Mellow Protocol going live — strategies and launch

Mellow Protocol
5 min readNov 15, 2022

How’s your bera market, folks? We at Mellow think it’s a great time to build and focus on tech.

Our main goal is to create a robust ecosystem for building DeFi strategies — provide users top-notch safe yield-generating products built on top of Mellow and help other protocols to get sustainable funds and pools management.

Sooo… The Day is coming! Yes, we’re ready to show you what our team has been building for more than a year. We’re announcing Mellow Protocol launch!
The protocol is deployed and will be launched for the first users on November 17th.
Mellow will be available on Ethereum mainnet first.

Launch details

We want to bring the best experience to our users and will start with limitations that will help to gather feedback and make the launch more robust.

Here’re the raw facts:

  • Date — November 17th
  • Initial TVL limits — 500k per strategy, will be increased gradually after the launch
  • Gated access — LobsterDAO NFTs and DegenScore Beacons holders
  • Gated access period — ~1 month

Strategies

At the launch, strategies with completely different approaches will be available — Boosted UniV3 and Fearless Gearbox. Also, Mellow already has a strategy built on top of the protocol by Voltz ProtocolMellow-Voltz LP Optimizooor, we’re excited that our vaults already help other protocols to build their strategies.

Boosted UniV3

Boosted UniV3 strategy provides a risk profile very similar to a fixed UniV3 position but with higher returns by the combination of UniV3 and Yearn.

Consider UniV3 ETH/USDC 0.05% pool and assume we’d like to put our liquidity into the [1000, 2000] price range (we refer to it as the Domain price range). How can we do better than just providing it directly into the pool?

The trick is to put only a tiny portion of liquidity into a really narrow price range earning the same fees as direct providing. As soon as the price risks going out of the narrow range, rebalance the interval to cover the price safely.

The liquidity requirements for UniV3, in this case, are significantly lower. The rest of the liquidity is allocated to Yearn. Thus the overall returns are higher for the UniV3 Boosted strategy.

Concentrated liquidity and swaps risks

The strategy has the same risk as the underlying UniV3 position with the Domain price range with one exception: if the rebalance happens when the price is out of the narrow price range. In this case, there are two key differences:

  1. Boosted UniV3 swaps at a better price than UniV3
  2. UniV3 gets fees for the swap, Boosted UniV3 pays fees for the swap

Generally, a better price gives much more benefit than fees loss so Boosted UniV3 will perform better than UniV3. However, there are some edge cases when the price move is too little to compensate for the loss of the fees. In these rare cases, the Boosted UniV3 position will perform slightly worse.

For more details and formulas see our article about the tricks with Uniswap V3:

Fearless Gearbox

This strategy allocates the tokens into Gearbox Protocol to get the leverage and puts them into the Curve pool. Then the strategy deposits Curve LP tokens into Convex where the juicy yields live.

The strategy implements the backstop module:

The backstop module monitors the position’s health factor and has pre-defined deployment parameters when the strategy can be stopped. Under the specific market conditions, Backstop Module automatically triggers Closing Credit Account to avoid liquidations.

For more details see the detailed article on the Fearless Gearbox:

Mellow-Voltz LP Optimizer

The strategy was built by Voltz Protocol, and we’re proud that the team chose Mellow to work on their strategy, details are described in the article in Voltz Protocol blog:

The trick — it’s already live and can be used via Voltz dapp interface.

Code & audits

Our codebase is available on GitHub, feel free to check it out and ask any question in our Discord #💻dev section.

The protocol core was audited by Chainsecurity and BlockSec, the reports are published in Mellow GitHub.

Initial strategies are under audit right now and the reports will be published soon.

Protocols, integrations and further strategies

Besides the initial strategies, there’re more to come and some new strategies are already WIP and will be released soon.

We see Mellow not only as a solution for LPs, but also as a protocol for protocols that provides strategies for native protocol tokens and treasury management.

As an integration layer, we’re open to collaboration and integration with any protocols, feel free to contact us in Discord if you want to discuss your strategy ideas or have requests for integrations to implement your strategy.

Ping us and let's buidl together!

Get involved

To get involved join the discussion in Mellow Discord, share your ideas and check the protocol on Nov 17th.

Contribute with your fresh, juicy, composable ideas and share your feedback!

Twitter | Discord | Docs | Website

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Mellow Protocol

Exploring the depths of math on LPing, AMMs and trading strategies.