✅AMM LP Provision

This section is for those unfamiliar with AMM and LP provisions in general! Skip this page if you are already familiar with the concepts.

TL;DR We have been providing liquidity for AMMs and other platforms to give a return in value to our early share buy-ins. AMM earning purely depends on Solana NFT market volume, and how much our pools are utilized. We use Tiexo to track market volume to make informed decisions on our fund allocation.

What's an AMM?

An automated Market maker is a new part of the web3 trading experience where any individual could list their NFT with liquidity backing to act as a marketplace for holders to buy/sell NFT. AMM gives everyday traders more confidence to buy/sell NFTs in the listed collections since there will be a base price available for them to sell their assets anytime!

Which AMM platform will you use?

We aim to generate as much revenue for our holders as possible while maintaining full transparency and a community governance structure. We will use any AMM platform that has the highest volume, with a caveat: it has to provide advanced features that give us finer control over our assets.

How would we earn from AMM platforms?

Just buying or selling NFTs or putting in buy or sell orders cannot earn on AMM platforms. But the earning begins when someone provides both buy and sell orders in a single pool with Sol & NFTs. On an advanced AMM platform, the individual could set

Spot price - the base price of the NFTs
Delta - It can be set as linear (based on sol price) or exponential (based on a percentage). Delta determines the NFT price for purchase and sales.
Bonding curve - Delta defines price change based on buys or sells executed on your own pool.
Fee - This is what we are earning from each trade! We can set a percentage we earn from each NFT sale or purchase from the pool. The fees would be built into the NFT price.

Is there any potential risk?

Yes!

If the NFT collection floor price increases too rapidly, an impermanent loss could occur - All your NFTs will be sold at a lower price point based on delta resulting in the earnings being less than the value of the NFT if held.

If the NFT floor price decreases too rapidly, an impermanent loss could occur - All your Sol would be used to purchase the NFTs at a higher price point resulting in you holding your NFTs at less value compared to how much they are worth based on floor price value.

But it should be noted that impermanent loss is not realized until the pool closes! Often times an active collection with good utility could retrace back to its original price over time! The pool will continue to earn as long as there is sol and NFT backing. This is what makes investing in Bunny Stacks safer compared to opening a pool on your own.