DeFi Sparks - Aperture's Automated Liquidity Management with Intents

In this episode of DeFi Sparks which took place on February 26, 2024, Nick Drakon hosted McDavid Stoddard to discuss liquidity management, Aperture Finance’s innovations, automated strategies, intent-based solutions, and more! Read our notes below to learn more.

Background

Nick Drakon (Host) – Founder of Revelo Intel

McDavid Stoddard (Guest) – Generalist and Growth Lead at Aperture Finance

Aperture Finance – LP management with intent-based architectures on Uniswap V3

Aperture Finance: Revolutionizing Liquidity Management with Intent-Based Strategies

Nick provides an overview of Aperture Finance‘s offerings, including automated strategies for managing concentrated liquidity positions, a recurring rebalancing feature, liquidity management strategies, and a decentralized exchange called Aperture Swap.
McDavid explains that Aperture’s current products focus on intent-based liquidity management for Uniswap V3, offering an alternative front end with automated features to help liquidity providers manage their positions more efficiently than on the Uniswap V3 interface.
He explains that Aperture is live on all Uniswap chains and Manta Pacific, highlighting their automation features launched in July 2023, which have facilitated over $600 million in volume, mainly through rebalancing products.
McDavid describes the challenge of managing liquidity in concentrated ranges on Uniswap V3 and how Aperture simplifies the rebalancing process, converting what would normally be a complex series of transactions and calculations into a single step.
He highlights the benefits of using Aperture for rebalancing, including a more intuitive user experience, 20% gas savings by condensing transactions, and the option for users to set future price events or perpetual rebalancing logic to automate their liquidity management strategies.
McDavid says that Aperture’s approach fills a gap left by Uniswap V3 in optimizing the liquidity provider experience, positioning their platform as a solution that leverages intent-based management to improve user outcomes in liquidity provision.
Nick asks what intents and solvers are and how they facilitate transactions in the blockchain.
McDavid explains that intents represent a shift from the traditional transactional approach to a more goal-oriented strategy in blockchain transactions. Instead of blindly signing a transaction, users declare their end goal, allowing for flexibility in achieving it.
He explains that solvers, or a network of solvers, play a crucial role by finding the most competitive execution route to fulfill the user’s declared intent, leveraging their knowledge of various platforms and creative solutions.
McDavid uses healthcare as an analogy to compare traditional transactional approaches with intent-based approaches. In the traditional method, individuals must visit various practitioners to address an issue like neck pain, without clear cost or outcome guarantees.
In contrast, an intent-based approach in healthcare would involve declaring a specific goal e.g., reducing neck pain by 50% within a budget and timeframe, allowing healthcare solvers to find the best solution, compared to how intents and solvers function in blockchain.

Revolutionizing User Intent with Aperture: From Chatbots to Smart Solutions

Nick compares the evolution of searching for information online to the functionality of chatbots, highlighting the efficiency of declaring intent and having the system automatically find the best solution, such as finding the best travel route within a budget.
Nick mentions using intent-based architecture in the purpose space, where backend solvers fulfill requests, improving the user experience.
McDavid introduces the vision of Aperture, where users interact with a chatbot in natural language to express their on-chain desires. The chatbot helps refine these desires into specific intents, asking clarifying questions about details like gas fees and slippage.
McDavid explains that Aperture aims to translate user intents into a domain-specific language that is understandable without technical knowledge. This domain-specific language becomes the basis for solvers to create solutions that are executed on behalf of the user, without them needing to pay gas fees directly.
The end goal for users is to see a clear, structured declaration of their intent, confirm it, and have the backend solvers and Aperture smart contract execute the solution, reflecting the desired outcome in the user’s wallet.
To realize this vision, Aperture needs to develop a chatbot-to-domain-specific language interface, create an open-source domain-specific language for Web3 use cases, establish a clearinghouse for intents, and implement a smart contract to verify and rank solver solutions using techniques like zero-knowledge proofs.
Aperture plans to simulate proposed solutions to ensure they match user intents, rank these solutions based on execution and solver rating, and leverage solver DAOs to enable niche use cases through staked tokens and business logic submissions to the Aperture DAO.
Solver DAOs could specialize in specific services, like claiming airdrops across various chains, and providing users with solutions to common problems without the need to build underlying infrastructure, focusing instead on their expertise.
Nick explains that a solver refers to a market maker, a professional organization managing liquidity across venues with the necessary technology and experience. He appreciates the conversation’s focus on mechanics rather than AI buzzwords, noting the use of LLM for chatbots rather than as a central component.

Aperture: Open-Source Ecosystem Challenges

Nick questions the proprietary versus open-source nature of the technology being developed by Aperture.
McDavid says that the core components of Aperture’s technology might largely be open-sourced, similar to Uniswap V4‘s approach, which allows third-party DEX apps to build upon it. He says that while the infrastructure might be open-source for transparency, network effects, and the initial trust could make it challenging for others to fork the technology simply.
McDavid says that Aperture’s infrastructure while aiming to be open-source, will likely create a sticky ecosystem difficult for other protocols to replicate. He highlights the importance of transparency in user interactions and the execution of their goals.
Nick reflects on the system’s potential to connect users with solvers that can access liquidity across various chains without being cross-chain themselves, acting as a conduit between users and solvers.
McDavid adds that the ranking smart contract of Aperture will need to simulate and rank solutions, requiring some knowledge of the solutions’ execution processes. He mentions the potential use of zero-knowledge proofs for verifying off-chain actions and the technical challenges of integrating solutions across different blockchains.
McDavid suggests LPs on concentrated liquidity DEXs explore Aperture, praising its front-end and tooling as the best publicly available solution, highlighting the current no-fee period and the non-custodial experience.
McDavid reveals plans to innovate on the current product, liquidity intense, with new features and partnerships, hints at expanding to PancakeSwap and possibly Orca if there’s enough demand, and invites Solana enthusiasts to engage on Twitter.

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Show Information

Medium: YouTube (Video)

Show: Revelo Intel (DeFi Sparks)

Show Title: Aperture Finance’s Innovative Use Of Intents For Automated Liquidity Management

Show Date: February 26, 2024