Today we have a chance to talk to alphaKΞY, founder of Poolshark. Together we will discuss what Poolshark is about, how the idea of Poolshark appeared, what is his background as a founder, and many more. Let’s dive in and swim with the sharks!
[SurferInvestor]
Could you please summarise briefly what Poolshark is about?
[alphaKΞY]
Poolshark to me has always been about providing LPs with better outcomes. Technically speaking it is a directional automated market maker (DAMM), meaning that in addition to supporting the kinds of liquidity-providing methods users have come to know and love, we will also allow users to passively capture profits from moves in the market.
[alphaKΞY]
Bidirectional liquidity (i.e. Uniswap, Curve, etc.) is what users have come to know from the AMM market and provides an opportunity to continuously gather trading fees from the market. Due to the phenomenon known as impermanent loss, being all-in as an LP becomes quite difficult, and this loss ultimately comes from the difference between the market price and the price your LP position sold ETH at for example.
[alphaKΞY]
Directional liquidity comes in two flavors: Cover Pools and Price Pools. Cover Pools are meant to sell off liquidity as the price moves to a certain value. For anyone coming from centralized exchanges, this is akin to a Stop Loss over some range.
For example: Let us say you want to start buying ETH in the range of $2000 to $2200, but only if the price is actually in this range. Normally, continually buying ETH would require a lot of gas costs and management. Effectively here you are stopping out of DAI at $2000 DAI per ETH progressively until $2200 is reached.
[alphaKΞY]
However, our hedge protocol will slowly unlock that liquidity to the market over time based on the price. This means if the price only goes to $2100 for ETH, only the liquidity from $2000 to $2100 gets unlocked.
[alphaKΞY]
The second flavor is Price Pools. These are meant for users attempting to quickly enter and exit the market, fish entries, and take profit. Bidirectional liquidity (i.e. Uniswap v3, Curve v2) uses a single curve to represent two trading directions (e.g. ETH to DAI and DAI to ETH). Thus, it is not able to prioritize the best price in a single trading direction. If you set your LP position at 1% below market price, users trading against the AMM would have to move the price there.
[alphaKΞY]
Price Pools have split liquidity curves, the same as Cover Pools, except they allow for ‘Take Profit’ or Quick Entry/Exit strategies. Bidirectional liquidity must represent both trading directions, so it cannot say the best price for either direction.
[alphaKΞY]
Here users can undercut the market price and thus receive priority for doing so.
[SurferInvestor]
Could you please introduce yourself as a founder? What is your background?
[alphaKΞY]
As a founder, my background is in infrastructure automation. I was always building distributed systems and scaling them based on the needs of the application. A distributed system is a group of computers that work together to achieve a common goal. Blockchain’s common goal is to achieve a shared consensus on the state of the ledger. I often think of the similarities of what I’ve done in the past, however, the details I would say and how you think about building a protocol are completely different than anything in traditional software, specifically with the need to conserve blockspace and think deeply about security. We are building public systems in web3 that need to be bulletproof, and this task is only feasible if we consider all possible outcomes during the development stage.
[SurferInvestor]
How did you come up with the idea of Poolshark?
[alphaKΞY]
Poolshark was born out of some discussions I had with various options protocols about how they could sustainably source liquidity to trade options tokens, which always have the risk of going to zero. Having a bidirectional liquidity position means taking risks on both sides.
[alphaKΞY]
If the pool is OPTION and ETH, then you take the risk of price divergence in either direction. What if you could just sell OPTION into ETH and have any ETH you receive along the way not recycled back into the liquidity pool? This is where directional liquidity was born from.
[alphaKΞY]
It was on the plane coming back from Devcon in Bogota that I realized this could be used to buy and hold ETH to recapture profits LPs miss out on versus normal holding.
[SurferInvestor]
What item in the roadmap gets you the most excited?
[alphaKΞY]
Beyond the AMM protocol we are working on for EVM chains, we also have a Predicate Orderbook set on our roadmap that is specific to Fuel Network. Fuel Network is an optimistic roll-up on top of Ethereum that has its own custom VM with multithreading.
[alphaKΞY]
Fuel also has predicates, which enable account abstraction via their UTXO model. What this means is that you can make a transaction spendable only under some conditions (i.e. only unlock this 1 ETH if I receive 2000 DAI).
[alphaKΞY]
If Fuel can achieve beyond 1000 TPS, it will mean that this Predicate Orderbook could on paper compete with dYdX v4, whose founder Antonio has also set this benchmark to fall in line with the current usage of dYdX v3.
[SurferInvestor]
Why should I use Poolshark as a user? What problem does it solve?
[alphaKΞY]
Ultimately Poolshark seeks to mitigate impermanent loss by allowing users to buy and hold what they choose to be the winning side. Do you think ETH is going to go to $5000 and greater? Cool, you can express a directional LP for that.
[SurferInvestor]
How many people in the team?
[alphaKΞY]
Currently we have 8 people on the team, and if we continue to receive the support we’ve been receiving from the community, we will continue to expand gradually to support all the products we want to introduce into the DeFi space.
We have a
– UI/UX designer
– Front-end engineer
– Back-end engineer (myself)
– Bizdev
– Economic engineer
[alphaKΞY]
If you appreciate the love we put into our product, definitely reach out! We would love to open that door and learn from those inspired by us.
[SurferInvestor]
In an ideal world, how would Poolshark look in 5 years?
[alphaKΞY]
To me the ideal result is being able to achieve better outcomes for LPs and turn around the narrative that LPs cannot be profitable. That is the true north star for us, and beyond that, it is taking users down this incredible path where we can show them the newer technologies that are coming out and give them a glimpse into what we believe is the future.
[SurferInvestor]
For people who wanna jump in, how to get started?
[alphaKΞY]
The best place to read up on us is directly from our Twitter where we have an entire Linktree, or you can jump directly to our documentation at docs.poolsharks.io. We look forward to hosting our second Community Call in the coming weeks and releasing our whitepaper to receive comments from the public. Until then, stay vigilant.
Big thanks to alphaKΞY for spending some time with us explaining what Poolshark is about and how it can help users to earn yield using directional liquidity. If you want to reach out, please refer to the socials of Poolshark.
Socials Poolshark:
