and even the best hook will underperform due to low liquidity. Medallion attracts liquidity for hook developers - they just need to bid in Medallion's auction to use all the liquidity in a pool.
How does Medallion attract flows?
By increasing LP yields, Medallion will attract and retain the largest pools of liquidity. This will provide the best price for routers and intents to attract flows; and maximise earnings for strategy creators to develop better strategies; both of which will further increase LP yields.
Why should I swap on Medallion?
By increasing LP yields, Medallion will attract and retain the largest pools of liquidity. This will reduce slippage and offer the lowest price for swappers.
Why is Medallion better than a single strategy?
Medallion is more likely to earn higher yields because its public auction selects the best strategy from all the possible strategies.
Why is Medallion different from other auction based AMM (eg the am-AMM)?
Medallion has a strategy contract anyone can write, and can contain any logic. The contract increases the number of bidders in Medallion's public auction, which means it is more likely to find the best strategy.
Is it possible a suboptimal strategy is always attached to a pool?
If a suboptimal strategy is attached, someone else with a better strategy can attach their strategy contract and profit. To grow the ecosystem of strategy developers, Medallion will release example code for strategy contracts, write educational resources, build a community to ask questions and share ideas, and build performance simulators and analytics.
Why should developers bid on Medallion?
To build a successful hook without Medallion, hook developers must set up their own pool, market the pool to LPs, and still perform poorly because the pool is small. With Medallion, a hook developer can earn all the fees in a large liquidity pool, simply by bidding - they do not need to do anything else.
Why should LPs provide liquidity into a pool that uses Medallion?
An LP can get higher yields with the least amount of effort. Medallion will automatically choose the best strategy, and pay the extra yields to LPs. LPs just need to provide liquidity, and withdraw at any time.
Why can’t the manager implement the {before, after}modifyPosition callbacks?
They can add in logic to revert on a withdraw and prevent LPs from withdrawing.
What happens if the manager reverts in every swap?
This will not harm LPs because they will receive the auction bid regardless of the manager’s strategy, and will harm the manager because they won’t receive fees. Their only motive is to prevent trading in the pool, which is an issue if the pool is the main trading venue for a token. This is not an issue for Medallion because its main target is large pools with multiple trading venues and high LVR.
What happens if the manager sets the swap fee to 0% or 100%?
Same as above, it only hurts the manager’s earnings and not LPs who receive the auction bid.
What happens if the manager’s hook is gas-intensive?
This wouldn’t affect LPs, and will only increase the gas cost of swaps. If the gas cost is higher, the pool is likely to receive less non-toxic flow, perform worse, and the manager will earn less. Therefore, managers are incentivised to implement LVR reduction strategies that are also gas-efficient.
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