Overview

ICHI Ascend Strategy

Introduction:

Bril leverages the ICHI Ascend strategy to support automated liquidity management for liquid staking tokens. Ascend exists to enable liquidity provision with liquid staking tokens that closely follow the value of an underlying token.

The ICHI Ascend strategy aims to capitalize on the anticipated appreciation of liquid staking tokens against their proof-of-stake token. In this example, we will use MaticX against Matic.

• Initial Setup: LPs deposit 100% MaticX into an ICHI Vault that is configured to utilize the ICHI Ascend strategy.

• Liquidity Concentration: ICHI Ascend places this MaticX liquidity into the ticks just to the left of the current active tick within the MaticX/Matic pool.

• Fee Capture: Due to the inherent volatility and fluctuations in the market, traders will occasionally swap MaticX back for Matic. These swaps generate fees for the Vault, as its liquidity is strategically positioned by ICHI Ascend. However, the Ascend positions will not chase this downward movement in price.

• Upwards Price Movement: As MaticX appreciates against Matic, traders swap Matic to acquire MaticX, thereby emptying the current active tick of its MaticX and moving the price to the next tick. The Ascend positions will follow this upward price movement.

• Limited Impermanent Loss: The strategy minimizes impermanent loss by keeping the Vault's liquidity aligned with the appreciating asset, in this case, MaticX.

• Compound Earnings: Since MaticX is a liquid staking token expected to grow over time, ICHI Ascend offers a compounding effect when paired with the trading fees.

• Automated Management: One of the key benefits of ICHI Ascend is its automation. LPs can deposit their MaticX and let the smart contract handle the rest, optimizing their yield without requiring active portfolio management.

By automating the process of following the asset's price appreciation, ICHI Ascend aims to maximize income while limiting risks, particularly impermanent loss, making it a compelling option for LPs who deposit liquid staking tokens like MaticX. However, as with any financial strategy, LPs should perform their own due diligence.