Alpha Prospecting》DeFi Godfather AC's new project Flyingtulip exposed, how to maximize Liquidity Provider income?

Decentralized Finance godfather Andre Cronje (AC) recently added the title of Flyingtulip founder to his personal profile. What are the features of this project, dubbed as the 'next generation of Decentralized Finance'? What innovations will AC bring? This article outlines the core highlights of Flyingtulip. For more project analysis, please read the 'Motion Zone Alpha Mining Series'. (Previous summary: Alpha Mining》Sonic Ecology BTC.ETH.USDT LiquidityMining Strategy, Rings Protocol TVL Soars Fivefold in a Week) (Background supplement: Alpha Mining》Shadow Exchange Innovation x(3,3) Mechanism, What Is It? Sonic Breaks Uniswap Dilemma) Decentralized Finance godfather and public chain Sonic leader Andre Cronje (AC) recently added the title of Flyingtulip (@flyingtulip_) founder to his X platform personal profile. What are the features of this new project, touted as the 'next generation of Decentralized Finance'? What innovations will AC bring? This article outlines the core highlights of Flyingtulip. One-stop Decentralized Finance protocol According to the official website information, Flyingtulip is a one-stop Decentralized Finance protocol that allows users to perform various Decentralized Finance operations through a single Liquidity pool without the need to transfer funds between different protocols. It covers the following functions: Spot trading and providing Liquidity - similar to DEXs like Uniswap Lending - similar to lending protocols like Aave Margin Trading with a maximum leverage of 50x - similar to Gearbox, Kamino, supporting leveraged lending and leveraged Liquidity Mining Derivative trading Perpetual Futures - similar to Hyperliquid, GMX On-chain options - similar to Derive Therefore, Flyingtulip's positioning may be a combination of Uniswap + Gearbox + Hyperliquid + Derive. This provides Liquidity Providers (LP) with multiple sources of income, allowing them to earn through a single Liquidity Position: Transaction fees Lending Interest Options premiums, etc. The official statement claims that Flyingtulip's LP earnings can be up to 9 times higher than Uniswap. Dynamic transaction fees Additionally, Flyingtulip adopts a dynamic transaction fee mechanism: lower fees are paid in stable markets, and fees are only increased when market fluctuations intensify and Liquidity demand rises, rather than a fixed rate. The website data shows that this allows transaction fees to be lowered to below 0.02%. Institutional investor layout In addition to targeting retail investors, Flyingtulip also caters to institutional investors, providing: Compliance: Built-in OFAC screening, tax reporting, Wallet monitoring, meeting institutional requirements. Institutional-grade trading suite: Providing Risk Management tools, advanced reports, API access, suitable for professional traders. Global market alignment: Supporting Cryptocurrency, forex, securities markets, and can be used without a Wallet, lowering the entry barrier for Web2 users. In addition, Flying Tulip claims to offer better quotes, lower Slippage, less Impermanent Loss, improving capital efficiency, mainly due to optimized design for AMMs. Adaptive AMM curve Flyingtulip introduces the concept of an adaptive AMM curve, aiming to dynamically adjust the AMM curve parameters based on 'market Fluctuation' to enhance Liquidity efficiency and reduce Impermanent Loss. Traditional AMMs, such as Uniswap, use a fixed constant product formula x×y=k to maintain asset prices. However, this fixed curve may not provide optimal Liquidity efficiency or price stability in the face of different market Fluctuations. Therefore, Flyingtulip introduces an adaptive AMM curve, dynamically adjusting the curve shape (controlled by the exponent n) based on the market's exponentially weighted moving average (EWMA) Fluctuation indicator, providing more concentrated Liquidity in low Fluctuation markets and greater price flexibility in high Fluctuation markets. Exponentially weighted moving average Fluctuation: Using the exponentially weighted moving average (EWMA) method, recent price changes are given higher weights, while older data is given lower weights. This method can more smoothly reflect market condition changes (green line in the figure below), avoiding sudden drastic changes seen in rolling window methods (yellow line in the figure below). Relationship between Fluctuation and AMM curve exponent n The exponent n is the control parameter of the adaptive AMM curve, determining the shape of the Liquidity curve, thus affecting Liquidity distribution and trade Slippage. Low Fluctuation markets: When the market Fluctuation is low, the AMM adopts a higher exponent n value, making the Liquidity curve flatter near the current price, simulating the constant product AMM x+y=k, providing a trading experience with close to zero Slippage and minimizing LP's Impermanent Loss. High Fluctuation markets: In high Fluctuation markets, the AMM adopts a lower exponent n value, making the curve closer to the constant product form xy=k, allowing prices to freely adjust with large trades, avoiding the risk of depleting one-sided assets in the Liquidity pool. How do LPs benefit from the adaptive AMM? Flyingtulip states that in different market environments, this dynamic AMM can bring equivalent or better returns to LPs compared to traditional static AMMs, especially performing better in ranging markets and maintaining performance similar to traditional AMMs in trending markets, especially when considering fee income, LP returns will be more significant. Low Fluctuation markets: The AMM concentrates Liquidity, reduces Slippage, ensures high trade frequency, and maximizes LP fee income. High Fluctuation markets: The AMM expands the Liquidity range, limits Impermanent Loss, ensures that liquidations and large trades do not deplete one-sided assets. Furthermore, this automatic Liquidity adjustment eliminates the threshold for LPs to actively manage Positions, making it easier for general users to participate in Liquidity Mining without the need to monitor market changes constantly. Dynamic LTV (Loan-to-Value) model Building on the adaptive AMM, Flyingtulip has redesigned the LTV (Loan-to-Value) mechanism for Decentralized Finance lending, different from the fixed LTV settings of Aave and Compound, it dynamically adjusts based on market conditions, with the core goals of: Enhancing capital efficiency - allowing users to borrow more assets when market conditions are favorable, without being restricted by overly conservative static LTV limits. Reducing liquidation risk - as market Fluctuations increase, LTV automatically drops to ensure borrowers are not unnecessarily liquidated due to short-term price changes. Integrating AMM mechanisms - LTV settings consider not only Fluctuation but also internal Liquidity and price impact (Slippage) of the AMM, making the liquidation process smoother and preventing price collapse due to one-time mass liquidations. Specifically, the core variables affecting LTV include: Market Fluctuation of assets - the higher the realized Fluctuation, the LTV automatically drops to reduce liquidation risk. Liquidity within the AMM - the lower the Liquidity, L...