Sushi’s ‘Smart Pools’ hope to boost LP efficiency

The DEX announced an integration with Steer Protocol, a liquidity manager focused on making LPing more efficient


BeNeDak/Shutterstock modified by Blockworks


DeFi depends on liquidity providers (LPs), but LPs can face an uphill battle in generating yield. Steer Protocol announced on Thursday that it is integrating its so-called Smart Pools on Sushi to try and make liquidity provision more attractive.

Steer’s Smart Pools take some data off-chain and automate aspects of liquidity management to increase efficiency for LPs. The Smart Pool integration comes as Sushi weighs an overhaul of its tokenomics and its native SUSHI token gets swept up in a market rally.

LPs put capital in pools that automated market makers (AMMs) like Sushi use to create order depth for DeFi assets. Providing capital as an LP can be inefficient because of loss-versus-rebalancing (LVR) where an LP essentially faces arbitrage from AMM prices lagging behind centralized venues.

Read more: Bitcoin may be riding the ETF wave, but altcoins are where the rally really is 

Steer is an active liquidity management platform (ALM) that focuses on concentrated liquidity. LPs provide the platform with capital for a certain price range to increase their chances of the funds being used for a trade and earning fees. 

The ALM moves some data off-chain to deal with LVR.

“From the arbitrage perspective, we can place liquidity, which looks like books that are on — let’s say a centralized exchange — which allows us to capture that price movement before it actually might happen on-chain,” Derek Barrera, the founder of Steer, said. 

Since launching over the summer, Steer has become the ninth-largest liquidity management protocol by total value locked (TVL), according to DeFiLlama.

Sushi’s Steer integration comes soon after the protocol’s “Head Chef” Jared Grey proposed changes to Sushi’s tokenomics. He indicated that these are meant to incentivize LPs to lock their liquidity into the DEX for longer periods of time. 

Under Sushi’s current tokenomics, an average of over $100 million has been paid out in emissions to LPs for every $300 million in total value locked (TVL) created, the proposal said

The price of Sushi (SUSHI) jumped from around $0.55 in mid-October to $1.26 in early November, per Blockworks Research, and currently trades at $0.96 at the time of publication.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Frax report cover.jpg


Frax saw continued development in its frxETH liquid staking derivative and Fraxlend money market throughout 2023. Frax V3 introduces an RWA strategy to drive utility to the protocol's cornerstone product, the FRAX stablecoin.


Crypto as an “industry” could probably do without quite as many cults of personality


Bitcoin has rebounded 130% so far this year


Following layoffs at BAYC parent Yuga Labs and OpenSea, Tiger Global marked down its stakes


Recent SEC filings suggest the regulator could be lining up the approval of multiple proposals in early January, segment observers argue


A dinner back in September gave big traders a heads up about the DOJ settlement, Bloomberg reported


On-chain debt capital markets platform deploys on Coinbase-incubated layer-2 after structured investment products push