Project Title: Unicord
Organization name: Lumis
Organization website and/or social media links:
Due to the link limit for new users, here is the document with all the additional links - Link
About us + prior experience:
Our team has extensive expertise with spot and derivatives DEXes and lending protocols. Previously we built together an automated liquidity manager for Uniswap V3 - Hedgehog vault that provides liquidity for the ETH-USDC pool and hedges its impermanent loss with power perpetuals (Squeeth). Also, together, we won the following hackathons:
- Hack DeFi with Wintermute with Conditional - customizable hooks DEX (proto Uniswap V4)
- Uniswap Atrium hookathon 1 - hook-based options on top of Uniswap V4 and Morpho (where we gradually increase our power perps positions by borrowing funds on Morpho)
- Uniswap Atrium hookathon 2 with Unicord - rehypothecation adapter that deposits all Uniswap liquidity into Morpho and withdraws it on-demand for trading.
This grant request aims to complete Unicord to the production level, integrate with solver’s network and launch it on the Ethereum mainnet and Base L2.
Leading Contributor(s):
Name: Yevhen Liubchenko
Role: Mechanism Design
Previously: Project Owner for Node-as-a-Service Provider, Quant at JMT
B.A. in Mechanical Engineering, M.A. in Economics
Links - Check doc
Name: Ivan Volovyk
Role: Solidity developer
Previously: CEX trading engine development at MadFish, Supply chains data engineering at Bosch, Physical national olympiad winner
B.A. in Computer Science, M.A. in Economics
Links - Check doc
Requested budget: 15k MORPHO
Scope of Work:
Protocol that enables permissionless Uniswap V4 hook deployment that maximizes yield by deploying 100% liquidity to Morpho lending protocol and implementing on-demand withdrawals for trades. It optimizes capital efficiency while ensuring liquidity availability.
The protocol will execute the following flow for the ETH-USDC swap tx:
- The contract supplies both ETH and USDC as collateral on Morpho
- When we receive ETH from the user for the ETH → USDC swap operation
- In pre-hook: calculate the amount of USDC that we owe to the user and withdraw this amount from the lending protocol
- Execute the swap
- In post-hook: increase our ETH collateral
This way, by executing on-demand lending protocol deposits/withdrawals, we significantly boost overall LP returns by collecting both trading fees and interest rate payments.
The whole swap flow is achieved by applying the NoOp approach that enables us to execute custom trading operations during the swap transactions without enforcing the original Uniswap V3 CLAMM restrictions.
This tool will be especially useful for stablecoin and pegged asset pools by offering significantly improved LP returns compared to the existing solutions, like Curve and Uniswap V3.
Though this product requires integrations within the solver’s network to attract trading volume, recently PropellerHeads introduced Tycho: The open-source liquidity indexer. By integrating with their product we will be able to attract the sustainable trading flow required for bootstrapping our liquidity pools powered by Mopho additional yield.
Our business model here is a 5% curation fee.
Benefit for the Morpho Ecosystem:
With expected APY for stablecoin pools of 15-20% compared to 1-2% APY on Uniswap V3, our product can bring substantial TVL to Morpho that will migrate from Curve and Uniswap V3 stablecoin and pegged asset pools. But, also providing a new yield source for LPs looking for increasing their yields while operating in a fully non-custodial way.
Metrics:
Achieve $100M TVL
Timeline:
- 4 weeks of development and testing
- 2 weeks for audits
We already received a subsidy from Uniswap Security Fund that will cover audit costs with an expected timeline of audits starting on Feb 3. By this time, we plan to fully finish development and testing. Expected mainnet launch - March 3.
Future directions (optional):
We also have plans for leveraged LPing functionality that combines leveraged long and short positions to offer up to 10x more liquidity and hence trading fees for LPs.