Maven 11 Capital is excited to announce our investment into Visor Finance. Visor is an active liquidity management protocol used on Uniswap V3 that allows liquidity providers to automate their liquidity provision. With the launch of Uniswap v3 came a different type of liquidity provision. Instead of providing liquidity on a full price range. Liquidity providers on Uniswap v3 are required to provide liquidity at set price ranges.
This way you need less capital to provide more liquidity which could be considered the holy grail of capital efficiency. However, if the prices of the underlying asset moves outside of the price range set by liquidity providers, they no longer earn fees without re-adjusting their price ranges.
Since the launch of V3 it has become clear that active liquidity management is harder than it might seem at first hand, especially for the users that want to have a “set and forget” strategy while LPing. On the other hand, active LPs can get much higher returns since the capital requirements are lower.
An example of how fees are affected was during the Ethereum market crash, where a majority of the Uniswap V3 liquidity was outside price ranges set by liquidity providers. This prevented them from earning any fees during a high volume period, negatively impacting their returns.
Under normal circumstances the narrower the chosen price is, the more efficient the liquidity is distributed and the higher the yields are. Capital efficiency gains can reach up to 4000x improvement versus Uniswap V2 for Liquidity Providers within a single 0.10% price range. However it has become much harder to become an efficient liquidity provider due to the constant change of strategy that needs to be implemented to receive high returns.
“Visor has the unique ability to once again create low entry barriers for Uniswap liquidity provision. The introduction of Uniswap v3 has been a major improvement on capital efficiency but has also complicated things. An active liquidity management protocol like Visor makes using DeFi much easier and we believe this is key for further adoption.” Balder Bomans, Managing Partner Maven 11 Capital.
This is where Visor Finance comes into play. Visor allows users to once again implement their set and forget strategy. Visor uses active liquidity management to make sure liquidity always stays within price range and maximizes capital efficiency for the highest returns.
This is mutually beneficial for the Uniswap ecosystem and liquidity providers. As Uniswap can offer better liquidity and providers can have hassle free high yields. In exchange for providing this service, Visor takes a cut from the returns made and distributes this to VSR token holders that stake their token.
We are excited about the opportunity to support Visor as we believe their offering makes the defi ecosystem more efficient, lowers entry barriers and helps users sustainably acquire higher yields.