Protocol Overview

Dimple is a non-custodial, easy-to-use active liquidity management protocol of concentrated liquidity in Uniswap v3. This protocol is available for everyone. Dimple protocol has stable-based and asset-based strategies.
  • Stable-based strategy means that the liquidity provider sends stablecoins to the protocol to manage liquidity, and receives back the stablecoins during withdrawal.
  • Asset-based strategy means that the liquidity provider sends ETH, MATIC, or another liquid asset as liquidity and receives back the same asset during withdrawal.
Dimple Vault Smart Contracts allow liquidity providers to store the assets on-chain securely.
Users (Liquidity Providers) can deposit funds into the Dimple Vaults and passively earn the hights fees from Uniswap v3 on DeFi Market. Dimple Keeper actively manages liquidity in Uniswap v3 Pools. Keepers don't have access to users' funds, they can only rebalance Uniswap v3 Pool Price Ranges of the chosen Strategy.
Dimple provides highly effective strategies for Uniswap v3, developed based on articles by analysts and data scientists. Dimple strategies implement different models of asset management, based on market volatility, trading indicators, and other financial models of price range prediction. Dimple strategies target the maximization of users' rewards from liquidity provision, hedging the possible risks and impermanent losses.

Dimple Protocol Advantages:

  • Dimple Protocol converts non-fungible liquidity positions of Uniswap v3 into LP tokens of ERC-20 standard. It's enabling liquidity to be used in any external DeFi protocols (staking, lending, farming, DAO, etc.)
  • Dimple protocol monitors all Uniswap v3 pools with enough liquidity and provides liquidity to pools with the most valuable characteristics
  • Protocol Strategies automatically reinvests earned fees back into Uniswap v3 Pool Strategy to achieve a compounding effect for deployed capital

How Protocol Works

  1. 1.
    User (Liquidity Provider) provides the amount of USDC (for stable-based strategy) or ETH, MATIC, or another liquid asset (for asset-based strategy) in the Dimple Vault, and receives LP token ERC-20 (representing Users' position or share in the Vault).
  2. 2.
    Keeper swaps the incoming amount of coins to token A and token B to provide liquidity to the chosen pool. Then Keeper adds liquidity to the pool. Liquidity NFTs are stored in the vault as well.
  3. 3.
    Keeper rebalances the LP position to make sure that LP accumulates exchange fees.
  4. 4.
    Users can withdraw assets back + earned fees at any time, burning their LP token. Users can add and remove liquidity from/to the strategy.
  5. 5.
    Users can send an LP token of Dimple Strategy to any other wallet address. (Dimple Protocol v2)

How Rebalancing Works

Every time the Kepper calls the rebalancing function of the protocol, the Vault executes a set of actions in one blockchain transaction. The rebalancing function provides a highly effective mechanism for Keeper to rebalance and exchange assets with maximum accuracy and minimum losses in one TX. During the strategy rebalancing, the Dimple Vault does not mint the NFT position of Uniswap v3 where possible, which will save the additional gas fees for strategy.

Keepers actions:

  1. 1.
    Withdraw assets from the Uniswap V3 position
  2. 2.
    Claim earned fees from the pool
  3. 3.
    Calculate liquidity for the new price range in the pool
  4. 4.
    Swap the exact amount using the Uniswap pool (Dimple uses custom swap tx that allows accumulating almost all swap fees inside the vault. More details are on the Swap page)
  5. 5.
    Deposit assets into the new price range