Edge Podcast - Royco Protocol: Revolutionizing Liquidity Markets - Revelo Intel

Edge Podcast – Royco Protocol: Revolutionizing Liquidity Markets

In this episode of The Edge Podcast which took place on May 27, 2024, DeFi Dad, Nomatic, and Jai discuss the features of Royco Protocol, how it will change OTC marketplaces, and more. Read our notes below to learn more.


Jai’s background

  • Jai says that he transitioned from Rari Capital co-founder to Waymont co-founder focusing on developing the Royco Protocol.
  • He addresses challenges related to fair token distribution during high FDV launches, highlighting issues that prompted the development of solutions like Royco.
  • Jai says that after observing whales’ activities on-chain, Waymont identified market inefficiencies and launched Royco to provide alpha opportunities to all users. Waymont plays a crucial role in contributing to Royo’s mission of democratizing access to lucrative deals beyond whales.

Origin of Royco

  • Jai says that Royco aims to enable broader participation in high-yield deals while reducing the need for large followings or social influence.
  • He adds that users leverage VC rounds to inflate market caps, enabling participation in TVL raises at significantly higher yields than traditional market rates. Royco seeks protocols offering 120%+ yields, aiming to open these opportunities beyond whales and limited follower bases.
  • Jai says that Royco envisions an on-chain marketplace where liquidity providers interact with specialized markets, fostering accessibility and efficiency for all participants.
  • He adds that various contributors collaborate with Royco protocol to democratize deal access, aiming for fairer markets and broader participation.

Why Royco makes sense

  • Jai says that whales’ involvement in private deals boosts metrics like total value locked, enhancing future fundraising prospects through increased valuations.
  • He adds that liquidity coordinators define asset management within markets. Uniswap, for example, can customize these coordinators to lock assets or set specific parameters. Order books in these markets focus on liquidity and incentives rather than traditional buying and selling. They determine costs of capital for users like Uniswap offering incentives based on liquidity needs.
  • Jai says that the order book allows platforms to visualize trade-offs between liquidity and incentives. Adjusting emissions impacts total value locked, showcasing a nonlinear relationship between liquidity and incentives. Successful trades yield pool tokens as an accounting method for deposits in the liquidity coordinator. These tokens represent shares of the pool, enabling trading or redemption within the system.
  • He adds that pool tokens serve as an accounting mechanism within the liquidity coordinator, potentially representing both principal amounts and additional points based on specific dynamics.

Example of how Royco will work

  • Jai says that the key to identifying the best liquidity provision system (LPS) for a protocol lies in managing the cost of capital efficiently.
  • He adds that they are introducing a market where users can specify their required payment for depositing funds can create varying amounts, leading to dynamic liquidity provision. By adjusting payout percentages on an order book, protocols can attract different levels of liquidity, potentially reducing costs significantly.
  • Jai says that utilizing Royco’s infrastructure allows protocols to minimize costs by efficiently acquiring necessary liquidity through innovative mechanisms like point programs.
  • He adds that Royco enables LPs to lock up liquidity in a market, specifying token amounts needed for funding and allowing users to competitively drive down costs. This system offers three key phases: aiding growth in TVL, assisting incumbents in maintaining pool liquidity at minimal costs and fostering new applications leveraging Royco’s infrastructure.

Application ideas for Royco

  • Jai says that leveraging Royco’s infrastructure presents opportunities to develop novel applications that capitalize on enhanced liquidity management and order book functionalities. Transitioning from traditional lending platforms to tick-based systems could revolutionize borrowing dynamics by focusing on collateral rather than market-based asset valuation.
  • He adds that customizing collateral factors based on price ranges allows for better support of longtail assets.
  • Jai says that introducing real-time bidding among various counterparties can enhance cost efficiency in liquidity provision.

Disrupting OTC markets and Democratizing access

  • Jai forecasts a transition from OTC markets to public trading spaces due to the transparency and efficiency offered by DeFi platforms like Royco.
  • He adds that DeFi opens up new avenues for trading and yield opportunities, transforming traditional equity mining practices.
  • Jai says that some individuals have been able to earn high yields in DeFi, but there is a push towards making these opportunities more widely accessible. Previously, attractive yields were limited to traditional finance firms with significant resources.
  • He adds that over the years, there has been an industrialization of various segments within DeFi, such as automated market makers and lending platforms. The aim is to revitalize DeFi by enabling broader access to industrialized opportunities for everyone.
  • Jai says that by reducing barriers to entry, it is anticipated that there will be a surge in innovation within the DeFi space. The goal is not only to provide access but also ensure easy liquidity provision for projects, fostering growth and development.

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Show Information

  • Medium: YouTube (Video)
  • Show: The Edge Podcast
  • Show Title: Royco Protocol: Revolutionizing Liquidity Markets
  • Show Date: May 27, 2024