Metis CEG Program: Steer Protocol

Introduction

Steer is a decentralized computing protocol built with the goal of addressing the challenges of infrastructure and data in building, securing, and deploying web3 dApps including Automated Liquidity Management for Concentrated Liquidity (CL) pools and more.

With Steer Protocol, Metis community can -

1. Build on-chain automation using 20+ programming languages.
2. Connect them to secured data sources off-chain or on-chain using the Steer data marketplace,
3. Execute on-chain using Steer infrastructure.

Steer Protocol Currently offers two solutions -

1. Off-chain compute platform that can be leveraged by protocols or devs to build web3 dApps including Automated Liquidity Management, Automating Loan Payments, Asset Management, Automated Governance, Automating Cross Chain Actions, Automatic Trading Strategies, Automating Protocol Operational Tasks like reward distribution, airdrops, and more.

2. We have built Active Automated Concentrated Liquidity Management that uses Steer Protocol off-chain compute infra with a combination of multi-position automated strategies in a non-custodial, permission-less open ecosystem to manage liquidity on Concentrated Liquidity pools. Currently, Steer automated strategies are deployed on concentrated liquidity pools across 12 chains, 8 AMMs, and over 260+ CL pools including Maia Dao on the Metis chain.

   Steer Protocol ALM (Active Liquidity management solution) stands out by combining the power of off-chain computing with multi-position automated strategies, all within a secure and deterministic multi-layer execution framework. This unique approach not only enhances investment returns but also prioritizes the security of all participants in the ecosystem.

This proposal aims to achieve Community Verified Project (CVP) status, with the primary goal of facilitating builders and the broader Metis ecosystem community in rapidly and securely developing and utilizing products using Steer Infrastructure.

Technicals On Concentrated Liquidity ****(CL) & Steer Protocol ALM Solution

Concentrated liquidity presents a host of challenges that DeFi platforms and liquidity providers must navigate adeptly. Properly managing liquidity pools is paramount, as imbalances can lead to inefficient trading and reduced capital efficiency. Additionally, mitigating impermanent loss (IL) is a crucial concern, as it can erode the value of assets within a pool. Implementing effective incentive programs to attract liquidity providers and ensure a vibrant ecosystem is another challenge, as striking the right balance between incentives and sustainability can be intricate. In essence, concentrated liquidity demands a delicate and strategic approach, encompassing smart pool management, IL mitigation strategies, and sustainable incentive structures to foster a thriving DeFi environment.

Steer Protocol addresses all these issues via Smart Pools. When an automated active liquidity management strategy is added to concentrated liquidity pools it's called a smart pool. LP’s deposit into these smart pools and the underlying strategies manage liquidity based on the strategy, reinvest fees for auto compounding, spread the liquidity similar to the CEX order book for traders, and keep the liquidity in-range based on the current price of asset, creating a healthy environment for all stakeholder interacting with CL pool.

On top of it, the Steer Protocol provides detailed analytics for monitoring liquidity smart pool performance, allowing for informed decision-making. Moreover, Steer Protocol offers the flexibility to run incentive programs to attract liquidity through its in-house staking feature or via Angle Merkl reward integration.

Under each smart pool, Steer Protocol uses an optimized position manager contract to mint and manage LP positions. An automated strategy paired with the vault runs off-chain to determine how much to rebalance and where to make positions on the pool. Funds are provided by liquidity providers, whose deposits are minted as ERC-20 LP tokens representative of their deposit. These strategies are publicly open and can be developed or published by anyone.

Here is the link to our strategies - https://docs.steer.finance/concentrated-liquidity/official-apps/keltner-channels

The technical implementation of Steer's solution involves the following steps:

1. The LP’s deposits the base assets into a smart pool.
2. Steer's smart vaults deploy the assets to the AMM v3 pool.
3. The depositor has minted ERC-20 LP tokens representative of its deposits.
4. Steer's off-chain computations monitor market conditions and rebalance & mint positions to ensure maximum depth and fees.
5. The LP tokens can be redeemed for the deposited base assets at any time.

Distinguishing Factors from Other Liquidity Managers:

• Multi-position Strategies With Secured Off-chain Compute - Unlike rival protocols that limit users to just 2-3 positions, Steer Protocol masterfully manages an extensive array of positions simultaneously for ALM at a low gas cost due to off-chain compute. The resulting benefits will positively impact all stakeholders, as traders get lower slippage, liquidity providers can earn higher fee returns, and AMM can benefit from increased trading volume.
• Minimize or outperform IL: Steer Protocol ALM is able to keep the value of the deposit close to that of holding the initial assets, and often outperform it.
• Trustless & transparency: Steer Protocol ALM only autonomously manages the liquidity but can never remove it. All executions of Steer Protocol ALM can be monitored on-chain with full transparency.
• Open Ecosystem: Steer Protocol provides LPs an option to create/deploy automated strategies on any concentrated liquidity pools via Steer SDK, so LPs don't have to wait for an ALM to add those pools. Be your own market maker.
• Advanced Analytics: Steer Protocol offers a wealth of insightful analytics that delve into the performance of automated strategies within Concentrated Liquidity (CL) pools. So that any analysis of the risks and rewards.
• Secured Execution: Steer Protocol uses off-chain computing that relies on deterministic execution by all nodes and consensus to do any on-chain execution of strategies. On top of it, each smart vault has other security parameters added as well like Twap, slippage, max supply, and other checks.

Alignment with Metis

Steer Protocol's off-chain computing capabilities present a valuable resource for the Metis ecosystem, offering numerous potential use cases beyond its existing functionalities. An illustrative example is automated active concentrated liquidity management, showcasing just one facet of the myriad possibilities.

Our current collaboration with Maia DAO has enabled us to support active Concentrated Liquidity (CL) management on the Metis chain, specifically within their Uni V3-style pools. We are now poised to expand our offerings, inviting the Metis community to leverage our compute platform for the creation of innovative products that can further enrich the Metis ecosystem.

The growth of liquidity-related activities, encompassing traders, liquidity providers, and automated market makers (AMMs), along with the broader Metis ecosystem and the protocols built upon it, has been progressing at a relatively modest pace. We hold a strong conviction that the Steer Protocol can serve as a catalyst, igniting the development and adoption of a diverse range of products within this ecosystem.

Audit:

Steer Protocol has been rigorously audited by Omniscia and Zellic on Feb 10, 2023 and May 2, 2023 respectively.

You can find the audit reports here:

Zellic: https://steer.finance/wp-content/uploads/2023/05/FILE_2279.pdf

Omniscia: https://omniscia.io/reports/steer-protocol-core-implementation-636b8fca6693a100164bf02f/

Steer Team

Our global team has a proven competence in building and scaling products as well as companies in both web2 and web3 space with an average of 10-14 years of experience. Our executive team has previously worked together for 6+ years and has scaled various startups in the blockchain space from the ground up. Our overall team has strong product, business, operation, and marketing backgrounds with a lot of trusted execution between each other.

Reference

For more information regarding Steer Protocol and Steer Protocol ALM, feel free to look at our docs and join our community. I’m also more than happy to respond to any comments here from the Angle community regarding this proposal!

Liquidity management Solution: https://steer.finance/liquidity-management/ Off-chain Compute - https://steer.finance/ Twitter: https://twitter.com/steerprotocol dApp: https://app.steer.finance/ Discord: https://discord.com/invite/M3Xjvv3Zfg Docs: https://docs.steer.finance/introduction/