Introducing the Liquidity Terminal: The sleekest way to tap into >$20m in fees.
In February 2021, Orca became the third app to launch on Solana mainnet. Three smart contracts, $36 billion in trading volume, and (knock on wood) zero exploits later, the protocol has evolved into a cornerstone of the ecosystem. On an average day, roughly half of Solana trading volume flows through Orca’s pools, generating over 70% of ecosystem-wide LP fees.
None of this would be possible without Orca’s small, but mighty group of liquidity providers. Over the past two years, the protocol has had the chance to learn from both on-chain, quantitative data and many hours of qualitative research interviews. Through these interviews, it became clear that the majority of liquidity is provided by just a few hundred LPs, most of whom live and breathe DeFi. (Human-centered design involves not only listening deeply to users, but learning which are the right target users!) You’ll find actual quotes from research paraphrased throughout this article.
The result is a brand-new interface that shifts the focus away from casual users and toward this core group of active LPs. It’s a radical shift, but simultaneously, it’s only the first step in a longer journey toward building the best poweruser interface in DeFi.
LPing: Analysis or guesswork?
“Without good data, you can’t trust the yields. So instead, we just put in some money and wait and see.”
Collectively, Orca LPs have earned over $20 million in fees to date. Given the amount of yield on the table, you might be surprised to learn that the most common approach to LPing today more closely resembles “trial and error” than “technical analysis.” This is not to say that a data-driven approach wouldn’t be preferable. It’s the accessibility of the data that’s the problem. Many factors determine the profitability of a liquidity position: The relative price of the two tokens, trading volume, fees charged per trade, and liquidity depth around the current price, to name a few. Historic price and volume information is readily available for most commonly traded tokens, but historic liquidity depth is not. Since fees are distributed to LPs based on liquidity depth, this makes it difficult to get a complete picture of past performance.
Given these constraints, LPs make conscious tradeoffs between analysis and convenience. Most look at price and volume data and consider the current liquidity depth chart, but few do much more than that. More often, users will try opening a position for a few days and manually track yield to project future PnL. However, the process is cumbersome enough that many end up abandoning the enterprise. Believe it or not, the strategy of LPs with portfolios in the hundreds of thousands of dollars often boils down to little more than “intuition.”
The Liquidity Terminal
“The most valuable thing I put into LPing is my own time.”
Today, Orca is taking strides toward a new vision of LPing with the beta launch of the Liquidity Terminal.
The name is no accident — much like a trading terminal, the Terminal places the data you need to LP at your fingertips. The upper-left of the screen prominently features a candlestick price chart powered by TradingView, which comes with all the requisite bells and whistles for technical analysis. This is paired with a liquidity depth chart to the right, now with axis labels. Below that, token information panels display the current price, market cap, FDV, and max, circulating, and total supply, all of which is derived from on-chain data. Together, this data empowers LPs to conduct the necessary research to LP faster and more easily.
While the Liquidity Terminal scales beautifully to a 35” curved display, it’s equally happy to squeeze down to the size of your phone. Despite the complexity of concentrated liquidity provision, UX research found that some advanced LPs conduct their activities primarily on mobile. One successful LP, who works a demanding job, does all position management on breaks on their phone. To this end, all of the new features available in the Terminal will be accessible on mobile.
But we haven’t even gotten to the exciting part…
“The reason I don’t LP anymore is because I don’t have an edge. Hard yield data… now that’s an edge.”
Meet the Yieldfinder: a first-of-its-kind combination of a Historic Yield Chart and a brand-new feature called the Time to Profit Simulator.
Simply select a range on the price chart, and LPs can see the actual yield a position with that range would have earned at an arbitrary period of time in the past. Meanwhile, the Time to Profit Simulator will show how long it would take for that position to start earning a profit at either the upper or lower bound of the range. (This is based on a learning from user research that LPs will usually withdraw once the price reaches the upper or lower bound, and they believe the price will not move back in range for an extended period.)
This combination of features — a first in DeFi — enables LPs to make conscious tradeoffs between higher yields and divergence loss. While past performance is not necessarily indicative of future performance, it does provide useful insight into market movements that helps LPs execute with intention. If all goes well, the ultimate result is higher fees for LPs and better prices for traders: a win-win situation for the entire ecosystem.With the Liquidity Terminal, hindsight is 20/20… in a good way.
How to try it
Starting today, a small group of powerusers will get to try a closed beta version of the Liquidity Terminal. During this time, the beta group will get exclusive access to its yield discovery capabilities and the opportunity to provide direct feedback on the experience.
And while the features launched today are the first of their kind, the beta is only a MVP for the long-term vision of the Terminal. In research, LPs expressed a desire for features such as easier repositioning, compounding harvested yield, and more robust auto-swap functionality. Have other ideas? We’d love to hear them. Apply to the closed beta, or if you have feedback in mind already, please share it in #lp-terminal-beta in the Orca Discord.
Ready to dive in? Apply for the closed beta here!
Disclaimer: The content of this communication is not financial advice and should not be relied on by any persons as financial advice. This communication has not been provided in consideration of any recipient’s financial needs. We have not conducted any financial assessment based on the personal circumstances of any recipients. Before using the protocol, carefully review all relevant documentation and consider risks including total loss of funds.