DeFi market maker Swaap Finance has launched a new service called Swap Earn, allowing users to earn an extra yield on already yield-bearing assets.
The protocol tops up investor returns through market-making yield, spreading investors’ assets across multiple pre-defined protocols.
Yield On Top Of Yield
Market making is when DeFi users provide liquidity to decentralized exchanges, allowing fellow crypto buyers to easily find sellers, and vice versa. Market-making yield can come from one of two sources: trading/swap fees, or intrinsic token rewards.
Per a press release shared with CryptoPotato, Swaap Earn liquidity providers earn “superior yield” by depositing their assets into single asset vaults. Assets are then dynamically distributed across multiple protocols in search of the most optimal yield at any given time.
The model provides investors with returns that are passive, but also trust minimized. Over time, Swaap’s decentralized governance can add new allocation rules and strategies to keep yields as high as possible.
“The beauty of Swaap Earn lies in its simplicity and efficiency,” said David Bouba of Swaap Labs. “By marrying our cutting-edge market-making strategies with passive yield generation, we’re setting a new standard for liquidity utilization in the DeFi space.”
Swaap’s Continued Growth
The first vaults on Swaap Earn were developed in conjunction with Lido and Aave. with Aave providing a grant Lido is the world’s largest DeFi protocol providing investors with Liquid staking assets like Staked Ether (stETH), while Aave is a lending protocol with $11.8 billion under management.
According to Swaap, revised fee structures among popular AMMs have made sustainable yields harder to come by within DeFi.
“Despite progress in strategy and risk mitigation, issues such as poor strategy design and liquidation risks persist,” wrote the team. “Swaap Earn was created to solve these challenges while increasing the returns available to LPs.”
One year ago, Swaap Labs closed a seed funding round for $4.5 million led by Signature Ventures, with participation from CoinShares CSO Meltem Demirors. Swaap v2 launched in July 2023, which brought advanced autopilot market trading strategies to all users for the first time.
