Automatic coveragethe new tool proposed by Network Autonomyserves as a decentralized application designed for liquidity providers to maximize their earnings, protecting against volatility.
What happened: On June 15, Autonomy Network introduced AutoHedge, a Web3 product that works to produce neutral delta positions, leveraging the Autonomy protocol.
AutoHedge works by using Autonomy’s smart contract automation layer to create delta neutrality. Designed for risk-averse investors to enter DeFi, AutoHedge will allow users to hold investment strategies that do not have changing dollar values over time (i.e. are delta-neutral ).
The network AHLP The token uniquely offers zero liquidation risk when borrowing, as it is backed by twice the value of the debt. For example, if hypothetically the price of Ethereum ETH/USD went to 0, the investor would gain the same by shorting the token, as he would lose in his Uniswap UNI/USD LP, due to a guaranteed rate of 100%. On the other hand, in the event of a rise in the price of the token, the position of the user would remain completely collateralised.
why it matters: AutoHedge realizes that large-scale institutional investors have significant funds that can be deployed to create liquidity in DeFi. However, due to regulatory barriers, these investors are not exposed to the risk of price volatility.
The tool is fundamentally created to always earn a return on investment, taking advantage of trading fees with no real exposure to asset price volatility, while allowing large-scale capital to flow into the DeFi space. .
“AutoHedge is the perfect bear market product for investors, as it completely protects them from falling prices of, for example, ETH, while allowing them to benefit from LPing with volatile assets,” said Key JamesCEO and Founder of Autonomy Network.
“[It] represents the first time that an entire trading strategy can be automated and tokenized for use in other DeFi applications, such as being a low-risk, high-return collateral for stablecoins – this is just the tip of the coin. iceberg and it’s not just a new product, but a whole new category of DeFi.”