Here’s another idea for a product we could build.
No Impermanent Loss AMM Strategy
Firms like 3 Arrow Capital are huge liquidity providers on Uniswap because they are able to hedge out the risk of impermanent loss by taking option positions on centralized exchanges against their position in the AMM. This allows them to earn risk-free yield from the transaction fees on Uniswap.
Similarly, Index Coop could make a structured product that supplies liquidity to a big Uniswap pool, like USDC - ETH (current APY at 38%), and automatically buys the options positions to hedge out the IL risk. Turning supplying liquidity on Uniswap into a risk free activity that generates significant passive yield.
Such a product would not only be huge from a TVL perspective (risk-free passive yield products have insane product market fit in crypto), but also help increase the liquidity on AMMs and make them more competitive with CEXs. Boosting the DeFi ecosystem.
We can work with options protocols like Opyn to help bring to market such a product.