Providing Liquidity

This page describes how users put liquidity into Marginly pools.

From here on, we consider USDC/ETH Marginly pool for simplicity which works in conjunction with the corresponding Uniswap v3 USDC/ETH pool.


Liquidity providers deposit quote asset (USDC) or base asset (ETH) liquidity into the pool for other users to borrow. Users then earn variable interest rates when traders borrow USDC to go long or borrow ETH to go short. USDC providers earn rewards in USDC, while ETH providers earn rewards in ETH. ETH holders (USDC borrowers) pay interest fees in USDC to USDC holders (ETH borrowers), who pay interest fees in ETH in return. The system is symmetric: longs pay shorts, and shorts pay longs. All debt accruals and reward accruals are pairwise. In Marginly, we calculate and handle these accruals as coefficients on user collateral and debt recorded in the system.

In Future

In later versions of the Marginly protocol, we could also facilitate investment in different currencies: e.g., invest WBTC in an ETH/USDC long position.

  • the initial conversion of WBTC to ETH (initial margin) for a long position

  • the initial conversion of WBTC to USDC (initial margin) for a short position

We'd need to monitor the input currency (WBTC) exposure to the collateral currency (ETH or USDC) ticker.

Profit is given by the margin value (ETH margin) in WBTC and the trading P&L on the ETH/USDC exposure.

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